Trusting Carbon Credits: Kita’s Story

This is a story of how an idea became a regulated product in 18 months. This business just raised £4m and is now shortlisted for the Earthshot prize.

When you think about reducing carbon footprints, your mind probably conjures images of shiny new things that we can build or buy. Electric vehicles, wind farms or the reforestation of farmland. We’ve been talking about such images for a generation, but why is it taking so long to make this a reality? And, from our perspective, is there a role for insurance to accelerate this transition?

Carbon Credits: Kita's Insurtech Story

Enter Kita, a new insurtech company who are creating carbon credit insurance. A trusted carbon credit system will be a major driver of funding for carbon offset projects. This is just the first step of a series of risk transfer products that in time will lead to A-rated underwriting paper underpinning some of the most ambitious projects on the net zero innovator’s wishlist. It’s time for serious insurance people to step up and help save the planet.

This is an ambitious task, requiring dedication and an unusual group of skills to come together into one singularly-focussed team. And an equally complex group of stakeholders from industry to assemble around them as a support group. It takes a village as they say. 

Dear reader, let this be your secret guide to getting a big idea started. Because it’s full of wisdom about where to go, what to do first and the conviction you need to really attract the right support behind you.

The founding

Once upon a time there were three people with very different backgrounds. Natalia Dorfman , an experienced business developer and strategist with a focus on climate risk. Tom Merriman, a FinTech product expert with a degree in climate change science. Paul Young, a PhD in Astrophysics who launched two data-science driven hedge funds. They all knew they wanted to devote the rest of their careers to fighting the climate crisis, and were looking for a place to start.

As fate would have it they all applied to Carbon13 and it is here our story really begins. Carbon13 is a Venture Builder playing a vital role in the fight against climate change. It’s a place where purpose-driven individuals can come together and team up to create scalable ventures with a laser focus on removing carbon from the atmosphere.  

Carbon13 doesn’t just support founders to work on the commercial side, but integral to their approach to venture building is “carbon intelligence”, the ability to embed carbon into business decisions. In fact, they only invest in ventures that have proven their potential to mitigate emissions by over 10 million tonnes of CO2e per year when at scale, a threshold the Kita team reached.

Kita completed the Carbon13 programme with a clear mission. To become the carbon insurance specialist.

Kita accelerating the fight against climate change

The product

With an innovative idea for a brand new insurance model, a fledgling company, and big goals, Kita knew that they still had their work cut out for them. Their next challenge was to navigate the world of insurance. For this challenge, Kita set their eyes on Insurtech Gateway.

trust carbon credits insurtech Kita Natalia Dorfman

“Starting an insurance company is a challenging thing and there were many (many) facets of the process we didn’t understand – from regulation to finding capacity to the nuances of insurance product development,” said Natalia. “Insurtech Gateway was with us the whole time, providing guidance and accelerating the process. In particular, Insurtech Gateway’s help on the regulatory process was instrumental in achieving our goals quickly.”

Insurtech Gateway’s role in Kita’s success hasn’t gone unnoticed. Chris Coleridge, the Founder and CEO of Carbon13 summed it up well:

Chris Coleridge, the Founder and CEO of Carbon13 Kita story

“Kita have benefitted enormously from Insurtech Gateway’s knowledge and ecosystem since graduating from Carbon13. The biggest proof point to us has been Kita’s ability to develop rapidly as a startup in the highly regulated insurance sector, which by necessity has costly and time-intensive barriers for new entrants. Insurtech Gateway’s ecosystem has also been instrumental in generating the amount of interest shown in Kita, culminating in their nomination for the Earthshot Prize.”

The insurance partners

One of the most testing times in any startup’s journey is securing partnerships with incumbent insurers, so we were delighted when Kita joined Lloyds Lab.

Natalia reflected that “Kita was fortunate in that we were accepted into Cohort 8 of Lloyd’s Lab and had the opportunity to work with excellent mentors – including from Chaucer and Munich Re Innovation Syndicate – from the start.”

Creating a brand new insurance product from scratch takes a hell of a lot of hard work and collaboration. As everyone pitched in and the product started to take shape, we were reminded of what could be achieved when full buy-in from the industry meets innovation from the outside.

 Tom Graham, Head of Partnerships at Chaucer Kita story

“By combining Kita’s deep understanding of the carbon capture markets, and their custom-built rating software, with our experience in innovative underwriting we’re able to deliver new and relevant products to this evolving market,” according to Tom Graham, Head of Partnerships at Chaucer. “We’re already working on widening the geographical and technological coverage we can offer our clients and are determined to remain at the leading edge of this specialist field.”

The investors

Like any other highly technical business, that requires expertise and time to be front loaded well ahead of any profit being made, Kita needed investment.

Their £350k pre-seed round was highly oversubscribed, but Kita were selective in which investors they partnered with at that early stage. They chose investors who had genuine value to add, alongside their capital investment. Insurtech Gateway led the round alongside Carbon13, Climate VC, Echelon Capital and angel investors.

6 months later, Kita’s rapid progress on their product allowed them to secure another highly oversubscribed funding round. Their £4m seed round was led by Octopus Ventures, alongside existing investors Insurtech Gateway, Carbon13 and Climate VC, and new investors Chaucer Group and Hartree Partners. According to Natasha Jones, Early Stage Investor at Octopus Ventures, they see the potential for significant returns.

Natasha Jones, Early Stage Investor at Octopus Ventures, Kita story

“We couldn’t be more excited to back Kita in its mission to develop carbon credit insurance which brings greater trust and confidence to this important market. The team have the vision and technical expertise to deliver on this grand mission. In doing so, Kita could unlock billions of dollars of carbon credit project financing. We believe that the businesses solving society’ biggest problems will create the greatest returns. Kita certainly falls into that category and we have high hopes for its future.”

A vision for the future

The Kita team are ready to make a difference. When asked about her vision for the future, Natalia has a simple answer: one where we have climate change under control.

We at Insurtech Gateway are excited to be part of that vision, and look forward supporting Kita as they continue to develop innovative insurance products that bring about real, measurable improvements for the environment. Our hope is that Kita’s story will inspire other founders to explore the impact that insurance can have against climate change.

Climate applications close 5th of July

Insurtech Gateway and our ecosystem of founders and investors want to work harder to support climate innovators, and are looking to support five more pre-seed founding teams this year. They will each receive hands-on support with venture building, partnerships, regulatory licences and investment up to £1M per company. 

We are looking for pre-seed teams building a business case within the emerging climate tech categories: 

  • Green AgiTech
  • Circular Economy
  • Carbon Markets
  • Biosphere protection
  • Renewable energy production and storage 
  • Green infrastructure and transport
  • Climate resilience

Applications close on the 5th of July but start dates are flexible. Those currently in accelerators or venture builders can apply now, then join Insurtech Gateway when ready.

Find out more here.