Climate-tech is more than just a buzz-worthy space in the startup ecosystem. Climate-tech is a vital force helping to protect our planet, one problem-solving technology at a time. One such trailblazing technology company dedicated to more than the hype is Avarni, an AI-powered and data-driven carbon accounting software, aimed at helping companies achieve their ambitious decarbonisation goals.
In this noble quest for our planet, a major problem has arisen. Large companies don’t know where to start or what to do to reach these important goals.
Avarni helps enterprise companies easily identify and measure their Scope 1-3 carbon emissions, and invites the company's suppliers to add theirs for free.
Zooming back out again:
Scope 1 = direct emissions
Scope 2 = indirect emissions and
Scope 3 = supply chain emissions
Avarni’s product provides a starting point, the roadmap and produces powerful forecasting reports to model future emissions reduction plans. Visibility, transparency and clarity for your business goals with regard to carbon emissions?
Check, check and check!
I was lucky enough to sit down with the Co-CEOs (and Co-Founder pair) Misha Cajic and Anuj Paudel to chat about being problem solvers, their long friendship and how Avarni sets itself ahead and apart from other players in the space.
A force for change
As we shared above, Avarni helps companies track and manage their carbon emissions. The second, more important piece is that Avarni helps these companies actually mobilise their suppliers (typically connected to Scope 3 emissions) to help decarbonise. For those who enjoy business books, it’s a decarbonisation network effect flywheel - a very powerful combination.
This combination has allowed Avarni to develop its niche. The founders share an unwavering belief that the first goal is to help their customers understand where to focus. For Avarni’s customers, it’s a very daunting but worthy task to try and get your entire supply chain down to net zero. Put simply, Avarni's customers don’t know what they don’t know.
Avarni sets out to help customers understand which 5% in their supply chain create 95% of emissions allowing a focus to be rallied around. Unfortunately, just identifying that huge piece proves challenging for many companies. They don’t know where to begin. They worry their suppliers won’t listen to them. Enter Avarni (again).
Once a focus area Avarni sets out to help these larger emitters (the suppliers) understand the gap between their current situation and net zero targets. Avarni’s ideal clients (enterprise companies) have already set targets within their supply chain, which is a great starting point.
Avarni guides customers to these initial understandings, then assists in prioritising and mobilising their customers’ suppliers by providing the tools to track their own emissions and manage their own carbon reduction initiatives. Avarni teaches these companies and their supply chain how to fish.
A trusted partnership from day one
The founders, who categorise themselves as problem solvers at heart, have been friends since high school. Avarni isn't even the first company which they’ve started together…
Misha and Anuj were in the same year in high school, in multimedia class they shared their love of building something new, and have collaborated on various projects well before Avarni or even their first company, Air-Shuffler (an aviation app that allows you to monitor your flight time in the palm of your hand), came to life.
When deciding what problem to work on (in what became Avarni), the pair knew they wanted to focus on a problem that was compelling, and something that they could add their technical skill sets to (both Paude and Cajic are developers). The sustainable space proved a compelling and worthy problem space and they iterated immensely over what made sense for them to build. These iterations included a carbon reduction card concept, but they ultimately pivoted towards a more enterprise-focused approach, driven by the demand for addressing supply chain decarbonisation. This evolution defines Avarni's current stage.
A perfect storm for builders
Engineers notoriously love solving problems and upgrading manual (dare we say archaic) processes. Paude and Cajic are no different. They approached climate-tech initially through curiosity, seeing the sheer number of problems needing to be solved was an irresistible itch they needed to scratch.
Once Avarni came to fruition, the pair dug deep with extensive research into what was already available in the market. They were primarily influenced by increasing demand and strides in the sustainable space in Europe. Their inception point was around the intersection of demand and interest for Avarni and that allowed them to identify the first part of the problem to focus on.
On top of automation, the development of AI for data science purposes allowed the Avarni team to go to market within about six months and secure their first paying customer.
From there the pair accidentally found themselves surrounded by advisers and people that were interested in what they were doing.
“They were saying wow, you guys are tackling the hardest problems in this space. Good on you in real life.”
Startup 101 typically includes defining your ICP (ideal customer profile). Part of Avarni’s success has been its dedication to serving customers. Avarni has pinpointed the niche of companies with complex supply chains, a desire to be greener but whose emission comes from upstream suppliers.
This has excluded oil, gas and energy companies, but they’ve found a niche in hospitality, consumer goods, and government as well (which is particularly evident in their partnership with the City of London mentioned above).
Misha Cajic shares, “If you look at historically the types of customers we're going for, and what's in our pipeline right now, we're very much aiming for large enterprise complex supply chains. They're generally the ones that are going to get the most value out of this, because they've got so many different stakeholders to report to. They're the ones that real pressure is on with the financial incentive to get on top of this growing problem.”
One step ahead
Avarni has a strategic advantage of staying slightly ahead of its customers through a focus on key capabilities. They've invested heavily in automating and optimising measurement, management, auditing, and reporting processes. Early efforts in supplier enablement and mobilisation anticipate customer needs as they streamline their operations. As customers mature in using Avarni, the platform will increasingly support their supplier collaborations.
It’s all about focus
In a space where there are so many different areas to focus on, ideas to validate and problems to solve, Avarni’s leaders credit their success and differentiation from other big players to focus. Focus specifically on supply mobilisation. This focus stems from their belief that as nice as it is for companies to report on their emissions and collect data from their suppliers, real change and success will only happen if these suppliers are also decarbonised. One thing is clear, Avarni and its software is not just a box ticking exercise - they want to make real change..
This means that Avarni has invested heavily into making their product optimised for the user-experience, particularly for the suppliers. This investment ensures that Avarni is bringing significant value to these suppliers and positions them to actually decarbonise.
California legislation dreaming
Part of the Avarni team recently travelled to the US. The goal of the trip was to work in the same timezone as their customer success team (Avarni’s Head of Customer Success lives in Phoenix, Arizona and the majority of their customers are in the US) and also visit some key customers and channel partners.
The amount of customers they’ve partnered within the US already is not terribly surprising, considering California recently mandated their scope for emissions reporting, specifically for enterprises. I was curious about their takeaways, both from the trip and from working with different companies in different countries with different legislation.
The TLDR was that US companies proved to move faster than expected, particularly towards supply mobilisation, and a willingness to work directly with their suppliers to decarbonise. The Avarni team admittedly expected it would’ve taken a little longer for companies to operationalise this measurement piece, but the US companies they spoke with indicated wanting to do everything all at once! These companies have recognised decarbonisation as an important initiative and have accelerated how quickly they want to begin engaging with their supply chain and offering incentives for early adopters and also penalties if the suppliers don't get on top of it.
What does this mean for Australia, a market which has historically followed the US legislation? They hope and believe that if this issue continues to be important to the US it will find itself at the forefront of importance here in Australia as well.
A sequence of events
You may have read that Avarni raised AU$3 million with deep tech VC titan Main Sequence (along with a host of other investors). This is a massive accomplishment for the co-founding pair. And now that the raise is over and the cheque has cleared, the topic of capital allocation rears its head.
The first priority is clear, investing into Avarni’s product offering to be the best in market for the problem they solve. This makes perfect sense with two technical co-founders who agree Avarni is a product-led company.
After that the pair will focus on attracting top talent in terms of engineering and design to add to their team. You can almost hear the sweet sound of resumes being sent over right now.
“Our vision is to have companies come to us and say you're the reason we were able to hit our net zero targets, and you're the reason that our suppliers were able to understand and buy into this problem.”
A call to action to be conscious
The Avarni co-founders added at the end of this interview their hope for more people to be more conscious about this problem and understand the seriousness of it by acknowledging how much action must be taken. It’s too easy to push off decarbonisation efforts and say, it’s a 2030 or 2035 problem. It's very clear to see the real effects of what's going on with climate change today. There's been record heat waves, here in Australia back in September as one clear example. None of that's normal.
Misha Cajic also shared, “I’d like to send a message out to people that this is the right problem to be focused on solving. And there needs to be a lot of energy directed towards this, mostly collaborative energy, which is why the supply chain side is so important. You can't just focus on your own emissions, you need to collaborate with buyers, you need to collaborate with people. It's a joint effort.”
Noble parting words indeed. I for one can’t wait to see the strides this impressive duo, technology and company make to positively change our world.
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