Hey — It’s Nico.

Welcome to another Failory edition. This issue takes 5 minutes to read. If you only have one, check this:

• Nori, a voluntary carbon marketplace, shut down — find out why below.

• Andrew Chen published an article on why consumer apps are going vertical.

• a16z published a framework to optimize freemium business models.

• Glean secured $260M to grow its AI work platform.

• AI is becoming a key sales channel for many businesses—here’s what you can do about it.

This issue is brought to you by Intercom’s Startup Program — get 12 months for free.

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This Week In Startups

🔗 Resources

Guide to transitioning from founder-led sales to hiring your first sales manager. 

How to increase your sales pipeline in 2024.

Six popular growth tactics that don’t work.

Andrew Chen explains why future consumer apps are going vertical.

The 3 biggest freemium challenges and how to solve them.

📰 News

Sequoia Capital completes $861M Stripe share purchase.

Atomico raises $1.24B to support late-stage European startups.

Progress acquires file management software ShareFile for $875M.

Bending Spoons to cut 75% of WeTransfer staff after acquisition.

Alpha Partners raises $153M for third pro-rata investment fund.

💸 Fundraising

Glean secures $260M to grow its AI work platform.

Bookkeeping startup Finally secures $200M as AI boosts enterprise fintech.

French startup Neat raises $55M to offer embedded insurance products.

Mintlify raises $18.5M for its next-gen software documentation platform.

Fail(St)ory

Carbon Removal, Still Struggling

This week, Nori, the carbon marketplace, officially announced its closure, marking the second major shutdown in the carbon removal space in just a few months. 

CEO Matt Trudeau pointed to the same challenges we’ve seen across the industry: a stagnant Voluntary Carbon Market (VCM) and a tough funding environment.

If this sounds familiar, it’s because we’ve been here before. Remember Running Tide? Their shutdown followed a similar path, and Nori’s closure only adds to the growing list of companies struggling to survive in this space.

As the carbon removal market faces mounting pressure, it’s clear that these aren’t isolated cases—they’re part of a broader trend shaping the future of climate tech.

What Was It: Founded in 2017, Nori aimed to bridge the gap between carbon emitters and those who could capture carbon naturally, primarily farmers.

Through its platform, farmers could sell carbon credits to companies and individuals, with a focus on practices like avoiding tilling and planting cover crops—methods proven to absorb CO2 from the atmosphere.

Nori stood out from typical carbon credit companies. Rather than selling promises of future reductions, Nori focused on credits representing real emissions that had already been pulled from the atmosphere through regenerative agriculture.

Nori sold the Regenerative Tonne, each representing one tonne of CO2 removed and stored for at least 10 years. These credits were generated by agricultural projects that used sustainable farming practices to store carbon in the soil.

The Numbers:

• 📅 Founded in 2017.

• 💰 Raised $17.25M in funding.

• 🌱 Supported over 400,000 acres of farmland.

• 🏢 More than 40 employees.

Reasons For Failure:

• Weak Demand: Just like Running Tide, Nori found themselves stuck in a market where the demand for carbon credits wasn’t growing fast enough. The VCM has been slow to take off, with only a few big players like Microsoft consistently buying. That leaves startups like Nori without enough customers to scale.

• Funding Struggles: Despite raising $17.25M, Nori needed more to keep growing. The current funding environment for climate tech is tough, especially for companies working in an area like carbon credits, where investors still aren’t fully convinced about the return on investment.

• Regulatory Uncertainty: The carbon credit market is highly dependent on government policies and regulations, which are still evolving. Without clear regulatory frameworks, many companies were hesitant to invest in carbon credits, making it hard for Nori to secure consistent revenue streams.

Why It Matters:

• Market Growth Concerns: Nori’s failure signals deeper issues within the carbon removal industry, where demand is growing slower than anticipated. For companies and individuals investing in carbon removal, this raises questions about the industry's future stability.

• Climate Goals at Risk: The closure of a company like Nori highlights the difficulty in scaling solutions that are critical to meeting global climate goals. 

• Investor Confidence: The shutdown of another high-profile climate tech company could shake investor confidence in the sector. For startups relying on venture capital to grow, this trend could make it even harder to raise the funds needed to innovate and expand.

• Public Perception: Nori’s closure may further fuel skepticism about the effectiveness of carbon credits, especially as the industry continues to face criticism over transparency and impact. This is a challenge the carbon market will have to address to rebuild trust.

Trend

AI-Driven Sales 

This weekend, I was planning a trip to Yosemite.

To do so, I asked ChatGPT a series of questions. The first one was where to stay. GPT send me a list of options; I analyzed them and booked the first one.

Then, I needed to rent a car, so I asked ChatGPT again. It suggested Turo, which led me to create an account, browse local listings, and secure my ride.

And just like that, I made two purchases from two businesses I hadn’t previously known about, thanks to ChatGPT.

Moments like this make it clear: LLMs are driving more and more sales, both for offline and online businesses.

Why It Matters:

• AI-driven sales: LLMs like ChatGPT are becoming a new sales channel, influencing consumer decisions in real-time.

• Optimization for AI: AIO is becoming a thing. Businesses are looking for ways to optimize their online presence so they become the top choice for AI models.

• Changing digital marketing: As businesses receive traffic and sales from AI recommendations, digital marketing will need to shift focus from traditional SEO to AI-friendly optimization.

• Personalized experiences: AI models are making shopping more personalized, offering businesses a chance to engage with consumers in a more targeted way.

AI Sales: The way I booked my trip this weekend was not a fluke. It’s a growing trend: AI models, like ChatGPT, are directly influencing consumer decisions. 

For businesses, this opens up a whole new sales channel. While traditional search engines like Google have long been the go-to for discovery, LLMs are now stepping in as the middleman, providing consumers with curated recommendations based on their specific needs.

More and more businesses are starting see sales coming directly from LLMs. Just take a look at this tweet from the founder of a startup specializing in WordPress plugins:

ChatGPT SEO: All of this means that there is a new type of SEO in town. In the future, optimizing your site for traditional search engines won’t be enough.

This is where new startups like Profound come into play. Profound’s goal is to help companies optimize their online presence to get recommended by AI systems. It’s no longer just about ranking high on Google. Now, businesses are scrambling to ensure that they’re the ones AI models mention when consumers ask for recommendations.

Profound’s recent $3.5M funding round shows just how serious this is becoming. They’re working on solutions that help companies understand how to get chosen by LLMs, such as ChatGPT and Perplexity. Think of it as the next evolution of SEO—optimizing not just for humans but for AI algorithms that act as a gatekeeper between consumers and businesses.

So, what do you think?

Help Me Improve Failory

That's all of this edition.

Cheers,

Nico