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Hydroponics Startup Babylon Micro-Farms Raises $3m Seed Capital For US Expansion
Babylon will use the capital to fund its nationwide expansion. It offers a cloud-based, plug-and-play hydroponics system for indoor farming operations
March 18, 2021
US indoor agriculture startup Babylon Micro-Farms has closed a $3 million seed round led by previous investors including the Center for Innovative Technology (CIT).
New investors to take part in the fundraising included Hull Street Capital, VentureSouth, and CAV Angels – the University of Virginia‘s alumni angel investor group.
Babylon will use the capital to fund its nationwide expansion. It offers a cloud-based, plug-and-play hydroponics system for indoor farming operations.
The Richmond, Virginia-based startup claims that its 15 square-foot miniature farm can grow as much produce as 2,000 square-feet of outdoor cropland.
In January 2020, Babylon raised its initial seed investment of $2.3 million led by CIT’s early-stage investment group CIT GAP Funds and startup incubator Plug and Play Ventures.
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“2021 is on track to be a year of accelerating growth and major market penetration through national distribution as we continue to focus on deploying our indoor farming service,” Babylon CEO Alexander Olesen said in a statement.
“We’re enabling businesses and communities to grow their own fresh produce and demonstrating the benefits of our fleet of remotely managed vertical farms.”
Indoor farming startups have been bagging fundings left, right, and center of late. Babylon Micro-Farms is just one of the latest outfits to capture investors’ attention, along with the likes of New York’s Oishii, Germany’s Infarm, and recently SPACced Kentuckian player AppHarvest.
What makes Babylon unique — in its own estimation — is its “remotely managed,” easy-to-use growing platform. The technology could give aspiring or existing indoor growers a quick way to get into the game instead of building a new growing system from scratch, or having to learn the ropes through old-school, analog means, the startup suggests.
Babylon Micro-Farms’ machinery can squeeze into relatively smaller spaces compared to many other indoor ag solutions on the market. This may give users a foothold over larger operations by allowing them to enter the fray more quickly while bigger players are still shopping for real estate.
Through a two-year lease contract, Babylon users can dabble in the indoor farming craze without having to commit to a more long-term operation. This can also give flexibility when it comes to testing new markets.
“The Covid-19 pandemic highlighted a national food-supply system issue, putting the spotlight on a critical need for more locally-grown produce options. Babylon Micro-Farms has found their focus, and it is a reflection of their leadership team’s commitment to building a category-defining customer experience while making a positive impact,” Alex Euler, investment director at CIT GAP Funds, said in a statement.
“During a time when many people are experiencing isolation, being able to watch your own garden grow can improve one’s quality of life. The company’s innovative approach to developing a technology system that enables its own staff to remotely control the light, water, and nutrients for its farming systems is absolutely making them a leader in this space.
How Vertical Farming Is Taking Off
Food supply chains are under more scrutiny than ever in the era of coronavirus and Brexit. The vertical farming movement offers solutions to some of the biggest challenges facing agriculture today
By George Nott
5 February 2021
Food supply chains are under more scrutiny than ever in the era of coronavirus and Brexit. The vertical farming movement offers solutions to some of the biggest challenges facing agriculture today
This feature is the first in a two-part series on the future of farming
Michiel Peters has been fielding some frantic calls in recent weeks. “People are saying, ‘You have to come now! We’re sorry we didn’t call you a year earlier!’” the CEO of vertical farming company PlantLab reports.
It seems vertical farming has reached a tipping point. For a long time, any consideration of the method soon ended with unit economics. But the price of produce has been rapidly falling – to the point that it’s now beginning to compete with traditional farms. And the unique advantages of vertical farming are suddenly coming into sharp relief for manufacturers, suppliers and retailers. So much so that the sector is preparing for a huge boom in interest and investment.
Indeed, demand is so heightened that Peters and his peers are having to turn potential customers away. Could now be vertical farming’s big moment?
“It’s not really a question of ‘if’ anymore. It’s going to happen,” Peters says. “And it’s already happening. It’s a matter of scaling up now.”
The benefits lie in the vertical farming method. Produce is grown indoors under LED lights, with a plant’s roots typically suspended in nutrient-rich water or mist. Temperature, humidity and light is carefully regulated within the sealed environment, and more plants can be packed into a space, on racks that can be seven storeys high.
While yield per square metre, low water consumption and lack of soil or pesticides have long been touted as the method’s main selling points, another one is becoming increasingly important: a guaranteed, year-round supply situated right where it is needed.
“On a small island or in remote locations, vertical farms can have a tremendous impact on food supply, especially in Covid times,” says Peters. “The food chain is typically very long and sensitive. When things break down, people realise their security of supply is not always a given.”
“It’s not really a question of ‘if’ any more. It’s going to happen. It’s a matter of scaling up now”
That’s not to say vertical farming businesses have been immune from the effects of the pandemic. The construction of Amsterdam-based PlantLab’s second overseas site in the Bahamas is being thwarted by current travel restrictions, for example. But Covid, and the disruption it has wreaked on global supply chains, is ultimately helping the sector make its case.
“There’s huge interest from island economies, hot economies and countries that have a higher propensity to import and have less arable land,” says Jamie Burrows, CEO of London-based Vertical Future. “From Iceland to Singapore, they all have very similar requirements.”
Plus, the pandemic isn’t the only threat to imports, Burrows adds. “If you import a lot of food, climate change is going to impact the countries that are producing that food for you. Even now, there have been pretty significant inflections in price on shelves and availability because of small fluctuations in temperature during the key growing seasons,” he explains.
And there is yet another factor that is throwing vertical farming into the spotlight in the UK, specifically: Brexit. That’s not just down to the immediate effect of imports disruption. The local produce sector remains riddled with uncertainty over access to the many seasonal workers that used to come from the EU, with a potential labour crisis looming.
Indoor farms, which are typically highly automated, require far fewer people to run. Furthermore, with constant harvesting, a small and constant rather than large and seasonal workforce is needed.
The yield and potential of vertical farming
The market opportunity for vertical farms is huge. Barclays Research analysts estimate the size of the global fruit & vegetable market is roughly $1.2tn (£800bn), and calculate that the addressable produce market for vertical farms is closer to $700bn (£513bn), leading to an approximately $50bn (£36.7bn) market opportunity. Plus, vertical farming boasts some environmental benefits, as produce requires less water and space to grow
Jones Food Company’s Scunthorpe vertical farm is a prime example. It has 26 tennis courts of growing space, operating 365 days a year – with a staff of six.
“Imagine if you have next to no labour in a farm that big. One of your largest costs is one you can really attack,” says James Lloyd-Jones, JFC CEO, and founder.
As a bonus, businesses such as JFC can boast lower carbon emissions than outdoor farms. While energy-intensive – to make up for the lack of natural sunlight – sector argues overall carbon savings are made when indoor farms are positioned close to where produce is needed, drastically reducing food miles.
Furthermore, Peters says, “if you make the chain radically short, you don’t need to waste so much of the harvest. You can avoid it altogether.”
This element could be particularly important to retailers with ambitious carbon commitments. “Retailers are being asked more questions than they’d probably like about carbon. You can’t just fudge it any more,” says Lloyd-Jones.
It’s not all plain sailing, though. There are some major hurdles for the sector to overcome – chiefly, the huge capex needed to build an indoor farm. Because of this, many vertical farming companies, whose main interest is in providing the technology for the farms to function, are becoming farm operators and even consumer brands.
PlantLab launched its first US production site – or ‘Plant Paradise’ – in December, within a former battery factory near Indianapolis city centre.
Having spent some time “working in relative silence” on the technology, PlantLab is now a site developer and operator. Local partners distribute and brand the end product into local supermarkets. As patent holder for its indoor farming tech in 74 countries, it is also in talks with major players about licensing the IP. But, adds Peters: “We’ve started this company to change the world, not just sit behind a desk and talk about licenses.”
It helps that PlantLab can point to the success of its own farms. Because building farms yourself is necessary to prove the technology and economics, says Lloyd-Jones. “There’s a lot of vertical farming companies that are tech companies, but they don’t grow anything so the person buying is the guinea pig,” he says.
For his part, he’s looking to refine the JFC concept further before embarking on a licensing model. The company already has plenty of expertise. Ocado-backed JFC is Europe’s largest vertical high-care farming operation, its 5,000 sq m facility stacking up 12 metres high with more than 17 layers of produce. But it will go one step further with its two new sites in the Midlands and the south west, due to open by the end of this year.
They will be more technologically advanced – “it’s like we built the first iPhone in Scunthorpe. We’ve jumped to making the iPhone 8,” Lloyd-Jones says – and will provide enough produce to meet 25% of UK demand for herbs.
The end goal is to develop a “cookie cutter” vertical farm that can be quickly and cheaply built wherever needed. “Once we’re happy with that we’ll look at a licensing model where we build these facilities all round the world. But anyone building them will know they’ve been stressed, used and run at 100%,” he says.
The model for vertical farming firms then is likely to be akin to Ocado and Ocado Retail, where the latter proves the case for the former’s technology, which rivals then adopt.
So similar, in fact, that Ocado itself is looking to get involved. In February last year, it formed Infinite Acres – a joint venture with Netherlands-based automation tech provider Priva Holding BV and US-based 80 Acres Farms, a vertical farm operator and brand. Customers have two options. They can either partner with Infinite Acres to build their own farm, or they can have 80 Acres run a farm on their behalf using that same technology.
If companies get it right, the licensing model can be lucrative. See Vertical Future for proof. It has two farms in London, with three more being built, but the output of the farms is only a small part of the business. “We retain them to keep our finger on the pulse and customer trends and it validates what we’re doing,” says Burrows. “Ninety-five per cent or more of our revenue now is from technology sales and software.”
Funding flurry
That potential has prompted a flurry of investment in the sector, kicked off in 2017 by Japanese media giant SoftBank, Alphabet’s Eric Schmidt and outgoing Amazon boss Jeff Bezos’ funding of San Francisco vertical farming startup Plenty. Plenty has now raised more than $200m in venture funding.
With it has come a lot of hype. “There is a lot of hot air in vertical farming,” Burrows says. “People can make crazy claims – one company said it could grow a head of lettuce in five days, which is ridiculous. And there is a lot of smoke and mirrors and low-grade companies trying to jump on the bandwagon.
“The risk is farms will fail and make the sector look bad,” he adds. “The impact for the good companies is investors will look at the sector and say it seems risky.”
Nevertheless, the pile-on is ultimately a positive thing, says Peters. “It’s maybe a matter of culture. In the US things tend to be more hyped and people tend to promise the world – then figure out after they have the money, they still need to do all the R&D,” he explains. “But it all helps to underline it’s really happening, and makes it acceptable and credible to consumers.”
Just how big vertical farming can get remains to be seen. Barclays estimates a $50bn (£36.7bn) market opportunity. As a total share of fresh produce output, it’s “going to be a single digit for years” says Burrows. “But as a standalone sector the growth rates are very high and will continue to be.”
Indeed, although it is currently focused on a small range of herbs and leafy greens, ultimately “you can grow anything” says Lloyd-Jones. While staples like rice and wheat might not be viable now, that will soon change. Competitive prices will doubtless be added to vertical farming’s multitude of advantages.
“We don’t want to get stuck in just being a premium, niche product that will only be affordable by a small part of the market,” says Peters. “We want to change the world.” Suddenly, that aim seems within reach.
Five firms leading the global vertical farming movement
InFarm
Vertical farms don’t have to be on a grand scale. In fact, they can fit in a chiller cabinet. InFarm places production right in the supermarket aisles at clients including Whole Foods Market and M&S.
“Modern agricultural production is built on a supply chain that is vulnerable to ecological and supply shocks. The global pandemic highlighted this. Retailers are having difficulties importing fresh produce, highlighting the need to develop a local and sustainable supply chain,” says Daniel Kats, VP of corporate sales.
Source: LettUs Grow
LettUs Grow
Bristol start-up LettUs Grow specialises in aeroponic farms that fit within a shipping container. Customers can purchase the full “business in a box”, which includes the grow beds and control system.
“Unlike a traditional farm, you’re not limited by location or climate. Your container farm needs no fertile land to operate and with its advanced climate control system, every day is a perfect summer’s day with ideal growing conditions,” LettUs Grow says. The company has raised a total £3.4m.
Source: PlantLab
PlantLab
This Dutch indoor farming firm launched its Indianapolis site in December. The 54,000 sq ft farm, developed in partnership with the Englewood Community Development Corporation, will provide an annual supply of close to 45,000 kg of fresh herbs and lettuce to local supermarkets and foodservice companies.
The fresh tomatoes, cucumbers, lettuce, and herbs grown in the ‘Plant Paradise’ are being marketed under the brand name Uplift, with the tagline ‘good food on purpose’.
Source: CropOne
CropOne
The world’s largest vertical farm is being built in Dubai, a joint venture between US firm Crop One and Emirates Flight Catering.
The $40m, 130,000 sq ft controlled environment facility will produce 6,000 pounds of high-quality, herbicide and pesticide-free leafy greens, harvested daily.
“We secure our own supply chain of high-quality and locally-sourced fresh vegetables, while significantly reducing our environmental footprint,” said Saeed Mohammed, EFC CEO.
Source: AeroFarms
AeroFarms
US firm AeroFarms last year announced it was building a 90,000 sq ft vertical farm in Abu Dhabi, which will be the world’s largest indoor agriculture research centre. The facility will house research centres for plant reproduction, seed breeding, machine learning and vision as well as robotics.
The company has grown more than 800 varieties of crops and is eyeing opportunity beyond food production in other industries like pharmaceutical, cosmeceutical and nutraceutical.
The Grocer
Lead photo: Source: AeroFarms
Topics: Farming Fruit & Veg Supply chain Sustainability & environment Technology
Rising Trends In Senior Living Dining: Cloud Kitchens And On-Site Micro-Farms
Senior housing providers are embracing an ever-growing list of unique dining services and amenities in order to attract tomorrow’s residents and save on operating costs — including indoor hydroponic micro-farms and offsite “cloud kitchens.”
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By Tim Regan | December 4, 2019
Senior housing providers are embracing an ever-growing list of unique dining services and amenities in order to attract tomorrow’s residents and save on operating costs — including indoor hydroponic micro-farms and offsite “cloud kitchens.”
Two companies leading the way in this regard are Charlottesville, Virginia-based Commonwealth Senior Living, and Priya Living, a senior housing company headquartered in the San Francisco Bay Area. Both companies are shaking up their dining services to include more trends that have gained traction in the consumer-facing restaurant industry.
The practice of adapting consumer dining trends for the senior living world is not new, as evidenced by the growing number of new senior living communities opening with full-service bars, fast-casual eateries, and bistros. Fleet Landing, a continuing care retirement community (CCRC) in Atlantic Beach, Florida, even has its own food truck.
All of this comes as senior living providers search for the right mix of services and amenities to woo millions of baby boomers due to reach retirement age in the next decade while tightening up their operations in a competitive and costly environment.
Hydroponic hopes
At Commonwealth Senior Living, residents are chowing down on fresh leafy greens grown in-house — literally.
The provider recently partnered with Charlottesville, Virginia-based Babylon Micro-Farms to build indoor micro-farms with the capacity to grow up to 5,800 plants a year and 45 different leafy lettuces, edible flowers and herbs. Timed LED lights and formulated nutrients nourish the plants, while 45-gallon reservoirs supply the water they need. The setup requires no soil, pesticides or other additives.
Through an app, Babylon guides Commonwealth’s dining service directors and associates through seeding, planting, harvesting, cleaning and everything between. A growing cycle can last anywhere between 15 and 45 days, depending on the plant, and workers spend just 1 hour and 20 minutes maintaining the setup in that time.
The first such micro-farm opened at Commonwealth Senior Living at Charlottesville in the third quarter of this year, and the company has plans to expand the service to all of its 34 communities early in 2020 at a rate of about three communities per week.
Commonwealth at Charlottesville’s residents and their loved ones first sampled fresh garden salads harvested from the indoor farm in mid-November. In addition to salads, Commonwealth’s chefs also use the produce in wraps and sandwiches, as garnishes and to flavor dishes.
The popularity of the fresh greens has only grown since Commonwealth’s first harvest, according to Bob Raymond, the provider’s vice president of procurement and dining services.
“We can’t keep up on the production,” Raymond told Senior Housing News. “The residents are eating everything we’re cutting and harvesting.”
And residents aren’t just eating their vegetables, they’re helping grow them, too. Already, some have pitched in to aid with the growing process — including a former “master gardener,” Raymond said. Looking ahead, Commonwealth hopes to include the hydroponic gardens in its programming, such as by letting residents pick out what they want to grow.
“We will be engaging the resident for the selection of product,” Raymond said. “So, if a resident wants to grow a specific type of butter lettuce … that will be that resident’s row of lettuce.”
Because the vegetables are grown in-house, they don’t need to be shipped from elsewhere. And Commonwealth has been able to trim the money it spends on fresh lettuce and produce, which can lie anywhere between $750 to $1500 a month for a typical community.
“Based on the overall cost of what we’re purchasing from farms or from mainline vendors, this has reduced our cost probably by about 10% to 15%,” Raymond said. “And, we’ve eliminated a 50- to 60-mile round trip [for deliveries] 52 times a year.”
In the end, adopting the hydroponic setup is aimed at attracting tomorrow’s senior living residents, who will bring with them a slew of new preferences and desires.
“Our resident population will be changing, and it is changing today,” Raymond said. “And what works today may not work tomorrow, so you have to continually look at different opportunities.”
A kitchen in the cloud
For many senior living providers, dining is a cost center, meaning more money goes into culinary budgets than comes out. For larger providers with more comprehensive programs and services, this is often mitigated elsewhere. But smaller providers — especially those that lie on the active adult or “independent living light” side of things — finding the right balance of providing some dining services while also keeping costs low is tricky.
That’s partly why senior housing provider Priya Living uses Shef, an offsite “cloud kitchen” service that makes and delivers food to residents on demand. The provider uses Shef in place of a more traditional commercial kitchen or onsite senior living dining program. Priya’s portfolio includes three open communities, and its focus on Indian culture and customs have made it a provider of choice for this affinity group — although the communities are open to anyone and have even welcomed residents of all ages.
“The cost of running a foodservice operation is substantial,” Priya Living Founder Arun Paul told SHN. “It’s a cost center. Everyone across the board, I would guess, is losing money on food.”
Shef delivers refrigerated, prepackaged meals such as shahi paneer, butter chicken, oxtail stew and pork dumplings to residents three times a week. While residents pay for the service, each meal costs just $8 to $10 thanks in part to a discount Priya Living has with Shef, Paul said.
Cloud kitchens — also referred to as “ghost kitchens” or “dark kitchens” — are restaurants that lack a dining room and don’t have a physical storefront. The food is cooked in the kitchen and then delivered to or catered at other sites. While the cloud kitchen trend is still budding, it is on the rise with help from the likes of major fast-food restaurants and former Uber CEO Travis Kalanick.
Using Shef and other unbundled services has helped Priya Living keep its rates relatively low. The provider’s communities in Fremont and Santa Clara, California, have monthly rates for residents between $2,500 and 3,000 before you add in any other services.
“When you take out food, your base cost for the resident is substantially lower,” Paul said. “In the mind of our residents, we’re viewed as a very affordable option.”
In addition to cost savings, Shef also offers variety and flexibility, he added. And while there are some residents who order most of their meals through Shef, it’s more commonly used by residents who also cook and dine out during the week.
“No matter how good your kitchen is, folks are going to get bored,” he said. “So, what’s great about working with the cloud kitchen is that it gives residents more flexibility over what they’re eating.”
Looking ahead, Paul expects more senior living providers — particularly those in urban markets — to explore using cloud kitchens to supplement or even replace their in-house dining programs.
“I think there’s still going to be a place for in-house food preparation, but I think it will be in much more limited circumstances than it is today,” Paul said. “Unbundling services is critical to addressing affordability and the middle market, and now we have the tools to do it that we didn’t have even a few years ago.”
Companies featured in this article:
Babylon Micro-Farms, Commonwealth Senior Living, Priya Living, Shef