[Raised $7 million] Ep.134 - The First 100 with Chris Slater, co-founder of Oka | B2B2C Outreach | Carbon Market

Chris Slater is the co-founder and CEO of Oka, a Carbon Insurance company that is de-risking the voluntary carbon market (VCM) for buyers and sellers of carbon credits. Its first-of-its-kind carbon insurance solution provides buyers with financial compensation for unforeseeable and unavoidable post-issuance risks, including reversal and invalidation. Oka has now raised $7 million since its inception from Aquiline Technology Growth.

The voluntary carbon market (VCM) is experiencing significant growth and is projected to reach $1 trillion by 2037, highlighting the scale of the opportunity. Oka, The Carbon Insurance Company, is currently focused on providing insurance that will replace credits if destroyed or invalid, providing security and confidence to the VCM market. 

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Transcript

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Let's do it. Let's do it Broadcasting from around the world you're listening to the first 100 a podcast on how founders acquired their first 100 paying customers Here's your host Hadi Rod one Good to have you on the show, Chris. How are you doing today? Very good, Hadi. Good to be here. Thank you for joining the show. You have a unique company in the insurance space. It's called OCCA. It's the carbon insurance that's trying to de-risk the voluntary carbon market between sellers and buyers. And you're one of the first of your kind because the market is going to be very huge. and you're at the forefront trying to bring insurance to this market. You've raised today 7 million from notable investors like Aqualine Technology Growth. Take us to the top, Chris, why carbon and insurance? It's a very unique combination. Yeah, it's a great question, Hadi, and it's a glaring emission, really, as part of the capital stack in the carbon market. I started exploring the carbon market at the start of 22 and in talking to predominantly large corporates who were participating in the market. It's a voluntary market. And in participating, there was lots of risk in that conversation. They were talking about the investment risk of sourcing projects. They were talking about the reputational risks of participating in a market, which certainly through the last 12 months has been under some fair scrutiny. So there was this concept of risk that existed in the market. But as I looked across the ecosystem, there was no insurance solutions that existed. So really the birth of OCCA at the start of last year, 2023, was to deliver a full stack insurance carrier into the carbon markets, voluntary carbon market at first, and then really focused on trying to protect buyers, create liquidity in the market. And as in any other efficient, mature, developed market, insurance plays a critical role. And we're really here to help create some of that confidence that's required to. continue it to scale. I mean, I've read somewhere that voluntary carbon market is going to be experiencing a lot of growth projected to be one trillion and twenty thirty seven, which positions you guys at the forefront. But for those who are unfamiliar with what carbon insurance is, if you can give us like a master class version of what it is, how it works, who needs it and why do they actually need it? Yeah, good question. So let's take a step back and explain what the... the carbon market is first of all. Now the carbon market is, the voluntary one has been around for about 20 years and there's many compliance markets as well. But the market's effectively there to allow buyers to offset emissions that they can't reduce. So as you think about large corporates who are setting goals to reach net zero, they're rolling through decarbonization plans within their businesses, but ultimately they're ending up with unabated emissions, you know, negative. pollutants effectively and the carbon market gives corporates the ability to go in and Purchase credits to offset against those emissions each credit should equal a ton of carbon and that's the fundamental Concept that exists and really where as we get into the insurance solution What we're trying to do is ensure that credit equals a ton of carbon Now that credit is linked to a variety of different projects. So Many of your listeners will be the first place they'll go to with things like reforestation, planting trees, that effectively a project that over the course of time will sequest carbon out of the atmosphere and store it in the ground. But there's a whole variety, there's about 130 different types of carbon projects ranging from reforestation, afforestation, but through to blue carbon, mangrove, and then some of the more technology and engineered solutions that are really exciting in the space, the sort of start of their journey. but exciting because of the scale of the opportunity that they bring in terms of sucking carbon out in the atmosphere and then ultimately getting us to meet the global climate goals of getting GERBELA at 1.5 degree temperature rise. So when thinking about therefore insurance, what carbon insurance can do is provide coverage against a whole host of risks that exists around a project. And again, very crudely, I'll bifurcate those risks into both pre-issuance risks and post-issuance risks. So on the pre-issuance side, this is let's take a reforestation project. The project needs to be funded, you know, an area of land that's gonna be turned from arable farming into forest. They need to plant the trees, they need to run those operations, they need to ensure that ultimately those seedlings grow and start to sequester carbon. There's a whole host of risks that exists around that project, both by virtue of the location it's in, by virtue of the climate risks that may exist, all the way through to... ultimately delivering credits into the market. So there's those pre-delivery risks, that's the start. And then there's a whole host of risks that exist after the credits have been issued. So the project will go through a registration process with a national body or international body and those credits will then be approved, a methodology applied that says that credit equals a ton and that corporate can now buy that credit. Our product, and this is our sort of formative product, really embeds insurance around that credit at the point of sale to protects the credit. So if something happens to the underlying project or indeed the methodology has been incorrectly applied, or there's issues at a local level around the project, which invalidates or impairs the value of that credit. We still want to make sure that the corporate who's bought the credit can stand behind the claims that they're making and indeed the disclosures that are going to come into the market. So that's a sort of one-on-one in terms of the carbon market and where. insurance can play a role and we can maybe get into some of the technicalities of some of that. Amazing, that was very, very helpful. You mentioned it's a voluntary market, so at the beginning, you're actually, probably the demand is much lower than the supply, so you're trying to create or generate demand, which also requires some education. How are you navigating that space? Because it's still voluntary, it's not like car insurance where it's mandatory to buy insurance, so the demand is higher, everyone... goes to these insurance companies. In your case, it's the other way around. Yes, yeah, no, it's a challenge, building a new product into a completely new market. Whilst the market's been around for 20 years, it's really only in the last couple of years that it's really started to scale. And the way that we're going about doing that is really through our go-to market. So our distribution of our product is through a couple of different go-to market channels. Ultimately, the end buyer of the insurance, the people paying for the risk as the corporates. but we're going through a couple of channels. One is this concept of risk sits within the corporate's risk office. So, you know, risk officer, as with any other asset that sits on their balance sheet, is looking at the credits that they're buying and going, can we protect them? So, you know, we're working through insurance brokers, our own internal broker that we built, really to help sell in and create an understanding in the risk parts of the organization around how can you protect those credits. So that's one channel. And then there's the second go-to-market channel, which is really within the carbon market. And this is where I'm most excited because I think if you, I draw quite often parallels with other bond markets or warranties around products. If we embed the insurance at the point of sale of the credit, when the sustainability teams are assessing projects and choosing to purchase credits in a particular project type or particular region, if they're purchasing the insurance with the credit, then ultimately it flows through. And we built the product in a quite sophisticated way that the insurance will travel with the credit. So even if the credits are often acquired to speculation sometimes by a trading desk or they might be bought by a broker and sold onto the corporate. So there might be a couple of different parties. Our insurance travels with the credit. So ultimately you embed it when the developer sells the credits into the market, it can then go on there. And therefore you've sort of approached and attacking the market in two ways. Ultimately, the corporate from a sustainability standpoint is going, I can stand behind my claims and then the risk finance and audit teams are going, our asset is protected and therefore you sort of come in at the market in a couple of different routes. But separately in the part that's my most excited by is, is we're embedding insurance at point of sale. So really as the developers sell credits into the market, they can give confidence to buyers and give a signal of the quality of their projects by virtue of the credit being insured. very similar to if you look at warranty on a vehicle or maybe more parallel with them, with sort of bonds, investment bonds where insurance gets wrapped around the bond. We built our products in a sophisticated way that effectively the insurance travels with the credit. So the developer can sell the credit to an intermediary who can then sell it to the corporate buyer. And therefore the sustainability teams get the reassurance that the investments that they're making to meet their net zero goals are also made. So you're sort of coming at them with the corporates through both the risk lens, as well as a sustainability lens. Makes a lot of sense. And do you remember your first client? Who was them? How did you get them? How did you convince them to buy the first product? And how long was the sales cycle in general? Yeah, we're fresh into market. So we did our seed round back in January last year. And as a regulated entity with a Lloyds Syndicate here in the UK and a licensed US agency, we got all those approvals through the one want to the first of January this year. very soon after they made our first sale. So really we were waiting for both you and I are in the market, you understand, building a regulated entity that's capitalized needs to go through the sort of robust governance mechanisms. But having done that, yeah, we're delighted that we've now made that first sale and that can really be the catalyst for scaling the business. It's actually a partnership that we've been working with for a number of months. There were large scale intermediary in the market, providing developers toolkit. to allow them to manage their inventory, sell credits, and here with this insurance product, giving them the opportunity to ensure projects and credits that they're then selling into corporates that they work with. What has been the most challenging part in building your insurtech so far? That's a good question, Hadi. I mean, the most challenging, we're building a product that's never been built before. So if you think about that from an insurance standpoint, we haven't got 40 years of accident data. to do actuarial modeling on what is the expected claims. And this isn't a new technology approach, or it isn't like a new gizmo, or a new way of distributing an existing product. This is a completely new product into a market that has risk in all the variety of lenses that I've described. So really the biggest challenge over the last 18 months is thinking through, well, what data... can we look at what are the proxy factors and how do we build a unique and what we believe is a one of its kind fairly sophisticated risk model to look at each project and go, okay, for that credit, this is the price that we're willing to charge. And you know, as well as I, as an entrepreneur, you go through all that work, you build a sophisticated model. And then really it's until you get that first customer telling you that the price is right or there or there about, you're never quite sure whether all that work has been. has been to good effect. How does demand meet supply and have you got it right? So really the biggest challenge has been the modeling of the pricing. And as I say to everyone, including various capital providers, it won't be perfect. But the way that we've built it allows us to continue to iterate. And what I want to start to see is, be perversely for any short-term business, I want to start to see claims data come through. We need claims to validate that the product has value. And we need claims to start to train those models to refine the pricing and continue to differentiate ourselves against what will inevitably be competition that will come into this space. I mean, it's a double-edged sword, right? Because in principle, insurers want to have the lowest loss ratio possible, but also because it's a new product where you need to iterate and make sure that the risk coverage are correct. You still need the claims data. So it's a really difficult position you guys are in. How would you convince in that case buying their providers that, well, we need claims to make it better. And at the same time, they want to make sure the loss ratio is low. Yeah, I mean, that's been a fascinating journey. You know, in building our own Lloyd's Syndicate, in fact, what's helped is we're putting our own capital at risk. So we're saying, okay, you know, whilst we're not taking all the risk, we are putting our own capital, so we're putting our own beliefs into needing to make sure that from an underwriting standpoint, this product works and it's economic. But I think what's clear from all the conversations I've had, whether that's going through the approval process with Lloyd's, whether it's the reinsurance program that we've put in with some incredibly supportive partners behind us, it's about, this is the start of a journey. This market, as you described at the onset, is gonna be a significant market. And therefore, for us to have an impact, what you need is you need to build a flexible capital stack with a variety of partners that see both the... growth opportunity and recognize there's going to be some bumps in the road. And you can contain some of that. Again, you'll know, you know, from a product perspective, making sure that the line limits are reasonable, making sure that the systemic risk is managed as effectively as you can do, making sure that sort of one in 200 event is not one that you, you're looking to pick up. So really it's you marshaling the resources outside of the organization and then building supported partners. And look, I think because of my experience having built one of the first insure techs in Simply Business, 2004, 2005. I've got a long history, I guess, in the insurance market. And I think sometimes that reputation helps in terms of building trust. People know that I built a business previously that certainly within its own MGA, it was always about making sure that we delivered strong underwriting results, both for our own internal MGA as well for the 20 insurance partners we worked with. So hopefully that reputation has helped us help through. My second question to you is, what's your sales philosophy as a new startup? Are you more a founder led salesperson at the beginning or would you rather focus to be the person who's visionary and building everything and then hiring someone specific for distribution? That's a fascinating question. I got a pretty firm view on this is that I think any new business, the founder needs to be selling. It might feel uncomfortable, whether they're a tech led founder or they're a visionary entrepreneur, or they're deeply embedded on the insurance side. I think when you're especially selling a new product as we are, and we're doing B2B2C, you know, you've got to be spending the majority of your time on sales, however good the sales team that you build around you as well. And the reason why I say that, Hadi, is it's all about for me, the learning cycles. In a startup, it's around how quickly can you get learning back into the organization around your product and your product market fit. And if you're not the one on the front line in those conversations, listening, hearing, looking for the cues, striking the commercial deals, if you're detached from that in any way, I think that learning cycle becomes too slow and your ability to build a fast growth business is limited. So I'm an introvert naturally at heart, so it doesn't come naturally to me. It's something you've got to do as a founder. Absolutely. That makes a lot of sense. And you're not a first time founder. As you mentioned, you've co-founded a couple of other companies. What are things that you had to unlearn or not bring with you from your old startups, things that you've learned the hard way and you're trying to avoid here? There's loads. One very practical example is I think building a business today, the need for resource and the need for people. You can just do so much more with with so few, or much less sort of people around you. So I think the mistakes in the past around investing ahead of where you're at, keeping the team lean, hiring for quality over volume, I think has been really important. And, you know, really I've got a team here, there's only eight of us, but you know, we've been able to build a full stack insurance carrier within 12 months, a new product. And if I look back at some of my experience, both at Simply Business in the early days, but also trying to build a private equity fund, just invested too much thinking it was all about team, it was all about growing resources and getting people around you. I just don't think you need to do that today. Technology is a good example. At Simply Business, we built our entire policy administration platform ourselves. I think when I left in 2017, we had 130 person development team here. I built a full policy admin for an insurance carrier and agency with two people and some third party tech. And actually the two people that built it are sort of part-time engineers or data people. So I think just the, your mindset in terms of how to build a business is very different today to where it was in 2004, 2005, you know, I had to unlearn some of that, okay, how do you think about building some of the infrastructure and some of the business? I've also just, you know, I think. lessons from the past around focus and product. I think the natural tendency for startups to build multiple products, try to solve multiple problems. And again, as I go back to my early Simply Business days, you know, we were solving a whole range of things for small businesses, from loans to asset finance, to invoice finance, to insurance, like it was a whole basket of things. We'd have grown much quicker if we focused in on one product. validated and grown and scaled that. And it's always the temptation for a startup is about, okay, well maybe we should go and serve another customer or iterate the product in a different way. And here, I'm going, no, you push this product, you validate this product, you grow this product. And even once this product has got 10% market share, then it's maybe about getting it to 20% market share for its first couple of incarnations of the business. I mean, you nailed it right there. When startups, they raise quite... a big sum of money, they get excited, they have a business plan, they want to go execute it and you start hiring more talent. And what happens is if something goes wrong and it will go as in any startup, you tend to have more people than you originally needed. And this is where someone experienced having done multiple companies understand that lean is better. It's slower at the beginning, but it's better, it's more controlled. So thank you for that advice. Is there a principle that you live by that has served you well on your entrepreneurial journey? I mean, two things really, which is one, surrounding yourself with incredible talent. And that's been true for my entire journey, looking for diverse viewpoints. Culture is incredibly important for me. The element of building openness, transparency, it is ultimately all about feedback and learning. That's in a startup's journey is how do you quicken that cycle. Take that lessons and learning on and how do you keep iterating and responding to what you're hearing in the market, as well as keeping an eye on that long-term vision. So one principle is always around a talent. Make sure you spend your time as a founder, really focusing on, have you got the right people in the right place? Hiring for T-shaped individuals. So I describe this, you know, technical expertise, but with general experience. So. Ideally, they've got startup experience. Ideally, they've got insurance startup experience. I think quite often, again, for insurance specifically, I've seen many startups hire lots of people from outside of the industry thinking that that's attractive because they're gonna change the industry in some way and not pay attention to the need to understand this domain, which is complex and difficult and challenging as it's so language, as many do. So I think one principle is really about the team and what you hire for. And then the second principle for me is about failure and recognizing and the sort of lean startup principles that Eric Ries brought in, the Simply Business we adopted almost religiously. I'd say we're not quite as religious with them in our own business today, but there's certainly some of those guardrails and principles around making mistakes, doing reviews, looking at retros of all aspects of the business. And that really creates an environment for people to trust the fact that they can equally make mistakes. It is an imperfect journey building a startup and therefore, if you can't have an environment where you can look at those mistakes, learn from them and grow from them, constantly figure it out, people issues or organization or product issues. You just got to try and create that arena really for people to succeed. Who has been the most influential person in your life? Oh, that's a good one. Two people immediately jumped to mind. One of personal, one of maybe as an eldest son, it's always, maybe that's quite a common one, is my father. You know, it's not until later in life you realize the influence that your parents have on you, especially as a parent myself now, of three young kids. But he was a builder. You know, he was an engineer, built computer games, some of the very early ones, worked on some fairly complex engineering projects, UK, US. And I was the antithesis of that in terms of I wasn't interested in science necessarily. I wasn't interested in building cars like he was. So I sort of went away, left home and then disappeared and started building things, but just in a different way and building businesses, which I love. The reason why I've stepped back into entrepreneurial life and building Ocker is I just love building things, creating things out of nothing, getting them into market and seeing them land and succeed. And I think a lot of that influence has come from my father in terms of... desire to try and test and push the edges, albeit maybe in slightly different, in different fields. And then the second person that jumps to mind really is Jason Stockwood, who we brought in as to be CEO of Simply Business back in 2010, really at an inflection point for the organization in terms of how the business and ultimately the reason why it's scaled was his mindset around the potential for individuals and the potential that businesses could reach fed through into my own leadership style and how I think about inspiring the team to reach great things, but also creating, you know, there's some early stories I could share of, you know, he made it very clear early on, he had young kids, he's like, I'm leaving the office at five o'clock, I'm going back, I'm putting the kids to bed. I'll be back online later on if you need me at Surgeon. And I think as a leader, setting some of those principles into your business really early. just creates that, again, back to that sort of environment and culture that can really thrive. So he's inspired me from a leadership standpoint in terms of what it means to be a leader. The previous guest has left you a question and it says, what has been the most surprising thing on your journey and how did you navigate this? What has been the most surprising thing on my journey? I think the biggest surprise, and it's a really pleasant surprise actually on the journey here with Oka, has been how encouraging and open the carbon market constituents have been to. Everyone's here trying to ultimately solve a really big, thorny, one of the biggest existential crisis of our lives. And therefore the appetite and openness to collaborate, to coordinate is refreshing. Coming out of a couple, you know, private equity or coming out of building insurance into the small business space. where it's all about competition and wanting to do better and challenging. That's been hugely refreshing. What that's meant, Adi, is really leaning into that and thinking about, well, how can you both optimize for your own success, but ultimately optimize for the success of the market? And I think that's been one I've been standing still trying to figure out how best to do that. That's probably been the biggest challenge. Is there a question you would like to leave for the next cast of Business Questions that you're currently... navigating through or contemplating on its mind and you need advice on how to solve it. My question for the next guest would be, I was going to go on to sort of fundraising. If you had a choice, sometimes you don't have a choice, but if you had a choice, what would the ideal investor look like for you at the seed through to series A stage? Excellent question. It's very specific. Everyone on this call has raised some form of capital, so you'd get quite a good advice. One last question. What's next for Oka? I mean, aside from world domination, but actually less about world domination, actually. It's more about the legacy I want to leave with this business is the impacts that we can have on the carbon market. The carbon market is really at an inflection point, Hadi. It's either going to scale to that trillion dollars that you've described and make a meaningful impact. on reducing carbon in the atmosphere, or there's a likely risk it could also collapse upon itself. So what I want to do with Ocker is really bring insurance in to help move it much more towards option A rather than option B. And I see ourselves as a catalytic force. We can't do it ourselves. There needs to be other startups looking to enter the space. There needs to be significant insurance capital coming in from the large. insurers and reinsurance market. And therefore for us this year, we're currently closing our annex funding round. It's really about proving and validating and growing our product market fit with this first product. And ideally then looking to scale as quickly as we possibly can, because with the scale that we get, it also can deliver the impact that I want us to have on the market. Chris, this was an amazing and informative episode. Thank you for stopping by. How can people reach you and are you hiring? They can always reach me on LinkedIn, although I get deluged, so just be patient in my response rate time, but LinkedIn can email me at chris.slater at carboninsurance.co. And we're always on the lookout for talent. So whilst we're not actively hiring at the moment, I think it's always good to, you always need to be having conversations, back to one of my earlier points, it's all about the people you surround yourselves with. You never quite know when those conversations might lead to something exciting for both sides. So yeah, please do reach out. Amazing, we'll put all of these in the show notes. We wish you the best of luck on your carbon journey. Thank you so much for listening to the first 100. We hope it inspired you in your journey. If you're enjoying the podcast, please subscribe to our podcast on Apple iTunes, Stitcher, Google Play, or Spotify and share it with a friend starting their entrepreneurship journey. Leave us a five star review. Your support will help spread our podcast to more viewers.