Kita secures £4m seed investment to bring essential carbon insurance products to market
Kita today announces a highly over-subscribed £4m seed funding round led by Octopus Ventures, alongside existing investors Insurtech Gateway, Carbon13 and Climate VC, and new investors Chaucer Group and Hartree Partners.
Kita is the carbon insurance specialist; helping reduce risk in carbon credit transactions with insurance products that safeguard the quality and performance of carbon purchases. The goal is to enable more upfront financing so carbon removal solutions can access greater flows of consistent capital and scale their impact faster.
To fight climate change, the world urgently needs to (1) stop emitting carbon dioxide, and (2) remove existing carbon dioxide from the atmosphere. The Intergovernmental Panel on Climate Change (IPCC) states that billion tonne scale carbon dioxide removal (CDR) is now “unavoidable” if we are to hit climate targets.
Trillions of pounds in investment are required to scale CDR solutions at speed, spanning both nature-based solutions like afforestation and engineered solutions like direct air capture. These investments are largely transacted via the Voluntary Carbon Market (VCM) and are receiving increasing focus from companies interested in purchasing high quality carbon removal credits to meet their net zero targets. However, the lack of transparency and quality metrics within the VCM create a high-risk environment for CDR investments, which is a deterrent to financing at scale.
Insurance is a solution – by reducing risk and increasing transparency, insurance can act as an essential enabler. Kita’s vision is to build a comprehensive portfolio of insurance products in this brand-new insurance market to protect against risks for all parties in the carbon markets ecosystem – from sellers, to buyers, to intermediaries.
Natasha Jones, Octopus: “Carbon removal plays a critical role in the fight against climate change and there is a pressing need to scale these technologies at an unprecedented size and pace. Insurance is essential to enable this rate of growth by de-risking investments into carbon removal solutions and building in incentives that increase the supply of high-quality carbon credits in the market. We are thrilled to have the opportunity to work with Kita in bringing ‘first of its kind’ carbon insurance solutions to market to help unlock billions of dollars of investment into the space, increase transparency in the Voluntary Carbon Market, and fight the climate crisis.”
Kita’s first product, Carbon Purchase Protection Cover, insures the buyer of forward purchased carbon removal credits against carbon delivery risk, removing a significant protection gap. Increased buyer trust in carbon delivery leads to greater flows of capital to help carbon removal projects scale at the rate the world needs to fight the climate crisis.
Natalia Dorfman, CEO and Co-Founder, Kita: “To prevent the worst impacts of climate change, we must remove gigatons of CO2 from the atmosphere annually for the remainder of the 21st century. This is a mammoth task, and it requires de-risking and access to capital for carbon removal solutions. Insurance can act as a fundamental enabler – by removing risk and increasing trust in the market, insurance will help drive capital to help quality carbon removal projects scale. Kita’s passion is developing these insurance products and we are delighted to be bringing our first product, Carbon Purchase Protection Cover, to market.”
Kita was founded in December 2021 by Dr. Paul Young, Thomas Merriman and Natalia Dorfman, as part of the Carbon13 climate tech venture builder in Cambridge. This funding announcement comes after a string of achievements by Kita in their first year. With support from Insurtech Gateway, Kita secured regulatory approval from the FCA, was approved as a Lloyd’s of London coverholder and onboarded insurance partners, including Chaucer Group. As well as investing in Kita, Chaucer is providing lead underwriting capacity; follow capacity will be provided by Munich Re Syndicate and RenaissanceRe. Alongside these successes, Kita has been nominated by PDIE Group for the Earthshot Prize 2023 and has also been awarded grants from the European Space Agency and UK Research and Innovation.”
Kita is using this investment to build its team, scale its underlying technology-based risk modelling, and launch its first insurance product, Carbon Purchase Protection Cover. The investment will also enable Kita to begin building a wider portfolio of carbon insurance products to cover the full spectrum of risks in the carbon markets.
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