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BASF Venture Capital Invests In Indian Startup UrbanKisaan
With the investment from BASF, UrbanKisaan plans to further expand its market presence in India, deploy its farming technology to work with thousands of farmers, and bring fresh, local, sustainable produce to urban dwellers
Startup optimizes sustainable agriculture without soil in tropical climates
■ BASF Venture Capital’s first investment in this early stage Indian business strengthens AgTech activities in Asia
Hyderabad, India, and Ludwigshafen, Germany, July 13, 2021 – BASF Venture Capital GmbH (BVC) is investing in the Indian startup UrbanKisaan, which specializes in hydroponic cultivation of various types of vegetables, greens and herbs in tropical urban environments. This is BVC’s first investment in an early stage business focusing on India. Conceptualized in 2017, UrbanKisaan operates several suburban greenhouses and vertical indoor farms in Hyderabad and Bangalore. The company sells the fresh produce, some of which is grown directly in the shops, in its franchise-owned brick-and-mortar stores and via an app and website. Both parties agreed not to disclose financial details of the investment.
UrbanKisaan has optimized hydroponics technology for use in tropical climates such as India. With only one tenth of the costs, the proprietary technology is significantly more efficient than conventional global standards in hydroponics cultivation. The company is also capitalizing on the trend of online food retailing, which is booming on the subcontinent. “Our approach in hydroponics enables us to produce our food cost-effectively and with relatively little effort,” said Vihari Kanukollu, co-founder and CEO at UrbanKisaan. “Our produce also contributes towards sustainability as it is grown in clean, hygienic farms in and around the city, thus minimizing the total carbon footprint. Use of IoT (Internet-of-Things)-enabled technology for monitoring the farms ensures pesticide-free produce. The growing demand from our customers shows that our idea is well-received,” he added.
UrbanKisaan’s farms are managed through their proprietary technology. Nutrient content, pH levels, atmospheric humidity, CO2 concentration, light concentration and other important parameters are controlled and adapted to the needs of the particular plants with an app.
“UrbanKisaan, as a pioneer in the hydroponics space, has developed a unique growing method and combines this with a compelling business model for sales,” commented Markus Solibieda, Managing Director of BASF Venture Capital GmbH. He added: “AgTech is one of our key investment focus areas worldwide. This includes, in particular, our goal of supporting innovative agricultural and food-related businesses in Asia. We look forward to learning more about hydroponic farming and exploring its potential through a close collaboration between UrbanKisaan and BASF’s agriculture experts.”
With the investment from BASF, UrbanKisaan plans to further expand its market presence in India, deploy its farming technology to work with thousands of farmers, and bring fresh, local, sustainable produce to urban dwellers.
Hydroponic farming – an efficient way to use limited resources
The world’s population is expected to reach 10 billion by 2050 1 while the area available for farming and freshwater reserves are becoming increasingly scarce. Hydroponics offers a sustainable way to grow crops without soil and using vertically stacked layers while reducing water usage by about 90 percent 2. Especially in densely populated urban areas, this presents a more efficient way to use limited resources like water, space and manpower. Water that is not absorbed by the plants is captured, purified and fed back into the farm’s water circulation system, minimizing wastage significantly.
India is the second-largest producer of fruits and vegetables in the world, with a production value of about $64 billion3. It is also a large consumer of fruits and vegetables, and while much of this is through unorganized channels (local vegetable markets, hand-pulled carts and neighborhood stores), organized channels (modern trade and online retail) account for a little over 20 percent of the market4. Thus, hydroponics is a fast growing and efficient alternative to traditional supply chains in the organized fresh produce market.
About UrbanKisaan
UrbanKisaan was conceptualized in 2017 in Hyderabad, India. The company began as a farming enterprise but wanted to grow more than just fresh and nutritious food. They wanted to create a sustainable future for farming and feed the world in a way that is good for both people and planet. Today, with its hyper-local urban farms the company is creating a transparent supply chain with a low carbon footprint, leveraging on proprietary growing technology that helps save 90% of water yet grow 30 times more crops compared to traditional farms of similar area. Further information at www.urbankisaan.com.
About BASF Venture Capital
At BASF, we create chemistry for a sustainable future. BASF Venture Capital GmbH (BVC) also contributes to this corporate purpose. Founded in 2001, BVC has offices in Europe, the U.S., China, India, Brazil, and Israel. BVC’s goal is to generate new growth potential for current and future business areas of BASF by investing in young companies and funds. The focus of investment is on new materials, AgTech, Digitization and new, disruptive business models. Further information at www.basf-vc.com.
About BASF
At BASF, we create chemistry for a sustainable future. We combine economic success with environmental protection and social responsibility. More than 110,000 employees in the BASF Group contribute to the success of our customers in nearly all sectors and almost every country in the world. Our portfolio is organized into six segments: Chemicals, Materials, Industrial Solutions, Surface Technologies, Nutrition & Care and Agricultural Solutions. BASF generated sales of €59 billion in 2020. BASF shares are traded on the stock exchange in Frankfurt (BAS) and as American Depositary Receipts (BASFY) in the U.S. Further information at www.basf.com.
3 Fruits & Vegetables Production value at Current Prices for 2015-16, Horticultural Statistics at a Glance 2018, Government of India, Ministry of Agriculture and Farmers Welfare
4 Avalon Consulting - http://www.fruitnet.com/asiafruit/article/178572/india-on-the-move
Natalie Portman, Other Celebs, Invest In Vertical Farming Startup Bowery
The sustainable agriculture startup, the largest vertical farming firm in the U.S., secured over $300 million from both individuals and investment groups to help expand its operations across the U.S.
$300M Investment Round Will Help
The Company Expand Its
Indoor Farms Across The U.S.
June 4, 2021
Natalie Portman | Roy Rochlin / Getty Images
Natalie Portman, an actor as well-known for her film roles as her dedication to causes ranging from the environment to animal welfare, has thrown her financial support behind a new investment round for Bowery Farming. The sustainable agriculture startup, the largest vertical farming firm in the U.S., secured over $300 million from both individuals and investment groups to help expand its operations across the U.S.
"At Bowery, we're reinventing a new supply chain that's simpler, safer, more sustainable and ultimately provides vibrantly flavorful produce unlike what's available today," Irving Fain, CEO, and Founder of Bowery Farming, said in a press release. "This infusion of new capital from Fidelity, other new investors, and the additional support of our long-term investor partners is an acknowledgment of the critical need for new solutions to our current agricultural system, and the enormous economic opportunity that comes with supporting our mission.
Portman’s investment is the latest in a series of big moves by the vegan activist to help grow companies that provide healthy, sustainable, and animal-friendly products to millions around the globe. In July of 2020, she joined others such as Oprah Winfrey and Starbucks CEO Howard Schultz in investing in milk-alternative startup Oatly. In November, she teamed with music artist John Legend in backing MycoWorks, a company creating vegan leather from fungus, to help raise more than $45 million.
“So now lots of people make fun of vegans, right? Lots of people make fun of anybody who cares about anything deeply, right?,” Portman said during a youth activism speech in 2019. “But I’m here to say, it is always a great thing to care…whether it’s environmental issues, animal rights, women’s rights, equality, never be afraid to show how much you care.”
Joining Portman in the latest investment round for Bowery, which has raised more than $465 million since its founding in 2014, were well-known plant-based eating advocates Lewis Hamilton and Chris Paul, as well as world-renowned chef and hunger advocate José Andrés and singer-songwriter Justin Timberlake.
Growth of vertical farming reaches new heights
So why is everyone from celebrities to investment groups throwing money at Bowery? Simply put, the skepticism around vertical farming that stunted early growth has been replaced with blooming enthusiasm in the wake of its success.
In the last year, Bowery has gone from selling produce in under 100 retail locations across the U.S. to nearly 800. According to Fain, these include such giants as Whole Foods Market, Giant Food, Stop & Shop, Walmart, and Weis Markets.
“It’s definitely bigger than the pandemic,” Fain told The Spoon. “What you’re seeing is a food system that’s evolving and [people have a desire] to see transparency and traceability in the food system.”
Bowery presently has two vertical farming sites in New Jersey and Maryland, with a third slated to open in Bethlehem, PA later this year. Each industrial space features various greens and herbs (butter lettuce, cilantro, arugula, etc.) stacked vertically in trays and grown hydroponically using a state-of-the-art computer control system and LED lights. An average of 80,000 pounds of produce is generated each week using 95% less water than traditional farms and with zero pesticides or chemicals. And because these vertical farms can be built within cities, transport costs and their associated environmental impacts are drastically reduced.
While the focus for vertical farming remains firmly planted on greens, Bowery is testing new crops like tomatoes, peppers, and strawberries. They are also making constant improvements to the artificial intelligence system that monitors the plants at all times. At any moment, the computer can make changes to improve the yield or alter the flavor of a particular crop.
“We achieve a plant vision system and that vision system takes photos of our crops in real-time and runs them through our machine learning algorithms,” Fain said in an interview with Tech at Bloomberg. “We know what’s happening with a crop right now and whether it’s healthy, but then also predict what we will see with this crop based on what we’ve seen in the past and what tweaks and changes we want to make.”
Yes, we know that sounds like some slice of a dystopian future, but vertical farming is quickly proving itself a necessary technology to help feed and sustain humanity. For Fain, he believes the ability to do all of this with fewer resources, chemicals, and independent changing climate conditions or unexpected global crises is something that should be celebrated and not feared.
“I actually view it as this incredibly optimistic opportunity to say, ‘Wow, like, isn't it amazing that technology has taken us to a point where something that we've done in a certain way for hundreds and hundreds of years with iteration and optimization can really be rethought and re-imagined in totality because of human creativity and human ingenuity?", he told MyClimateJourney. “And I think that's actually exciting and that's something that we should be happy about and optimistic about. And that to me is really the message in what we're building at Bowery.”
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The Stock Market Discovers Indoor Ag In A Big Way
Special purpose acquisition companies are a faster cheaper way to raise company funds than the traditional IPO process. What role may they play in our ever growing vertical farming industry?
Robinhood antics aside, there’s no hotter topic in finance right now than SPACs (special purpose acquisition companies), and even indoor agriculture has become caught up in the buzz.
SPACs, or special purpose acquisition corporations, are a shell company that lists itself on a stock exchange and then uses the listing proceeds to acquire or merge with another company. It’s an attractive route to raising funds for companies looking for a faster and cheaper way to list than the rigours of the traditional IPO process.
Though SPACs have been around since the 1990s, they have had a reputation for being “the buyer of last resort”, primarily owing to a spate of failures in the early 2000s. The approach has once more taken off in recent years. There was nearly 8x as much raised in 2020 as in 2018, and 2021’s total has already surpassed last year’s[1]. The approach has become so hot that even Goldman Sachs junior investment bankers recently complained that they were burned out by the sheer volume of SPACs they’re working on[2].
This newfound enthusiasm is generally traced to a combination of tighter SEC regulations, efforts by cash-rich private equity companies to exit portfolio companies and fewer traditional IPO listings. Higher quality sponsors, such as 40-year old private equity firm Thoma Bravo, lead some to believe that things are different this time around. The lustre of famous SPAC participants – such as baseball player A-Rod and basketball legend Shaquille O’Neal – has helped things along.
Detractors point to post-listing underperformance by SPACs, high fees to sponsors and opaqueness around the acquisition of companies. SPAC rules mean that institutional investors sometimes get to see information on potential acquisitions ahead of retail investors.[3] On a recent Clubhouse chat, one investor compared SPACs to the risky no-revenue internet listings of the late 1990s. Another questioned whether retail investors’ appetite for such vehicles would cause greater market volatility[4].
Dan Bienvenue, the interim CEO of mega public pension fund CALPERs, recently described SPACs as “fraught with potential misalignment, potential governance issues”.[5] That said, similar dire warnings have accompanied the rise of many a new approach in finance, most recently equity crowdfunding, and have proven wrong as often as right.
As is so often the case in indoor agriculture, cannabis companies have led the way when it comes to SPACs, generally listing in Canada owing to the US federal prohibition on the crop. One example is Choice Consolidation Corp, which raised $150mm in February, and says that it plans to acquire “existing strong single-state operators”[6].
Historically, food-focused indoor agriculture companies have sourced little of their capital from public markets, preferring instead to work with private equity and strategic investors. To be sure, there is a small cadre of listed CEA firms, such as Canadian greenhouse operator Village Farms (TSE: VFF) and Canadian grow system tech company CubicFarm Systems Corp (TSXV: CUB) are exceptions to this rule.
All of that changed last month when Kentucky-based greenhouse company AppHarvest raised $475mm through NASDAQ listed SPAC Novus Capital. The funds will fuel the expansion of up to a dozen new farms through 2025.
Naturally, the move has led to speculation that vertical farms and greenhouses will follow suit, though it’s worth noting that the rules that govern SPACs aren’t necessarily friendly to CEA companies. They favour large, highly valued companies that easily capture the attention of retail investors, and those are not plentiful in CEA.
Regardless of whether the SPAC trend becomes a permanent feature of the indoor farm fundraising landscape, one more method of accessing capital for CEA can only be a good thing. For the moment at least.
For more information:
Contain
www.contain.ag
Note: None of the above constitutes investment advice.
Sources:
[1] SPACInsider figures
[2] “Goldman’s junior bankers complain of crushing workload amid SPAC-fueled boom in Wall Street deals”, CNBC, March 18, 2021
[3] For instance, where a PIPE is being considered by the SPAC
[4] “SPACS: IPO 2.0 & Agrifoodtech Exits”, March 4, 2021
[5] “CalPERS’ Bienvenue: SPACs are fraught with potential misalignment”, Private Equity International, March 16, 2021
[6] “New cannabis SPAC raises $150 million in IPO for US acquisitions”, Marijuana Business Daily, February 19, 2021
Publication date: Wed 24 Mar 2021
Author: Rebekka Boekhout
© VerticalFarmDaily.com
Vertical Farming In LatAm: AgroUrbana Closes $1m Seed Funding
Access to vertical farming technologies is deepening and widening across the world, bringing down the costs and hassle of locally producing anything from Singapore strawberries to Arctic tomatoes
July 2, 2020
Access to vertical farming technologies is deepening and widening across the world, bringing down the costs and hassle of locally producing anything from Singapore strawberries to Arctic tomatoes.
In Latin America, however, indoor vertical farms are still largely written off on a continent known for its abundant fertile soil and plentiful sunlight. Why need of artificial light or indoor automation when the sun is free and labor is cheap?
That said, there are early signs of a LatAm vertical farming awakening in Chile, where AgroUrbana has just raised a $1 million seed round, bringing its total capital raised to $1.5 million. AgroUrbana is South America’s first vertical farm, according to the Association for Vertical Farming.
Leading the round by contributing 33% of the cash was the CLIN Private Investment Fund administered by Chile Global Ventures, the venture capital arm of Fundación Chile, a public-private initiative for innovation and sustainability in the country. Support financing also came from CORFO (Chile’s Development Agency) and private investors like company builder and VC Engie Factory, the country’s largest telecommunications company Entel, and sustainability investor Zoma Capital.
In a video call with AFN, AgroUrbana f0unders Cristián Sjögren and Pablo Bunster described how the funds would be put to work at their 3,000 square feet pilot facility in the suburbs of Santiago, where testing is ongoing on layered stacks of hydroponically grown, LED-lit, renewable energy powered leafy greens and fruits. AgroUrbana’s first big offtake deal had just been inked with a major Chilean grocery retailer, they said.
A pre-planned switch from restaurant to retail
“It’s been run, run, run,” recalled Bunster, describing the political turmoil in Chile that brought curfews and shuttered restaurants months before Covid-19 locked down the country. That earlier disruption, he added, had actually had its upsides, as it got them thinking more about e-commerce and direct-to-consumer sales — so when the team’s restaurant deals dried up during the Covid-19 pandemic, the switch to retail was already scoped out.
As to scaling up further, Sjögren envisioned an eventual 30,000 square foot facility that would be bankrolled by a Series A that they plan to work towards later this year; the design and output would depend on the results of their pilot trials.
This size of farm sets the team somewhere in the middle of the two dominant visions of vertical farming: centralized versus distributed. Proponents of centralized systems argue that large-scale production—and financial viability—depend on ever-bigger and higher farms. These farms, or plant factories as they are sometimes called, are proliferating, aided by huge sums of capital. Plenty scooped up a whopping $200 million in Series B funding back in 2017. US-based AeroFarms raised $100 million in late-stage funding in 2019 while Fifth Season secured $50 million last year.
Although centralized facilities have generally dominated the vertical farming venture capital domain, distributed and decentralized business models are gaining pace, according to AgFunder’s 2019 industry report. One in particular—Germany’s Infarm—nabbed $100 million last year to deploy its connected growing cabinets in supermarkets. The theatricality of these cabinets harmoniously glowing in office buildings or hospitals in a post-corona world also holds sway in the popular and corporate imagination of 2020, with companies like Square Mile Farms recently crowdfunding over $300,000 on the promise of re-kitting office spaces like those of Microsoft’s London premises with fresh produce. In New York, Farmshelf has its own grow cabinets deployed in WeWork FoodLabs.
Learning from cash-heavy first movers
Mention of giants like Plenty or InFarm could be daunting for newer companies like Square Mile Farms or AgroUrbana and their hitherto modest sums raised. But there is perhaps an advantage in starting late — so long as the team learns from the costly mistakes and hubris of earlier endeavors. Here, both Bunster and Sjögren see parallels with the renewable industry, where they worked previously, and see the arrival of cheaper, more sustainable energy and capital in Chile as crucial to making vertical farming competitive.
AgroUrbana is exploring three options for solar going forward: either establish a PPA, in which they buy renewable energy from an existing plant; to finance a power plant which will sell to them later; or build their own solar farm. But they acknowledge that the larger the facility, the less feasible it is to have solar onsite.
The pair described how some Chilean outdoor farming is already lean and competitive, yet much of it has been geared towards high-value crops like avocados — and that stuff is primed for export. For the urbanizing local market, they see gaps for hyper-local fresh produce, where the competition would actually be with low-tech smallholder farmers with less traceable supply chains. In the context of Covid-19 and an ensuing consumer embrace of e-commerce options, better nutrition, less water use, and fewer pesticides, the pair reckon there is much to gain from providing produce that is consistently fresh 365 days a year.
Any chance of the world’s first vertically-farmed avocados any time soon? Unlikely, replied Bunster. As for gene editing, where Latin America is known to have more lax regulations than North America, Bunster said the plan was to work with what nature already provides, and just give them “the conditions of spring every day of the year.”