When Melbourne City played Adelaide United recently, Etihad Airways’ displayed a digital ad on the stands reading “net zero emissions by 2050”.

The fact their Sustainability Report actually forecasted the opposite – a 1 million tonne emission increase by 2026 got the ad reported to the ACCC. 

Everyone’s jumped on the carbon neutral, net zero bandwagons, setting targets before they’ve defined how they’ll meet them. And now they’re getting sued. 

Time’s up for greenwashers. And if whistleblowers don’t get you, policymakers will. The ACCC’s first greenwashing sting operation implicated 57% of businesses in misleading claims. 

ASIC has lodged proceedings against Mercer Superannuation and Vanguard, whose “Ethically Conscious” bond allegedly exposed investors’ funds to fracking, petrochemicals, and the Abu Dhabi crude oil pipeline. Yikes. 

Carbon reporting is officially as important as paying taxes. It’s a global hammerfall - with every business, staffed by 1 person or 100,000 - sitting underneath it.

Australia’s 2 million SMBs will soon have the same accountability as Etihad, but without the big CSR budgets. 

NetNada co-founder Lochie says: 

“They want to do the right thing, but with ESG consultant fees hitting $100k, they’re priced out. Offsetting carbon, cleaning up supply chains, and searching for green solutions amidst the greenwashing is a minefield.”

NetNada is offering them “carbon footprint measurement the way you’d hope it would be”. 

It’s an AI sustainability compliance platform designed to be affordable and understandable for smaller businesses, and sophisticated enough for massive enterprise supply chains, mapping their environmental impacts with 100% accuracy. 

The machine learning software assesses emissions, consumption, and waste, measures your direct, indirect, and supply chain impacts (in technical speak that’s Scope 1, 2, and 3 emissions), and suggests both remedial action and dollar savings - in days, not months. 

And it’ll save you getting dobbed in by ASIC.

(Re)meet the founders

We knew the NetNada team had something that would become essential for Australia’s green future. 

But huge legislative shifts have since made their timing even more bang on.

Lochie and Afonso both brought previous founding experience to the table. Lochie had scaled a drone startup (JAR Aerospace) to a $20m valuation. Environmental engineer/software developer Afonso had launched companies in software, AI, and e-commerce. 

Their knowhow, dynamism, and grant-funded fledgling MVP had netted them a few paying customers. But small contract values and SMB-focused positioning were making growth an uphill climb.

Why we (re)invested

We believed NetNada was ready to corner their market because it wasn’t pivoting, reacting, or adapting to this huge global shift - it’s been a carbon accounting platform from its inception, with compliance in its DNA. 

It’s been ready for this regulatory hammerfall since our first investment in August 2022. Since then, the guys have earned deep knowledge, high customer trust, and big enterprise credibility, while adding an easy to use suite of AI features as the cherry on top. 

And they’re at the thin end of a big wedge. Social Impact analysis will soon play a huge role in global seachanges - which NetNada can seamlessly integrate into its software.

It’s a huge burden of responsibility made easy - something no competitors are currently offering.

Last year, NetNada cut over 170,000 tonnes of CO2 emissions. And they're set to increase that dramatically in 2024.

Deploying more capital is always part of our plan (not just our sales pitch). So once we'd helped validate the model, got the growth engine humming, and put PMF in clear sight, we followed our initial investment with a second round in November 2023.

How we helped

SMBs had the most urgent problem and were easier to approach than big-budget corporates. 

But it was a time-consuming, high-touch process yielding low-$100s subscription deals. 

The team didn’t want to leave small businesses behind. So we helped them to refine and automate the SMB sales funnel and onboarding. 

Identifying and actioning the biggest possible impact as quickly as possible, we helped free up NetNada’s time to go after bigger enterprise fish, creating a hybrid GTM motion, and putting $100K+ ACV in the company’s focus.

With our support, NetNada did the hard yards - pouring hours into bringing on bigger clients, seeking revenue expansion opportunities, and massively leveraging and maximising revenue within the existing customer base.

They spoke with dozens of industry pros to understand their struggle, minimise servicing, and decarbonise entire supply chains. Thanks to their utter dedication to customer success, customer churn now sits at >1%.

How (exactly) we helped

Breaking down our contribution beyond the cash into essential categories:

Value proposition and narrative

Then: The huge task of educating customers around both the product and the nature of carbon accounting.

Now: A clear value proposition for key customer segments, better education, and better messaging.

The team identified that customers needed more transparency on the process, more education on carbon accounting at large, and help with bringing the entire team on the journey (essential to outcomes).

Over several whiteboarding sessions, the core pieces fell into place – clarity of purpose, refined website messaging, and effective customer messaging for SMB and Enterprise.

GTM

Then: No clear GTM strategy for SMBs, or method of unlocking business within enterprise clients’ supply chains.

Now: Growing SMB community, 'supply chain acquisition' strategy firing on all cylinders, and increased data accuracy from the AI’s global memory (NetNada’s “brain” affectionately known as Nettie).

The team always knew that network effects would play a huge role in not only client growth, but accuracy of data to feed Nettie. Via their supply chain acquisition strategy, an onboarded client is issued a platform licence that they can offer everyone in their own supply chain. 

This didn’t just mean more accurate reporting, but a force multiplier for new clients as the network effect kicks in.

On the lower end of the market, the team knew that to make emissions part of a small business’ day-to-day, they had to start with educating them on the whole point of it. 

So to grow their SME customer base, they built a Sustainability Hub covering policy, greenwashing, and industry advances, and built community and credibility using webinars, panels, and thought leadership.

We also encouraged NetNada to blow their addressable market expectations wide open. Other GTM initiatives included:

• A channel partner strategy: Working with accountants, professional services firms, and solar providers who in turn sell the product into their own clients.‍
• Event Emissions Calculator: A marketing tool for reporting event emissions and publishing estimates on social media, gaining NetNada clients (e.g. Merivale).
• Analysing sporting events: Gaining 30 seconds of big screen exposure at each of the Melbourne Rebels’ AAMI park games.
• Music and tours: Analysis and exposure of all Robbie Williams concerts in his current world tour, as well as Laneway Festival (Sydney, Melbourne, Perth, Adelaide, and Brisbane).
  

NetNada clients now include: NSW Government, ZIP, CBRE, Melbourne Rebels, ASI and ICC.

Data and AI

Then: Manual accounting and data extraction (CSV exports), incomplete Scope 3 capability leading to slightly fuzzy data, and no clear AI strategy.

Now: Full scope, 100% accurate analysis, an AI-driven vectorised database of emissions data, a chatbot on top of emissions and sustainability data, and a solutions recommendation engine.

Early on, NetNada didn't have enough data to go beyond "best guess" analysis.

With over 65,000 businesses analysed and 20 additional data collection formats, Nettie’s exponentially growing knowledge has de-fuzzed the data.

In Afonso’s words:

“The first step to reducing your carbon footprint is understanding how big the shoe is. Our focus is on making complex and opaque data clear and actionable, so business owners can self-regulate.”

Team 

Then: A team of 2 (highly capable) founders.

‍Now: A growing outfit with a data analyst, lead engineer, full stack developer, AI developer, head of growth, and business development manager.

Lochie and Afonso have been nominated for the Australia Young Entrepreneur Award 2023, and NetNada has been selected as part of the Global Growth Program by Investment NSW and AusTrade. 

Financial discipline 

Then: A bit of shaky hiring with team roles filled and then vacated again, and Series A spending on a seed budget.

Now: A lean operation, strategic part-time/casual hiring, bringing employees on the journey (a great strength of the founders), and transitioning them to full time after our second round. 

Lochie and Afonso lead a high performing, lean team (3 part time, 4 full time), using new funding to make new hires and upgrade existing hires to full time. 

And like all our founders, they got really good at cash flow forecasting.

International strategy

Then: A handful of Aussie customers.

Now: A plan of attack for global expansion.

Lochie has already spent time laying groundwork in the UK, where regulation is further ahead than in Australia.

“There’s more pressure on businesses, there's more customer demand for environmental services, and the uptake would be faster than in Australia. So we have goals to be more aggressive in the UK and the EU.” 

What’s next for NetNada?

The next phase of growth will be fueled by:

• Further optimising SMB onboarding (reducing time and cost to onboard)
• Recruiting a Customer Hero to keep that churn sub zero
• 10x-ing the 170,000 tonnes of CO2 emissions saved in 2023
• Regulatory tailwinds for 2024 that make this a ‘once in a decade’ market opportunity.

Disclosures will soon be mandatory for large, listed businesses and financial institutions. And that will only continue down the chain in the years to come.

The Australian Treasury is currently deciding whether “large private businesses” (100+ employees, $50 million+ revenue, $25 million+ assets) should be included (which, with those numbers, they should be – and most likely will be). Lochie says:

“Carbon neutrality is no longer a nice-to-have but a licence to operate. 80% of the ASX50 is already disclosing scope 3 emissions. NetNada was ahead of the starting gun and is now quite a way past competitors at procurement stage.”

We believe that it's no longer if but when every business in Australia will be obligated to report on their own emissions. NetNada is here to make that quick, easy and affordable.

The work continues

When we match founders with members of the Skalata team, we're always looking for complimentary skillsets – and what is needed at each particular phase of the business. Afonso and Lochie are currently working closely with both Tuong and Shahirah. Shah says:

“Lochie’s experience as a second time founder is clear in his leadership of sales, product, and team - as is his occasional rejection of my advice, which I’ve come to enjoy as Lochie equally admits his gaps!” 

Confidence and coachability - our favourite combo in founders. 

We’ve worked with the guys to get the product solid and the pitch down to a fine art. We’ll continue working closely with them in 2024 as new challenges emerge on their path towards Series A… and we won’t mind seeing corporate greenwashers get brought to heel in the process.

In Lochie’s words:

“The carrot of sustainability has existed for a while, but beware of the stick!”