This article is the first in a series that studies climate tech and nature-based businesses to understand what made them attract venture capital. Stay tuned for more!

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Nature-based carbon removals (afforestation, improved forest management, improved agricultural practices) depend on land and typically lasts 30-50 years. These characteristics cause some unique challenges.

Project developers need to work with multiple landowners over the course of the project life. Land ownership and what the owner wants to do with her land becomes the shakiest domino in a carbon project, especially as 30-50 year project lifecycle means that land ownership can change.

So, the largest chunk of the transaction costs of a carbon project comes from aggregating land owners to make the project viable and monitoring their adherence to the activities outlined in the carbon project.

Chestnut Carbon has structured its operations to address both these transaction costs, making it an attractive enough to raise the largest tranche from climate tech VC in 2025, amounting to $250M over two funding rounds.

Chestnut Carbon a New York–based, U.S.-focused nature based carbon removal developer, made waves in the climate tech and carbon market world last year by signing a long-term offtake agreement with Microsoft for high-integrity nature-based removals. This offtake agreement was followed by Series B funding from CPP Investments, with participation from Cloverlay, DBL Partners, and institutional LPs of Kimmeridge (university endowments, family offices, funds of funds, etc.).

The problem they are attacking

Corporates with net‑zero targets increasingly need removal credits, but the supply of high‑quality, additional, durable removals is limited and often viewed as low‑trust. Improving and maintaining high credibility requires more control and/or coordination over land management practices with incentives aligned for landowners.

To ensure high-quality, monitoring has to be strong and robust. Traditional forest inventory capture requires more time, the use of multiple costly tools, and the need to enlist a professional foresters to undertake the process.

Chestnut Carbon’s solution

To address the land ownership and aggregation challenge, Chestnut either directly acquires marginal forest land or specifically targets high-potential land patches and engages with landowners. This way, Chestnut can tightly manage additionality, permanence, leakage, addressing the main criticisms of forest offsets. Land acquisition is supported by the Chestnut Land Explorer. The platform employs public and private data to identify the U.S. regions in which trees absorb the highest volumes of carbon. This allows them to identify land with the optimal productivity for afforestation programs and evaluate private forest landowner candidates for the Improved Forest Management (IFM) program. They have identified that large swathes of marginal or degraded farmland and at‑risk private forests in the U.S. Southeast could absorb significant CO₂ if restored, but landowners lack capital, know‑how, and access to carbon markets. This geography remains they primary focus.

To address the monitoring problem, Chestnut has developed propriety monitoring tools. They collect detailed tree inventory data using a custom, portable device which is patented. As it is a single device, it bypasses several layers of remote sensing imagery and bespoke inventory measurements, allowing them easily train a wide range of qualified technicians to use it, not just registered foresters, and to access technicians nationwide, resulting in significant cost savings.

While other carbon projects often rely exclusively on remote sensing data from aerial imagery, our approach offers greater accuracy and the ability to collect and review real, tangible, site-specific tree data in a cost-effective way. Once the data is collected, it flows directly into our inventory management software for analysis and processing.

More on their innovations and business thesis can be found in their whitepaper here.

Business model

As a carbon project developer, their primary revenue comes from the sale of high-quality carbon credits. They focus on two types of projects: Afforestation on land it owns and Integrated Forest Management (IFM) on land owned by private landowners, where it provides project development and market access.

The company is financed by a combination of equity, structured finance and offtake agreements for their carbon credits. Afforestation projects (like their Sustainable Restoration Project) generate long‑term Gold Standard credits sold via large, multi‑year offtake agreements and potentially spot or forward sales to other corporates. IFM credits from Forest Carbon Works projects are sold to buyers like TD Bank and Sol Systems; revenues are shared with landowners through a membership/revenue‑sharing model. The offtake agreement signed with Microsoft allowed for a $210m non recourse credit facility from a bank syndicate (J.P. Morgan, CoBank, BMO, East West Bank) provides project finance.

As Chestnut acquires and restores land, the underlying real‑asset base (forestland) can appreciate, adding another layer of value beyond carbon credits.

Competitive advantage

Chestnut is functioning within a highly competitive and evolving Voluntary Carbon Market (VCM). 2025 continued to see the market shift to removals credits, with both technical and nature-based removals seeing the highest share of credits purchased via offtakes and retired (source). Demand forecasts based project that total demand for removals could reach 46-110 Mt by 2030, a ~6-14x from today (source). Even if we conservatively project the demand from today’s top active buyers, CDR demand could reach a minimum of 28 Mt by 2030. NbS is expected to meet a substantial portion of that demand. Within that, high‑integrity removal credits — especially in high‑trust jurisdictions like the U.S. which already dominate technical removals — are projected to command a price premium. Supply will be tight relative to demand. It is this niche that Chestnut is targeting.

Their competitive advantage is in direct land ownership and patented tools that cut monitoring costs while increasing reliability of their data. Their current afforestation projects are among the largest from the U.S. listed on a registry, with over 30,000 planted acres and ambitions for hundreds of thousands more. Their afforestation project and IFM portfolio is the first US-based project to receive FSC Verified Impact for Biodiversity, setting a benchmark for co‑benefits and signaling leadership in quality.

The Combination of Gold Standard, Verra, and FSC Verified Impact is a strong quality signal that many competing projects lack. Their “conservative methodology” for IFM is explicitly marketed as more stringent than typical IFM projects on the market.

They carry a strong reputational moat: Being associated with Microsoft, TD Bank, Sol Systems, CPP, and FSC programs helps Chestnut stand out in a crowded and often mistrusted carbon market.

Final take

Chestnut sits among the most heavily financed, bankable players in the nature‑based removals space, with a capital stack designed to support long‑lived, large‑scale forest restoration assets. That said, NbS credits remain exposed to macro debates about permanence and forest fire risk. Chestnut Carbon’s defensibility is strong within the nature-based removals space but still depends on broader market acceptance of forest removals.