When Arolytics raised $3.5 million last month it did so on the back of 250 percent revenue growth from 2021 to 2022, as governments in Canada and the United States tee up stricter methane emissions rules governing oil and gas projects.

Liz O’Connell, Chief Executive of the Halifax- and Calgary-based maker of environmental reporting software, said in an interview that the new funding will go largely towards expanding into the United States. That country's Environmental Protection Agency is in the process of imposing stricter requirements on project operators, including improved tracking of “abnormal” methane releases not reflected by standard reporting methodologies.

In Canada, meanwhile, the federal government already has in place an interim target of a 45 percent reduction in methane emissions from oil and gas projects by 2030, with imminent plans to increase that target to 75 percent. 

“The story around this raise was really scaling in new markets,” said O’Connell. “It’s a perfectly timed market opportunity because governments in the U.S. and around the world are releasing new methane regulations or updating their regulations.

“We wanted to capitalize on that … and so this capital will help us scale our team quite drastically.”

Arolytics has 27 employees, nearly double last year’s figure, with plans to reach 30 soon. That will include the company’s first U.S. hire, who will work on business development.

“What we’re looking for is someone to start opening up doors for us in the U.S.,” said O’Connell. “But a lot of our other hires have actually been software developers and more technical hires. I think a bottleneck to our growth has been, the product needs to keep up with the pace of market demand, so we really need to scale on the technical side.”

Founded in 2018, Arolytics grew out of research at St. Francis Xavier University, where co-founders O’Connell, Emmaline Atherton and Dave Risk were developing technology to measure methane releases. Now, they help for-profit businesses document and predict those same emissions.

The $3.5 million funding deal was led by BDC Capital’s new, $150 million Sustainability Venture Fund. Other backers included Vancouver-based Yaletown Partners, returning Alberta investors Metiquity Ventures and Startup TNT and an unnamed strategic backer from Houston, Texas.

Arolytics counts some of the largest oil and gas producers in Canada among its clients. The team also works with smaller clients, but O’Connell said demand is particularly acute among larger players, partly because they often have numerous assets that must be managed simultaneously, and partly because larger businesses are more frequent targets of public pressure.