Nature-based carbon removal startup Chestnut Carbon has raised $160 million in Series B financing, the company told TechCrunch. The startup buys marginal and degraded farmland, plants them with native trees, and harvests the resulting carbon credits.

Carbon credits have become a hot commodity, especially among tech companies looking to offset skyrocketing emissions caused in part by the breakneck expansion of data centers serving cloud and AI customers.

The new round included investment from Canada Pension Plan Investment Board, Cloverlay, and DBL Partners along with unnamed university endowments, family offices, funds of funds, and other institutional investors.

For Chestnut Carbon, the $160 million is actually a somewhat modest sum. When the company was founded, private equity firm Kimmeridge capitalized it by pledging up to $200 million. The firm typically invests in oil and gas companies, but managing partner Ben Dell saw an opportunity to stake a claim in the growing carbon credit market.

To make it happen, he acquired Forest Carbon Works, a startup founded by Kyle Holland that helped families manage their forests to sell carbon credits. Holland continued with Chestnut, where he’s currently chief product officer.

With Chestnut, the team expanded their focus to include projects developed by the company, not just managing existing forests.

Chestnut currently owns more than 35,000 acres of marginal and degraded farmland and pasture in the southeastern United States. Part of the goal of the fundraise is to grow Chestnut’s holdings significantly. The startup is hoping to expand its carbon credit capacity to 100 million metric tons by 2030, which will require hundreds of thousands of acres to be transformed back into forests.

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