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Bowery CEO: Building Tech Is Expensive, Takes Time But Has Direct Impact On Economics of Vertical Farming
Bowery Farming, the New York-based vertical farming startup that counts Google, First Round Capital, and famous chef Tom Collichio as investors, has just raised an extra $50 million as an extension to its Series B. Temasek, Singapore’s state fund, led the extension with participation from Henry Kravis, the founder of private equity giant KKR
November 12, 2019
Bowery Farming, the New York-based vertical farming startup that counts Google, First Round Capital, and famous chef Tom Collichio as investors, has just raised an extra $50 million as an extension to its Series B. Temasek, Singapore’s state fund, led the extension with participation from Henry Kravis, the founder of private equity giant KKR.
Temasek invested in the first tranche of the Series B and was taking advantage of its seat at the table to preemptively invest more into the company on the back of Bowery’s growing commercial success, said CEO Irving Fain, adding that he wasn’t looking for more funding; the company has raised $172.5 million to date. “To their credit, they are phenomenal partners and this deal closed at a nice place from a valuation perspective for us. They have a very strong conviction about this space, both because of the macro trends but also after spending a lot of time looking at [vertical farming] before choosing to invest in us.”
The big piece of news coming with the funding announcement was the launch of Bowery’s third farm, a facility in Baltimore that is 3.5 times larger than its last in New Jersey. The farm is already operational and will be selling greens in the New Year, Fain told AFN.
Why Baltimore? From a population perspective, it can serve 26 million people within a 150-mile radius from its location, which is a transportation hub. And the company will be able to hire a workforce from within the community, which Fain says has always been important to them.
Fun fact: the exact location, White Marsh, used to have a farm many moons ago, so Fain likes the idea that Bowery is bringing the area back to its agricultural roots but in a modern way.
This round also coincides with a step-change in Bowery’s commercial activities, which Fain said have been less of a focus until now in favor of the company’s technology platform. As part of this, the company has hired Carmela Cugini as EVP of sales. Cugini comes from Walmart where she led its online grocery business after it acquired Jet.com, and also spent time leading sales divisions at Pepsi. “She’s been both a seller and a buyer at some point and that’s a unique set of skills to find,” said Fain.
Having said that, Bowery has still managed to expand its retail footprint to Whole Foods Markets, Ahold, Amazon Fresh, Jet, Westside Market, among others and recently significantly increased its deal with Whole Foods, Fain told AFN. Bowery’s greens will now appear in Whole Foods stores in all of Manhattan, Westchester, and Connecticut. Fain puts the growth in demand for Bowery produce down to two critical consumer trends that are gathering pace rapidly: the demand for local food and food grown with sustainable farming practices.
Tell us about the tech!
Meeting the growing demand for indoor-grown food has been a challenge for many in the vertical farming industry; the high costs associated with building new facilities and the struggles to find the right talent have been some of the key challenges in scaling this industry. For Bowery, building its internal technology platform has been key to its strategy of “thoughtful scaling,” said Fain.
“With each new farm we’ve opened, we’ve made meaningful improvements and steps forward in the technology, taking time to learn and understand what’s working well and what needs to improve,” he said.
Dubbed BoweryOS, the firm’s technology platform combines sensors, control systems, computer vision, robotics, and machine learning to optimize many of the processes around the farm, making the overall operation more efficient in terms of labor and costs. Not only can it do some of the tasks humans would have previously done such as monitoring and altering the environment or moving plants around the facility, but its machine learning and software platform can also guide workers on what to do and when such as identifying plants ready for harvest and harvesting.
“This means the workforce can look and resemble an Amazon fulfillment center; they don’t need to have grown a crop or have familiarity with farming,” said Fain. The company recently hired Caralyn Cooley as chief people officer, who was also previously with Jet.com, Amazon, and Pepsi. Cooley has deep experience working with an hourly workforce and the types of workers Bowery will be looking for in its farms in terms of experience and salary, said Fain.
Bowery wouldn’t disclose how much of the $170 million-odd raised has been spent on its technology platform — although we know it to be significant — but Fain said its a critical part of the company’s success.
“Building technology is hard, it’s expensive, and it takes time, but the tech you use in indoor ag has a direct and clear impact on the economics of the business you’re creating, the varieties you can grow, and the efficiencies you can generate and we realized this early on,” he said.
As Boaz Toledano recently wrote in a very popular AFN post, this type of second-generation indoor ag technology can enable vertical farms to yield 55 times more than first-generation vertical farms where tasks such as controlling lighting, heat and Co2 were automated to some extent but not optimized with data analysis.
Asked why they decided to build it in-house instead of deploying third-party technology that would have been cheaper, Fain said the ability to control and own the technology meant they could iterate on it and optimize at a very fast rate, unreliant on other vendors to make changes and updates. “The ability to create tech specifically for our system and ecosystem provides enormous efficiencies from farm to farm,” he said of the benefits of internal tech in scaling the company to multiple farms.
But Bowery emphasized that technology is still just one piece of the business; “scaling for Bowery is more than just evolving technology or rapidly opening new farms in new cities – it also means investing in agricultural science and R&D, and hiring top talent across the organization to support this continued growth. All of these factors (and more) ensure the brand can continue expanding their farm network and distribution footprint in 2020, and beyond,” the company said in a statement.
The agricultural science team, under Susan McIsaac, a plant biology Ph.D., is looking at optimizing and improving the varieties of vegetables the company grows today and researching new ones including new species across root vegetables, vine crops, and fruiting crops. Using BoweryOS data, it also suggests detailed tweaks to how to grow different crops and is looking at “how to push the boundaries in conjunction with the farm design team.” It’s not considering gene editing at this stage though, unlike some others in the space that recently created the Precision Indoor Plants (PIP) Consortium.
An Analysis of Vertical Vegetable Farms
Until recently, vertical farms were an exception in the market, but now this high-tech agricultural sector is rapidly gaining ground in urban centers of Asia, North America, and Western Europe
"Huge Investments, Confident Markets, But Still Many Uncertainties"
Until recently, vertical farms were an exception in the market, but now this high-tech agricultural sector is rapidly gaining ground in urban centers of Asia, North America, and Western Europe. However, their economic viability and agronomic interest, compared to field crops or greenhouses, are far from established. Why, then, do some investors choose to follow this path of innovation? What, exactly, are the technical solutions required to produce in confined buildings, without natural sunlight? And, does this business model have future prospects?
The French Centre for Studies and Strategic Foresight, part of the Ministry of Agriculture and Food General Secretariat, published an analysis on the market.
Urban agriculture is now promoted as a vector of sustainable food, quality of life and community engagement. Most often, though, it consists of small-scale home and leisure activities: shared neighborhood gardens, potted crops on balconies or green
rooftops, etc. These “initiatives” are confined to a niche by the lack of land and the intermittence of citizen involvement. The artificial
environment of the city, with its soil and air pollution, building shadows, and impermeable pavement hinders any large-scale deployment of urban gardens. Thus, their contribution to the populations’ food supply seems doomed to remain marginal.
On the opposite side of the social and market spectrum is urban agriculture for industrial and production purposes, and more specifically on vertical farms. With advancements in LED lamps, robotics, and information technology, multi-level indoor production units with reduced footprints are being created, dedicated to the intensive cultivation of plants and vegetables, mostly salads.
Contrary to greenhouses, these high-tech farms do away with natural light and cut all dependance to their outside environment. This version of urban agriculture has strong ambitions: mass production of quality food products, at any time, under any climate, close to consumers, and without the use of pesticides, all at market prices.
Download the full analysis here
Publication date: Thu 7 Nov 2019
Bowery Farming's $50 Million Financing Tops Recent Funding News In New York
New York-based agriculture company Bowery Farming has secured $50 million in Series B funding, according to company database Crunchbase, topping the city’s recent funding headlines. The cash infusion was announced Nov. 6th
Photo: Paul Arps/Flickr
November 12, 2019
New York-based agriculture company Bowery Farming has secured $50 million in Series B funding, according to company database Crunchbase, topping the city’s recent funding headlines. The cash infusion was announced Nov. 6.
According to its Crunchbase profile, "Bowery is the modern farming company growing the purest produce imaginable. We are on a mission to grow food for a better future by revolutionizing agriculture. By combining the benefits of the best local farms with advances made possible by technology, our indoor farms create the ideal conditions to grow post-organic produce you can feel good about eating."
The four-year-old startup has raised three previous funding rounds, including a $90 million Series B round in 2018.
The round brings total funding raised by New York companies in food and beverage over the past month to $55 million. The local food and beverage industry has seen 65 funding rounds over the past year, securing a total of $786 million in venture funding.
In other local funding news, lending and point of sale company Octane Lending announced a $45 million Series C funding round on Nov. 4, led by Valar Ventures.
According to Crunchbase, "Octane Lending is a point of sale financing platform focused on niche consumer lending markets. They are currently focused on the recreational market (motorcycles, ATVs, UTVs, personal watercraft, boats, RVs and snowmobiles). Their web-based platform helps dealers save time by eliminating the need to re-key customer information and helps move more units by opening dealerships to more prime/subprime lending sources."
Founded in 2014, the company has raised 11 previous rounds, including a $50 million debt financing round earlier this year.
Meanwhile, cloud data services and recruiting company Papaya Global raised $45 million in Series A funding, announced on Nov. 5. The round's investors were led by Insight Partners.
From the company's Crunchbase profile: "Papaya Global is a global HRIS that transforms global payroll, payments, and workforce management. Papaya Global's automated platform helps companies hire, onboard, manage and pay people in more than 100 countries. The cloud-based solution is easy to use and scale ensures full compliance and provides industry-leading BI and analytics."
Papaya Global last raised $3 million in funding in 2018.
Also of note, innovation management company Eight Sleep raised $40 million in Series C funding, announced on Nov. 6 and led by Founders Fund.
From Crunchbase: "Eight Sleep is the first sleep fitness company. It leverages innovation, technology, and personal biometrics to restore individuals to their peak energy levels each morning. Backed by leading Silicon Valley investors including Khosla Ventures and Y Combinator, it was named by Fast Company in 2018 as one of the Most Innovative Companies in Consumer Electronics."
The company previously raised $14 million in Series B funding in 2018.
Rounding out the city's recent top local funding events, rental property company SquareFoot raised $16 million in Series B funding, announced on Nov. 6 and led by DRW Venture Capital.
From Crunchbase: "SquareFoot serves companies that are looking for their next office and care deeply about finding the right next home. Growing companies require flexible lease options, a stress-free process, and transparency throughout the leasing journey. SquareFoot provides a seamless experience supported by easy-to-use technology and a highly responsive team of real estate professionals working to match specific client needs with a strong knowledge of what the market has to offer at any given moment."
The company previously raised $7 million in Series A funding in 2018.
Temasek Leads $50m Funding Round In US Indoor Farming Startup Bowery
“We are excited to share that Bowery’s third (and biggest) farm yet is launching in the DC-Baltimore area in early 2020. Along with this expansion, our team is elated to announce an additional $50 million in funding led by Temasek that will drive further innovation and scale across our organization,” it said on its Linkedin page
Southeast Asia India Greater China Rest of Asia World E-Commerce & Internet Economy Technology Real Estate and Infrastructure Financial Services Social Infrastructure Temasek leads $50m funding round in US indoor farming startup Bowery Farmers work at the Bowery Farming Inc.
indoor farm in Kearny, New Jersey. Photographer: David Williams/Bloomberg By Quynh Nguyen
November 7, 2019
Singapore state investor Temasek has led a $50-million Series B extension round for Bowery Farming Inc, a four-year-old startup that uses robotics to cultivate crops indoors.
“We are excited to share that Bowery’s third (and biggest) farm yet is launching in the DC-Baltimore area in early 2020. Along with this expansion, our team is elated to announce an additional $50 million in funding led by Temasek that will drive further innovation and scale across our organization,” it said on its Linkedin page.
Launched in 2015, Bowery is the modern farming company that uses robotics, LED lighting and data analytics to grow leafy greens indoors.
The company is currently operating two indoor farms in Kearny, New Jersey. Its new farm in Baltimore is around 3.5 times larger than the last, the company said.
The fresh funding brings the New York-based company’s total capital raised to $172.5 million. Last year, the indoor agriculture startup raised $90 million in Series B funding led by GV (formerly Google Ventures). Temasek, restaurateur David Barber’s Almanac Insights, and Uber CEO Dara Khosrowshahi joined the round.
Singapore-based investment firm Temasek last year participated in a $70-million Series B funding round in Pivot Bio, a US agriculture startup that combines machine learning and computational modeling to help microbes in providing plants with a daily supply of nitrogen, eliminating pollution in the process.
The round was led by Breakthrough Energy Ventures, a venture supported by billionaires.
Dean Foods Files For Bankruptcy And Is In 'Advanced Discussions' For Sale
Dean Foods, the largest dairy producer in the U.S., filed for Chapter 11 bankruptcy on Tuesday. The company also said it is in "advanced discussions" with Dairy Farmers of America, Inc. for a potential sale
AUTHOR Lillianna Byington@lil_byington
November 12, 2019
Dive Brief:
Dean Foods, the largest dairy producer in the U.S., filed for Chapter 11 bankruptcy on Tuesday. The company also said it is in "advanced discussions" with Dairy Farmers of America, Inc. for a potential sale.
The dairy producer said in a release it intends to use this process to support its ongoing business operations and address debt while it works toward selling the company. Dean Foods has secured commitments for $850 million in debtor-in-possession financing, which is funding for companies in financial distress.
"Despite our best efforts to make our business more agile and cost-efficient, we continue to be impacted by a challenging operating environment marked by continuing declines in consumer milk consumption," Dean Foods' CEO Eric Beringause said in a release.
Dive Insight:
Just two months after Dean Foods completed a strategic review and decided against a sale, the company is reversing course.
After a seven-month review, the dairy producer's Board of Directors decided in September to trust in its new CEO to turn the company around, saying Beringause would "provide the best opportunity to enhance long-term shareholder value." This was a lot of pressure for Beringause, who became CEO in July and inherited a troubled company.
Despite Beringause's extensive experience in the food and dairy industry, it seems he decided the problems facing Dean Foods were too large to tackle.
"Since joining the company just over three months ago, I've taken a hard look at our challenges, as well as our opportunities, and truly believe we are taking the best path forward," Beringause said in the release.
This filing for bankruptcy doesn't come as a shock, considering the years of struggle the dairy giant has had amid competition from milk alternatives and deeply discounted private label dairy.
Dean has tried many methods to improve its position, to no avail. Dean Foods has reported net losses in seven of its last eight quarters. In an attempt to overcome these hurdles, the company cut costs, increased its borrowing base and replaced its CEO. Last year, Dean Foods laid off 207 workers with the closure of two milk processing factories, ended more than 100 dairy contracts with the company to curtail how much milk it was buying and closed three other facilities.
Although food and beverage companies face financial turmoil, few file for bankruptcy. With this filing Dean joins companies including Hostess, which, under previous configurations, has filed for two Chapter 11 bankruptcies and a Chapter 7 bankruptcy. Atkins Nutritionals, Pure Foods and Groeb Farms have also filed for bankruptcy. Analysts have said the diversified portfolio of brands at most food companies can help a company in financial trouble avoid bankruptcy because there are opportunities to raise cash through asset sales.
That strategy didn't work for Dean, which has tried to diversify its portfolio during the last several years. As dairy, in general, continued to decline, Dean diversified its investments. The company purchased a majority stake in Good Karma Foods, which sells flaxseed-based milk and yogurt. It bought Uncle Matt's Organic, a maker of probiotic-infused juices and fruit-infused waters. It also acquired the retail ice cream business of Friendly's Ice Cream. But those moves have not been enough since the company is now working toward a sale of "substantially all assets."
One of the reasons Dean decided to stay independent after its recent strategic review could have to do with its lack of interest from potential buyers. Rumors that Saputo was looking at buying the company were squashed when the CEO told Bloomberg months later he wasn't interested. But now the company says it is in advanced talks with Dairy Farmers of America, which means that a deal could be close.
The dairy co-op could be buying Dean at a good price. Dairy Farmers of America, a co-op with 14,000 dairy farmer members with 47 plants nationwide, is accustomed to the troubles of the dairy industry today. The co-op was formed 21 years ago, and last year's net sales were down $1 billion from 2017.
If Dairy Farmers of America does buy Dean Foods, it will likely face similar struggles. Plant-based dairy alternatives have jumped in popularity across the country, hurting farms and milk producers. U.S. non-dairy milk sales were up 61% over the past five years, while dairy milk sales plunged 15% from 2012 to 2017, according to Mintel. Just last month, Dean Foods gave up its membership in the International Dairy Foods Association because it said the trade group doesn't share its key priority of opposing the labeling of plant-based products with dairy terms.
Looking to the future, it seems like the dairy industry's problems are on track to continue. Dean's move for bankruptcy — and potential sale — is its way out.
Follow Lillianna Byington on Twitter
Photo - Credit: Dean Foods
Contain Ready To Grow After Completing The Techstars Accelerator Program
Contain started from the ground up. It all began by talking to indoor farmers about their finance needs. Over the last 18 months, we met over 300 growers and developed a deep knowledge of what growers need when looking for finance
Nov 7, 2019
Contain started from the ground up. It all began by talking to indoor farmers about their finance needs. Over the last 18 months, we met over 300 growers and developed a deep knowledge of what growers need when looking for finance.
Once we had developed our expertise through first-hand knowledge and executing a number of leases, we recognized the need to grow what we learned from those conversations. It was time to take the next step as a start-up.
Here enters the Techstars accelerator program.
Last Spring, we pitched and were selected to participate in the Techstars’ Farm to Fork accelerator program, a program that provides ambitious tech startups with corporate mentorship and investment, backed by Cargill and Ecolab. Now, three months later, we’re ready to use the resources of the program to serve more clients, according to their needs. In other words, we’re growing (and we’re growing fast). We’re excited to share more about this exciting new stage in the company. Here’s what’s on the horizon for us.
We’re changing the way indoor farmers find financing.
The investment from Techstars gave us the opportunity to convert our knowledge into an automated leasing platform built for indoor growers. Our newly developed algorithms match indoor growers with the optimal lenders and provide growers with leasing options. And this platform isn’t just for farmers. It also includes specialized portals for equipment vendors and lenders.
We’re growing our mission.
The new platform sets the stage for rapid growth for Contain. It automates our process, and allow us to add hundreds of vendors and lenders to the platform. This in turn, will enable the success of thousands of growers. We’re already working hard to on board the numerous vendors and new lenders that now want to work with us.
Techstars’ Farm to Fork Demo Day
Our network is deeper than ever.
During our time in the accelerator, we developed valuable relationships with industry experts. We got to seek advice from leaders in the marketplace, financial services, and consumer packaged goods mega-corps. We worked with these mentors on everything from product development to marketing and fundraising strategies. As a Fintech company, we’re excited to work with the broader Techstars’ network in New York, Chicago and the Bay Area. We now have more relationships than ever to help us realize our vision.
The program has strengthened our team internally as well. The Contain team is a distributed one. Overall, this is a strength of the company; We see it as one of our advantages that we can accommodate our team members’ lives and still work with experienced and highly skilled folks. But that means that our headquarters is usually Slack, and we hang out with each other virtually most of the time. Being in one location for the summer gave us the opportunity to spend more time with one another in person and become more cohesive as a team.
But at the end of the day, it’s not just about the corporate connections or our team. It’s about the indoor farmers that inspire our work. Here is our CEO Nicola Kerslake, on what we learned while conducting interviews with some of the indoor growers we had worked with prior to the program.
“The greatest boost to the Contain team during the program was interviewing some of the indoor growers that we had worked with,” she said. Kerslake continues, “we realized that we had made a difference in the life of farmers and the communities that they support.”
For her, “It’s the best feeling to know that our hard work has a positive impact in the wider world.”
WRITTEN BY Nicola Kerslake
We’re Contain Inc. We use data to improve access to capital for indoor growers, those farming in warehouses, containers & greenhouses. https://www.contain.ag/
NL: Bankruptcy Filed For AC Hartman
In mid-2017, TFFG took over the 72-hectare Frisian organic grower and there were great plans and expectations. Less than half a year later already, the reality turned out to be different and problems arose that eventually led to this decision
Major shareholder The Fruit Farm Group today filed for bankruptcy of its subsidiary AC Hartman. In mid-2017, TFFG took over the 72-hectare Frisian organic grower and there were great plans and expectations. Less than half a year later already, the reality turned out to be different and problems arose that eventually led to this decision.
A.C. Hartman is one of the premier suppliers to Dutch retailer Albert Heijn.
The Fruit Farm, De Weide Blik
The Fruit Farm is part of holding De Weide Blik, which is 90% property of entrepreneur Hein Deprez, well-known for the publicly listed Greenyard multinational of which he currently owns 49%. When acquiring AC Hartman, Hein Deprez said it takes a family company to make most out of produce growing companies, since maximizing profit is not something that can be done in the fruit-producing industry.
Still, the acquisition of AC Hartman wasn’t a success. Following this news in 2017, the announced expansion was canceled, various lawsuits followed regarding the takeover and dozens of people were fired. Two other locations of the farm were sold. Still, the considerable losses started putting pressure on the figures of The Fruit Farm. Earlier this year they announced plans to sell the facility in Sexbierem.
Now the company filed for bankruptcy. According to the board of directors of The Fruit Farm Group, the decision was inevitable: "We have worked hard to keep this beautiful company in the air, so it is painful to have to acknowledge that, together, we have unfortunately not succeeded in doing so. But everything has a limit and that has, in the recent past, been reached several times and now exceeded. There were no other options for us."
Dutch market of organic vegetables
AC Hartman has about 70 permanent employees, supplemented by seasonal workers. The company is an important player in the Dutch market of organic vegetable production and supplies to renowned companies.
The court will appoint a trustee as soon as possible to investigate possible future scenarios. There are already parties at AC Hartman who are interested in the company.
Update
In response to the bankruptcy petition, Greenyard states that the bankruptcy has no effect on Greenyard itself, because AC Hartman operated independently, also financially. "The Fruit Farm Group is a supplier to Greenyard of exotic fruits as well as local European vegetables and is ultimately owned by the same shareholder as Greenyard", they confirm.
"Greenyard regrets this unfortunate news given the long-standing relationship with A.C. Hartman. Greenyard is not related to the A.C. Hartman nor to The Fruit Farm Group as it is a separately managed group, both operationally and financially. As Greenyard has alternatives for the products concerned, it is not expecting this event to have negative consequences for its customers. Greenyard’s positive recovery will also not be affected by this event."
Publication date: Fri 1 Nov 2019
Bowery Raises $50M More For Indoor, Pesticide-Free Farms
Indoor farming startup Bowery announced today it has raised an additional $50M in an extension of its Series B round. This comes just nearly 11 months after it raised $90 million in a Series B round
Indoor farming startup Bowery announced today it has raised an additional $50M in an extension of its Series B round. This comes just nearly 11 months after it raised $90 million in a Series B round that we reported on at the time.
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In a written statement, Bowery said the add-on was the result “of significant momentum in the business.” Temasek led the extension and Henry Kravis, the co-founder of Kohlberg Kravis Roberts & Co., also put money in the “B+ round.” The financing brings the New York-based company’s total raised to $172.5 million since its inception in 2015, according to Bowery.
The startup, which aims to grow “organic, sustainably grown produce,” also announced today its new indoor farm in the Baltimore-DC area. The new farm is 3.5 times larger than Bowery’s last facility, according to the company. Its network of farms “essentially communicate using Bowery’s software.” according to the company, and benefits from the collective intelligence of 2+ years of data.”
How It Works
Bowery’s proprietary software system, BoweryOS, uses vision systems, automation technology, and machine learning to continuously monitor plants and all the variables that drive their growth.
“Because we control the entire process from seed to store, Bowery farms use zero pesticides, 95 percent less water, and are 100+ times more productive on the same footprint of land than traditional agriculture,” the company claims.
Co-founder and CEO Irving Fain said at the time of Bowery’s last raise that in general, the company is focused on creating “scalable solutions for an impending climate and food crisis.”
“And we deeply believe in the power of technology to make drastic, necessary improvements to the food system,” he added.
Since the last raise, Bowery says it has extended its computer vision system and increased automation.
Bowery’s produce is currently available at select Whole Foods, Amazon Fresh, Westside Market and other retailers.
The market for organic food is growing, and so is the number of startups working in the space. Last December, Paris-based Agricool, which has its own take on Agtech innovation, picked up a $28 million round. That company has developed a way to grow produce inside of its “cooltainers,” which are essentially large shipping containers.
Previously, Crunchbase News writer Joanna Glasner reported that funding for venture-backed U.S. agricultural companies spiked in the first half of 2017, with investors seeking to fund companies applying robotics, data, genetic engineering, and other technology to farming practices.
Illustration: Li-Anne Dias
‘Chaotic’ Culture At SoftBank’s Vision Fund
SoftBank says the culture has improved in the year since that report, but there are more reasons for scrutiny, aside from the fund’s write-downs on its investments in Uber and WeWork. Indoor farming startup Plenty, dog-walking app Wag and robot pizza maker Zume are all worth less than what SoftBank invested
By Cory Weinberg
October 31, 2019
Source: The Wall Street Journal
The Wall Street Journal paints a bleak picture of the inner workings of SoftBank’s Vision Fund, where investment decisions are often made in minutes. Employees told outside consultants last year about a “chaotic” culture where investors are “incentivized to gamble to look good” and build their personal brands.
Another related detail in the story is perhaps more damning: Startup executives seeking money from the Vision Fund were “taking advantage of the fund’s disorganization,” one executive told the consultants.
SoftBank says the culture has improved in the year since that report, but there are more reasons for scrutiny, aside from the fund’s write-downs on its investments in Uber and WeWork. Indoor farming startup Plenty, dog-walking app Wag and robot pizza maker Zume are all worth less than what SoftBank invested, the Journal notes.
As for SoftBanks’s second Vision Fund, key investors like Singapore’s GIC sovereign wealth fund and the investment arm of Koch Industries, have pulled out of their initial commitments.
Trying to right the ship is Vision Fund leader Rajeev Misra, a former Deutsche Bank executive who ingratiated himself with SoftBank boss Masayoshi Son by knowing how to find cash when it needed to buy cell phone carriers and controversial bets. He says the company will spend its money more slowly next time it raises its giant tech fund.
Abu Dhabi Prepares For The Future of Food
This is a historic year for Agriculture Technology (AgTech) in the UAE. This March the Abu Dhabi government approved an AED 1 billion package to support the AgTech sector
This is a historic year for Agriculture Technology (AgTech) in the UAE. This March the Abu Dhabi government approved an AED 1 billion package to support the AgTech sector. The package is part of Ghadan 21 (Tomorrow 21), which is a three-year AED 50 billion program designed to accelerate the capital’s economic growth and reduce dependency on oil revenues. It is led by the Abu Dhabi Investment Office (ADIO), which was created in 2018 with the mandate to increase foreign direct investment. In this article, we are going to take a deep dive into the initiative.
What is it?
The stimulus consists of cash and non-cash benefits, which include rebates of up to 75% of R&D costs subject to eligibility and commercialization criteria.
Who is eligible?
Local and international companies are eligible. The program is focused on three specific sectors in the AgTech industry that have been identified for their strategic significance: precision farming and agriculture robotics, indoor farming, and bioenergy (algae).
But why?
The government has taken this major decision primarily for three reasons.
Firstly, the government seeks to establish Abu Dhabi as a global center for innovation in agriculture, especially in desert environments. This is achievable because the AgTech industry is in its early stages globally. As such, there is an opportunity to become global leaders if we become knowledge exporters. R&D is underfunded globally, which is why the initiative targets R&D and seeks to attract the best talent from around the world.
Secondly, agriculture is a high-risk industry due to the sheer number of variables that cannot be controlled, which is why governments around the world provide various levels of assurances and support. AgTech promises to decrease these risks in the medium term. However, developing and localizing these solutions to the UAE’s environment adds a degree of complexity. This is why the government’s initiatives are crucial for the success of this industry as a whole.
Finally, the government recognizes the urgency of addressing food security and diversifying the economy. Currently the UAE imports over 90% of its food, and the country’s population is forecast to increase from today’s 9.4 million to 11.5 million by 2025. Demand for food, especially high-quality produce, is set to rise sharply. A booming AgTech industry should meaningfully reduce dependence on imports.
What is expected?
Like any investor, the government seeks the highest return for its investment. The government measures success by analyzing which initiative will have the largest GDP multiplier (i.e. where 1 AED will generate the biggest knock on effect). In addition to reducing dependency on food imports and oil revenues, the package is expected to generate a contribution of AED 1.65 billion to the GDP and create more than 2,900 jobs in Abu Dhabi by 2021.
Are there any other benefits?
In addition to funding R&D, the initiative allows it to be easy to setup in AD with world-class infrastructure etc. and attract global level talent here to make UAE a global center of excellence for this industry.
Additionally, …
Government funding alone does not ensure success. Regulations need to keep pace with technological and commercial innovation. The ADIO acts as a bridge for industry to discuss the regulatory environment. These discussions have played in a key role in recent regulatory changes for the agricultural industry.
The Abu Dhabi government consolidated regulation of the agriculture sector through the establishment of the Abu Dhabi Agriculture and Food Safety Authority (ADAFSA). This new organization has taken on the roles of the Abu Dhabi Food Control Authority, the Abu Dhabi Farmers’ Services Centre, and the Food Security Centre – Abu Dhabi. It is responsible for overseeing agriculture, food safety, food security, and biosecurity. The founding of ADAFSA is another step in accelerating the emirate’s efforts to drive scientific research and agricultural development while helping to build partnerships between the public and private sectors, according to Sheikh Mansour bin Zayed Al Nahyan, the deputy prime minister and minister of presidential affairs. He told local media:
“Food security continues to be a national and strategic priority that entails concerted actions between the government and private sectors in order to ensure a well-integrated food security strategy that is conducive to unlocking the value in the agriculture and food supply chains, and ensuring all segments of society have access to all food supplies”.
Like any new industry, businesses in the AgTech industry will inevitably discover that some aspects of the existing regulatory framework do not meet their commercial needs. This is natural as regulators cannot predict future industry requirements with 100% accuracy. However, it is encouraging to see that the government is proactive about increasing their understanding and are taking decisive actions. We are more optimistic than before about the AgTech industry’s prospects in the UAE.
For more information, please visit www.investinabudhabi.ae or follow them on Instagram, Twitter, LinkedIn and Facebook.
Digant Raj Kapoor
People Manager
Sources
Gulf News – 11 March 2019
The National – 11 March 2019
Arabian Business – 11 March 2019
ADIO Website – seen on 26 August 2019
Zawya – 15 May 2019
AgFunder News – 25 March 2019
World Future Energy Summit – 27 March 2019
UK Food Technology Company, Vertical Future, Completes Its £4m Seed Round To Accelerate Growth Plans In London
Vertical Future, a London-based food technology company, announced the completion of its Seed Round, raising £4m of equity finance, with further investment expected in the coming months. The company uses technology to produce high-quality, ethical food (primarily baby leaf vegetables and herbs), in controlled environments
Funds will be used to build additional ethical plant factories in London Fields and Mayfair, expanding from its existing site in Deptford
The move will also see improvements in technology, primarily in automation, data, and nutrition
Earthworm, lead investor, and High-Net-Worth-Investor-base invest in high-yield food production for urban environments
The company’s long-term objective is better urban health
Today (7th October 2019), Vertical Future, a London-based food technology company, announced the completion of its Seed Round, raising £4m of equity finance, with further investment expected in the coming months. The company uses technology to produce high-quality, ethical food (primarily baby leaf vegetables and herbs), in controlled environments. They also develop efficient and sustainable methods of food production and supply systems, with a long-term commitment to improving health and reducing CO2 emissions in cities.
“Following several years of hard work, today’s raise validates our growth strategy and strong position in the London market, furthering our mission to improve the food and health of urban inhabitants, starting in London,” said Jamie Burrows, Founder, and CEO of Vertical Future.
The capital raised will be used to support the first phase of Vertical Future’s long-term, ambitious growth strategy. The company will see a 25x increase in crop production capacity across its London operations, aided by the development of two new ethical plant factories” in London Fields and Mayfair, as well as further developing its existing site in Deptford. Despite significantly more automation, this heightened production is expected to lead to 30 or more permanent local jobs, with more specialist roles focusing on the development of in-house growing tech, robotics, and process management.
The investment round was led by Earthworm – a fast-growing impact investor with a portfolio across food, energy, and waste – and supported by corporate finance adviser, Acceleris Capital. Also supporting the raise was Amberley Advisory and Gateley.
Ben Prior, CEO of Earthworm said: “Vertical farming offers huge potential in solving one of the biggest issues of our time – how to feed a growing population sustainably. We are really impressed with Jamie’s vision and work ethic, and the team at Vertical Future has a very special business poised for growth.”
Lord Nigel Crisp, Former Head of the NHS and Non-Executive Board Member at Vertical Future, added: “This is our first major move in this sector, enabling us to direct our work more towards health, in addition to purely producing food, in future years. Sustainable food will be one of society’s biggest health challenges and we aim to be at the forefront of the effort for better, long-lasting, tangible solutions”
Vertical Future’s ability to produce significantly more food will target a 10x increase in its Business-2-Business (B2B) restaurant, home cooks, and food brand customers – sold under the “MiniCrops” consumer brand. Current customers include Tom’s Kitchen, Mindful Chef, Chop’d, Kaleido, Sartoria, Lahpet, and Quaglino’s, to name a few.
Simon Thorn, CEO of Acceleris said: “We are delighted to complete this transaction with Jamie and the team at Vertical Future. We believe that we have secured an excellent investment partner in Earthworm and we look forward to supporting the company’s growth over the coming years. The team has attracted an impressive customer base so far and we see plenty of areas for growth.”
About Vertical Future
Vertical Future is a privately-owned technology company focused on improving health in cities through developing a better, more efficient food production and supply system.
About the Founder
Jamie Burrows previously worked as a consultant specializing in healthcare and life sciences strategy. Before founding Vertical Future in 2016, he worked at numerous top-tier consulting firms including EY and Deloitte, and also undertook a secondment to the Office for Life Sciences at the Department of Health. Educated to Ph.D. level in Economics, Jamie believes that much of the Vertical Future business directly relates to the central theme of health economics - resource scarcity.
About Earthworm
Earthworm is an environmental fund manager which only backs projects that will have a positive social or environmental impact.
We work closely with industry professionals from food, energy and waste to source, develop and nurture start-up and scale-up businesses with significant commercial potential. Although it is vital for the companies within the Earthworm community to make a return for our investors, it is equally important that they are ethically driven and they contribute to the circular economy. Members of the Earthworm community share expertise and best practice to support each other and achieve the best return for investors.
Earthworm now manages over £100m of investor capital. 10% of Earthworm profits go to charitable causes and 10% is invested directly in the environmental technologies of tomorrow.
About Acceleris Capital
Acceleris Capital are an FCA regulated corporate finance boutique that focus on advising early-stage technology SMEs.
Since incorporation in 2000, Acceleris have advised and managed fundraisings for over 50 UK businesses and raised over £120m, with a track record including start-up to IPO, trade sale and private equity exits.
Acceleris primarily source external funding directly from their network of High Net Worth investors and major UK investment institutions.
For more information and interviews, please contact:
Jess@ha-lo.co
+44 7789102402
The Inside Scoop On How Growers Can Up Their Funding Odds
Funding is a constant headache for many getting started, or even just keeping on, in the indoor ag world. We chatted with Contain’s VP of Business Development, Doug Harding, to get the inside story on what lenders are looking for, and the best ways to up your odds of getting funded
Image courtesy of CropKing
Funding is a constant headache for many getting started, or even just keeping on, in the indoor ag world. We chatted with Contain’s VP of Business Development, Doug Harding, to get the inside story on what lenders are looking for, and the best ways to up your odds of getting funded.
What main things are funders looking for?
Startups are going to be construed as riskier by any lender. They really don’t have a track record. In some cases, they don’t have the experience.
They have to have a thoughtful business plan. They’ve got to figure to commit some capital. We have a lot of people that come in and think that they can do it with no commitment on their own and hope that it works. Really, if you think that through, all the risk then lies with the lender, and that’s probably not going to work.
Image courtesy of Doug Harding
How much capital should growers expect to put in upfront?
It really depends on the size of the deal. Focusing on startups, 20%. In some cases more.
If they have more it can help get them more favorable terms on financing. If the lender requires an absolute minimum of 20%, and the customer has a pretty well thought-out business plan, is dealing with a reputable vendor, and maybe even has an offtake agreement, where they know they’re already going to sell their product, and maybe they’re going to come up with 40% down, they’re going to get a better offer.
It could be a longer-term. It could be because of that additional down they can help shorten their term, and that’s what a customer should always try to do. When you’re borrowing money for the first time for a startup business, keep the term as short as possible. You’ve got to afford the payment, but you’ve also got to assume your cost of capital after you prove yourself can be dramatically lower than when you first start out.
What are some other ways to bump up your funding odds?
Be reasonable with your size. When you’re first starting out, make sure, even though you think you have everything thought out in your business plan, start off smaller. We have some first-time growers that want to start off with a $5 million project with limited capital and no experience, and it’s just not going to work. Even if we could get that funding, why would you want to gamble that much before you really know what you’re doing? So start off small, get a feel for it, make sure that it’s something you have passion, ability, and time for.
What’s a common misconception that lenders have about indoor ag, compared to something like financing cars or houses?
A common misconception would be that even some of the experienced lenders in the industry really still are very uncertain on what the equipment’s worth. When that happens, they’re going to tend to be more conservative. They’re going to focus much more on the grower, and it may manifest in the form of insisting on more money down, just trying to dot their i’s and cross their t’s.
How can growers get around that reluctance?
It’s somewhat static. What they can do is stick to their business plan. If they’re successful in obtaining their funding, I’d tell them to work hard, and prove themselves, and show a track record and help prove the industry right.
We all know that everything about this industry makes sense. You can spend a whole lot less money. You can hedge your bets with climate conditions. You can grow year-round. There’s a growing need for food, as our population will increase for the next 30 years. Prove yourself. There’s not much they can do upfront other than making sure that they have things well thought out.
What are some common funding mistakes first-time growers make?
I think sometimes growers place too much emphasis on some of the initial conversations they have as far as where they can sell their product. It’s a long road to actually start growing and have the quality of product and still have that relationship intact, so I think one common mistake is that although it’s very prudent for potential growers to have a source of where they’re going to sell their product, it shouldn’t be the basis of their decision to start growing.
My advice is to not put all your eggs in one basket. If you get that kind of response, go talk to five others, and figure on not having just one source to sell your product to. Things could change.
What do the next five years in funding indoor agriculture look like?
That’s a real positive thing in the industry. Lenders are in business to generate a profit. In the next five years, as more and more lenders jump in—and it’s always a slower process at the beginning—other lenders are going to see the opportunity. People are going to understand what things are worth that they don’t know now, and it’s just going to be an evolution as it always is in a new industry.
That’s one of the really optimistic things about where Contain has positioned itself. We’re at the forefront of that. There’s only an upside ahead. Lenders are always looking for an opportunity, and there’s a giant opportunity in indoor ag.
Any final pieces of advice?
No one likes applying for financing. It can be a very frustrating process. If you’re trying to do it through traditional sources, it can almost lead to insanity. I mean, most people just don’t have the patience for it. It leaves you second-guessing your decisions.
We think that we can help dramatically speed up that process and take that frustration out for many customers by being aligned with the right lenders. Customers still need to be patient, but they need to understand that working with the right company can make their life a whole lot easier.
This conversation transcript has been lightly edited for length and clarity.
Learn more about Contain and funding your indoor ag business at our website, and subscribe to Inside The Box, our weekly newsletter.
WRITTEN BY
Nicola Kerslake
We’re Contain Inc. We use data to improve access to capital for indoor growers, those farming in warehouses, containers & greenhouses. https://www.contain.ag/
Intelligent Growth Solutions Attracts Further US AgriTech Investment To Scotland
Intelligent Growth Solutions Ltd (IGS), the Scottish-based indoor AgriTech and Commercial Lighting business, announced today a further raise of £1.6 million in the second and final close of its Series A funding
Edinburgh, Scotland – 26 September 2019 - Intelligent Growth Solutions Ltd (IGS), the Scottish-based indoor AgriTech and Commercial Lighting business, announced today a further raise of £1.6 million in the second and final close of its Series A funding. The £1.5 million received from globally established agri-investor Ospraie Ag Science (OAS), coupled with an additional £100k from Agfunder, brings IGS’ total Series A fundraise to £7 million.
Ospraie Ag Science (New York City) joins existing Series A investors S2G Ventures (Chicago), the most active agri-foodtech investor globally in 2018; online venture capital firm AgFunder (San Francisco); and the Scottish Investment Bank in the investment round.
Ospraie brings 25 years of agriculture investing experience to IGS, and its investment in the company is its first step towards building a global platform in the indoor AgriTech market.
Dwight Anderson, Chief Investment Officer at Ospraie Ag Science commented: “IGS has tremendous potential to transform the way food is produced and supplied, and our investment – Ospraie’s first in the indoor agriculture market and in Scotland – is a testament to our strong belief in the success of IGS’ technology. The benefits of IGS’s Vertical Farming align well with our mission of helping farmers do more with less. We look forward to leveraging our significant agriculture network to help IGS grow its business to meet the market’s demand for sustainable solutions.”
This latest raise allows IGS to further expand its market presence through global sales operations for both AgriTech and Commercial Lighting. Demands for its systems are high with the first deployments expected in early 2020.
IGS Chief Executive Officer David Farquhar said: “The further investment of £1.6 million is a hugely exciting one, not only for our business but also for the Scottish economy. Ospraie has chosen IGS as its initial investment target in the indoor agriculture market, and also as its first investment in Scotland, which is a substantial endorsement of our technology and approach to date. Working alongside our other investors in this Series A funding we are in a really strong position to take our offering to a global market and meet the demand that is growing almost daily.
“The pressures of climate change are real and clear and our technology and systems have the ability to play a part in addressing how we produce and supply food sustainably and productively all over the world. Our customers in the commercial property world are equally keen to adopt IOT-enabled smart lighting to create better indoor climates for their tenants and visitors alike.”
IGS has designed all its products to be highly pragmatic, flexible, modular and scalable in line with market expectations.
Sanjeev Krishnan, Managing Director of S2G Ventures said: “We are excited to partner again with Dwight and the Ospraie team. IGS will benefit greatly from the Ospraie insights, networks and entrepreneurial vision in building scaled businesses in the outdoor sector. Indoor Ag is set up to grow considerably and we are excited about IGS’ role in that effort.”
Michael Dean, founding partner at AgFunder commented: “We are delighted to see our friends at Ospraie join us as investors in IGS. We look forward to working with the Ospraie team to ensure that the game-changing IGS technology is rolled out to Controlled Environment Agriculture project developers globally.”
Kerry Sharp, Director, Scottish Investment Bank, said: “Intelligent Growth Solutions has made good progress recently. This latest investment is a testament to the hard work and vision of the management team and will help the company as it takes its technology to the global marketplace. A company like IGS securing three international investors in Ospraie, S2G, and AgFunder goes a long way to highlight the strength of opportunities available for Investors outside Scotland looking to invest in innovative Scottish companies. We look forward to continuing the journey with the company through our investment and our Scottish Enterprise account management service.”
The Scottish-led R&D team at IGS has developed, patented and productised a breakthrough, IoT-enabled power and communications platform consisting of patented electrical, electronic and mechanical technologies as well as the world’s most sophisticated ventilation system. All this is managed by a SaaS and data platform using AI to deliver economic and operational benefits to indoor environments across the globe.
About IGS:
IGS was formed in 2013. Its purpose was to bring indoor horticulture to commercial reality by combining efficient internet-enabled smart lighting with automation and power management. The founders’ experience combined extensive knowledge of horticulture, industrial automation, and big data.
IGS launched its first vertical demonstration facility in August 2018 and is now selling a revolutionary controlled-environment growth system. The location of IGS’ facility at the James Hutton Institute, a world-leading crop research facility, was deliberately chosen to enhance collaboration opportunities for the benefit of customers. Scientists and researchers at the Institute are working with the team at IGS to better understand how growing indoors can impact different varieties of crop growth, as well as driving increased productivity.
For more information visit www.intelligentgrowthsolutions.com or connect with us on Twitter and LinkedIn.
About Ospraie Ag Science:
Ospraie Ag Science LLC (OAS) identifies solutions to help farmers "Do More With Less". By increasing profitability, improving quality-adjusted yield, and reducing environmental impact, OAS’s companies not only benefit producers, but generate smarter, healthier, and more efficient food for consumers globally. Utilizing its extensive network and 25 years of experience investing in agriculture, OAS is positioned to help farmers achieve a sustainable future.
About S2G Ventures:
S2G Ventures (Seed to Growth) is a multi-stage venture fund investing in food and agriculture. The fund’s mission is to catalyze innovation to meet consumer demands for healthy and sustainable food. S2G has identified sectors across the food system that are ripe for change and is building a multi-stage portfolio including seed, venture, and growth-stage investments. Core areas of interest for S2G are agriculture, ingredients, infrastructure and logistics, IT and hardware, food safety and technology, retail and restaurants, and consumer brands. For more information about S2G, visit www.s2gventures.com or connect with us on Twitter and LinkedIn.
About AgFunder
AgFunder is an online Venture Capital Platform investing in the bold and exceptional entrepreneurs transforming our food and agriculture system. Our in-house technology enables us to invest globally and at scale, make better investment decisions, and support our portfolio companies. Through media and research, AgFunder has built a community of over 60,000 members and subscribers, giving us the largest and most powerful network in the industry.
Stay up-to-date with Food Tech and AgTech startup news, and other reports, by signing up to our newsletter here.
About the Scottish Investment Bank
The Scottish Investment Bank (SIB) is the investment arm of Scotland’s national economic development agency, Scottish Enterprise, operating Scotland-wide in partnership with Highlands and Islands Enterprise (HIE). SIB’s activities support Scotland’s SME funding market to ensure businesses with growth and export potential have adequate access to growth capital and loan funding.
SIB manages a suite of co-investment funds including the Scottish Co-investment Fund, the Scottish Venture Fund and the Energy Investment Fund on behalf of the Scottish Government. SIB is also an investor in Epidarex Capital’s Life Sciences Fund and is a participant in the Scottish-European Growth Co-Investment Programme with funding secured from the Scottish Government’s Scottish Growth Scheme alongside the European Investment Fund.
SIB also provides funding into LendingCrowd, Scotland’s marketplace lender providing loans to SMEs, and Maven's UK Regional Buy-Out Fund (MBO) that offers financial support for management buyouts (MBOs) and helps existing management teams acquire their businesses from their owners so they can continue to flourish. SIB’s team of financial readiness specialists help companies to prepare for new investment and access appropriate finance.
US: Early Morning Farms And Global Access Capital Enter Into Global Joint Venture
Early Morning Farms LLC (EMF) is an indoor vertical farming company in the business of deploying indoor vertical growing systems which we seek to locate in facilities near every major market in the United States and throughout the world
Minneapolis, MN
September 17, 2019
New Hope, MN-based Early Morning Farms LLC (“EMF”) and Minneapolis, MN-based Global Access Capital LLC (“GA Capital”) announce their entry into a global joint venture to bring Early Morning Farms’ best in class indoor vertical farming to the world. The new joint venture is Early Morning Farms International (“EMFI”). Preliminary discussions are already underway in several countries.
“I am excited to be working with the team at GA Capital to catalyze our international expansion goals,” said Howard Rogers, COO, of EMF, continuing that “the depth and expertise of the GA Capital team will permit us to more broadly and deeply penetrate the global markets in which we seek to compete and allows EMF to keep its focus on expanding our domestic business”. “We also look forward to bringing our expertise in specialty mushrooms, particularly our unique ability to grow high-quality morel mushrooms year-round to customers and markets around the world that have not had consistent access to these highly valued specialty mushrooms up to now,” said EMF’s Founder and Chairman Dean Terry.
“On our side, we are very excited to join forces with Howard and the outstanding team at EMF to bring their state-of-the-art growing techniques and technologies into new international markets,” said Michael Macaluso, a Principal of GA Capital. In addition, Gregg Haugen, CIO of GA Capital noted: “that GA Capital’s business has been evolving to include working with companies such as EMF as a business and operating partner to drive business expansion and market entry in domestic and international markets”.
About Early Morning Farms
Early Morning Farms LLC (EMF) is an indoor vertical farming company in the business of deploying indoor vertical growing systems which we seek to locate in facilities near every major market in the United States and throughout the world. Our indoor growing systems will provide consumers with high demand, top quality food products. EMF’s growing systems and multi-level growing facilities can significantly increase yields over conventional growing methods by many multiples. Fresh. Local. Organic. Everywhere!
For more information, please visit: www.earlymorningfarms.com
About GA Capital
Global Access Capital LLC (GA Capital) is an independent global operating partner, strategic advisor, and private direct investor. Accessing today’s domestic and global opportunities, while managing the attendant risks, in an environment characterized by intensifying competition and disruptive challenges, often in real-time, can prove challenging for even for the most savvy and innovative organizations. As an operating partner and strategic advisor, we work with our companies and clients to develop practical strategies and solutions for realizing their aspirations with greater certainty and less financial and execution risk through our integrated global approach. GA Capital advises, and from time to time partners with, growing businesses from growth-stage companies to the Fortune 500 that have significant opportunities in their markets or industries, seek to open or grow new markets, possess transformative or unique technologies and brands, and are typically led by experienced management.
For more information, please visit: www.globalaccesscsg.com
For additional information regarding Early Morning Farms International LLC, please visit us online at www.emfiverticalfarms.com or contact:
Gregg Haugen
ghaugen@emfiverticalfarms.com
+1.612.325.1806
Howard Rogers
hrogers@emfiverticalfarms.com
+1.612.998.3622
Forward-Looking Statements
This press release contains projections and other forward-looking statements regarding future events or our future financial performance. All statements other than present and historical facts and conditions contained in this release, including any statements regarding our future results of operations and financial positions, business strategy, plans and our objectives for future operations, are forward-looking statements. These statements are predictions and reflect our current beliefs and expectations with respect to future events and are based on assumptions, are subject to risk and uncertainties and are subject to change at any time. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Actual events or results may differ materially from those contained in the projections or forward-looking statements. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.
Media Contact
Company Name: Global Access Capital
Contact Person: Michael Macaluso
Email: Send Email
Phone: 6127184200
Address:80 South Eighth Street
City: Minneapolis
State: MN
Country: United States
Website: www.globalaccesscsg.com
AmHydro’s Joe Swartz On The “Shiny Object” Problem Plaguing Indoor Ag
All photos courtesy of American Hydroponics and Joe Swartz. Joe Swartz, Vice President of Contain vendor American Hydroponics (AmHydro), is a fourth-generation farmer from Western Massachusetts. When it came time for him to take over, he went looking for a way to do things differently
All photos courtesy of American Hydroponics and Joe Swartz.
Joe Swartz, Vice President of Contain vendor American Hydroponics (AmHydro), is a fourth-generation farmer from Western Massachusetts. When it came time for him to take over, he went looking for a way to do things differently. His family had faced numerous challenges with conventional outdoor agriculture, from the state’s short, 120-day growing season, to an uncle who died prematurely due to pesticide exposure.
Joe decided the solution was indoor agriculture, and since 1984, he’s grown just about everything you can imagine with every possible setup. We caught up with Joe to talk about why it’s important to educate the public about indoor ag, and how media hype can distract from the fundamentals of good farming.
What’s AmHydro’s approach, and what makes it unique?
Ironically, AmHydro started about the same time I started to grow, unbeknownst to each other. We have always focused on the philosophy of making growers successful by employing the correct technologies in the appropriate situation, not trying to sell this system or that system, but looking at a given situation and assembling the correct technologies to effectively grow.
In fact, I think AmHydro has more successful growers around the world than any other hydroponics company. We have growers in 66 countries around the world, soon to be 67, and we’re really very, very pleased with that.
What are some of the most common challenges about getting started in indoor agriculture?
There are lots of different technology companies trying to get your attention. The biggest challenge I see right now is a lot of inappropriate technology that’s being promoted, especially in the media and online, because people think certain things look really interesting or cool. We call it “shiny object” technology. These are not effective technologies.
A lot of vertical farming technology, where you’re essentially trying to cram as many plants into a give area as you can, from a horticultural standpoint, that isn’t correct. Plants have very specific needs in terms of environmental management and space management, and a lot of these systems ignore the basic horticultural concepts that are required for successful production.
You’re saying you think all vertical farms and plant factories don’t work?
Not all plant factories, but unfortunately that model is by far—and I mean by a factor of thousands—by far the most challenging segment of controlled environment agriculture in terms of making an economic return.
If you look at the industry, look at where the expansion is in hydroponics. Companies like Gotham Greens and BrightFarms are expanding rapidly because they have a cost-effective production model. Tomato operations such as Houweling’s and NatureFresh and Sunset are all expanding rapidly. Again, they’re utilizing effective technology.
What’s been the main benefit of working with Contain?
We were actually one of the first companies that Contain worked with. They believed in our model, and we believed in the model they had, which was helping provide financing solutions so that more people could enter this industry. We thought it was a great model — people who understood controlled environment agriculture and were offering financing models. Good people and proper technology is a good combination.
We’ve had a few projects where there would have been difficulty in locating financing, and they went through Contain and were able to do it, so it was an effective model. We hope to do more of that in the future.
What advice do you wish you got when you started growing?
I think I would’ve pushed myself to focus on the basics of correct horticulture. That means to learn as much about the lifecycle of the plant, the lifecycle of insect and disease pests, to understand the different living ecosystems that go on in a facility like that. At the end of the day this is still farming. With a lot of the technological advances, people forget that.
Why are some banks and investors reluctant to get into indoor ag, and how can we change that as an industry?
It’s a very capital-intensive business. It is expensive to set up and to get started. That’s always been one of the big pain points of getting into the industry.
And I do think that investment and interest in technologies that are not productive damages the industry. In the 1980s, Weyerhaeuser and Pepperidge Farms and General Electric and all these huge corporations began building large greenhouses here on the East Coast, and utilizing the pond system, and talking about lettuce factories, and these are all automated systems, and by 1990 all of our food is going to be grown in these indoor food factories. They all failed spectacularly, and millions and millions of dollars in investment were lost, and it damaged the credibility of the industry. It’s taken a long time for the industry to recover. Unfortunately, we’re heading down the same path today.
AmHydro does a lot of public education. Why is that important?
We feel very strongly that education is the key to everything. Basically you are looking at a very intensive form of growth that requires knowledge in terms of growing and business management to be successful. The more we educate our growers, the more successful they are.
What’s the most exciting trend in indoor agriculture?
The most exciting trend is the level of public awareness about the business, both from a consumer buying hydroponically grown produce, to people who want to get involved in the industry. This is the highest level ever.
When I was in agricultural college in the ‘80s, I was in a classroom of young people with 30, 35 students. I come back now to the University of Massachusetts and I lecture to 300 students, so the level of involvement has skyrocketed, and that’s tremendous, and I couldn’t be more excited.
This conversation transcript has been lightly edited for length and clarity. Learn more about Contain and funding your indoor ag business at our website.
Tags: Agriculture Indoor Agriculture Startup Finance Contain
WRITTEN BYNicola Kerslake
We’re Contain Inc. We use data to improve access to capital for indoor growers, those farming in warehouses, containers & greenhouses. https://www.contain.ag/
Are Vertical Farms Ready For Prime Time?
Plenty, Bowery, Aerofarms and 80 Acres Farms are among young companies that see a future in salad greens and other produce grown in what are called vertical farms that rely on robotics and artificial intelligence, along with LED lights
Indoor Farm Companies Say They're Scaling Up,
But Many Question Their Business Model
August 27, 2019
Plenty CEO and co-founder Matt Barnard (right) says his company is now competitive with organic competitors but critics say vertical farms are simply too expensive to run. Photo: Reuters/Jane Lanhee Lee
Indoor Farm Companies Say They’re Scaling Up,
But Many Question Their Business Model
Reuters — Leafy salad greens grown under banks of LED lights, with mist or drips of water are having their day in the sun.
Several top U.S. indoor farms say they are boosting production to a level where they can now supply hundreds of grocery stores.
Plenty, Bowery, Aerofarms and 80 Acres Farms are among young companies that see a future in salad greens and other produce grown in what are called vertical farms that rely on robotics and artificial intelligence, along with LED lights.
While the first versions of modern vertical farms sprouted about a decade ago, in recent years the introduction of automation and the tracking of data to regulate light and water has allowed them to get out of lab mode and into stores. Now they are trying to scale up.
Plenty and others say their customized, controlled lighting — some more blue light here, some more red light there — makes for tastier plants compared to sun-grown leaves and that they use 95 per cent less water than conventional farms, require very little land, and use no pesticides, making them competitive with organic farms.
And because vertical farms exist in windowless buildings that can be located in the heart of urban areas, produce does not have to travel far by fossil fuel-guzzling trucks to reach stores.
The companies’ expansion comes as plant-based burger makers Beyond Meat Inc. and Impossible Foods captivate investors and make inroads in high-end restaurants and fast-food chains.
But whether the sunless farms can compete financially with their field-grown brethren, given big upfront investments and electric bills, remains a question.
“We’re competitive with organic today and we’re working very hard to continue to make more and more crops grocery store competitive,” said Matt Barnard, chief executive and co-founder of Plenty, which is based in Silicon Valley.
Plenty’s salads sell on organic grocery delivery site Good Eggs for 99 cents an ounce, while a leading brand, Organic Girl, on grocery chain Safeway’s online site was priced at 80 cents an ounce.
Plenty said its new farm, dubbed “Tigris,” can produce enough leafy greens to supply over 100 stores, compared with its previous farm that could only supply three stores and some restaurants.
Bowery said its third farm coming online soon will help it supply hundreds of stores from dozens today, and Aerofarms, in New Jersey, said it is doubling its space to meet demand.
None of the three companies would give details about costs.
Former Vertical Farm CEO Matt Matros is skeptical that sunless farms can make economic sense. He invested in and ran Chicago-based FarmedHere in 2015, but changed its business into food processing.
“The issue with indoor farming was that you could really only grow a couple of things efficiently — namely basil and microgreens” Matros said. “But the problem is the world just doesn’t need that much basil and microgreens.”
80 Acres Farms in Cincinnati says it already grows and sells tomatoes and cucumbers, and Plenty is testing cherry tomatoes and strawberries in the lab.
Agriculture technology investor Michael Rose says vertical sunless farms are more expensive to run than modern greenhouses that rely on sunlight, supplemented by LED lights. He sees limited areas where it makes sense, such as the Middle East, where much of the food is imported, or China’s mega-cities where pollution and urban sprawl limit the availability of premium fresh food.
At Plenty’s new farm, robots put seedlings in tall, vertically hung planters. The planters move along a wall of LED lights for 10 days, and are then put through a harvesting machine that shaves off the leafy greens.
The machines minimize labour needs, and Plenty says the speed of production also helps control pests.
“We use no pesticides,” said Nate Storey, co-founder and chief scientist at Plenty. “We don’t even have to use things like ladybugs, because we go so fast in our production that we out-race the pests themselves.”
Can Indoor Vertical Farming Deliver Exceptional Returns For The Planet, Consumers, And Investors?
Food security, food quality, and resources scarcity are the main challenges the global agri-food system is facing. Indoor vertical farming promises to partially address these challenges by producing locally and efficiently fresh, chemical-free, and nutritious food
© kalafoto
Get Agroecology Capital’s full report on indoor vertical farming.
This report covers investment trends since 2010 and Agroecology Capital’s key investment drivers.
Food security, food quality, and resources scarcity are the main challenges the global agri-food system is facing. Indoor vertical farming promises to partially address these challenges by producing locally and efficiently fresh, chemical-free, and nutritious food. New farming systems increase yields, use less land and water, and allow a close quality and safety monitoring.
These promises and the ability of indoor vertical farming to industrialize high-value crop production have created a perfect window of opportunity to disrupt a multi-billion market (just for the U.S. leafy greens market), leading investors to respond favorably by investing large amounts in this industry.
Venture capital investment in indoor vertical farming is getting a strong traction
To assess the magnitude of these investments, Agroecology Capital’s report listed publicly available deals in indoor vertical farming between 2010 and 2019, globally. This report narrowed the scope of the analysis to companies that have developed comprehensive growing solutions with a substantial innovation component. Thus, companies with stable technologies (i.e., conventional greenhouses) or that only produce components (i.e., LED lighting) have been excluded from the scope.
The selected deals comprehend 31 different startups that, collectively, have received $873m between 2010 and 2019 (see the list of startups on the report).
Source: Agroecology Capital Research, 2019. Figures from Pitchbook, Crunchbase, CB Insights, and market data
Indoor vertical farming has represented a significant and increasing share of total AgTech venture capital investments. Large rounds such as AeroFarms (2013 and 2017) and Plenty ($200 million in 2017) led this vertical’s share to boost in 2013 and 2017 (10% in 2013 and 15% in 2017). Unsurprisingly, the U.S. has concentrated 89% of total investments between 2010 and 2019.
Source: Agroecology Capital Research, 2019. Figures from Pitchbook, Crunchbase, CB Insights, and market data
Despite a strong value proposition, several key aspects are still unclear from an investment perspective
Production costs for indoor vertical farming suffers when compared to conventional agriculture. Main production inputs, which are freely available in nature (i.e., light, air, water, CO2), have to be supplied at cost in indoor vertical farming. According to some startups, costs for an indoor-grown salad can reach twice those for an outdoor-grown one, putting energy efficiency[1] as a critical factor to optimize.
The high capital intensity required for scaling a vertical farming business is also a challenge for an industry that can neither compete on cost nor benefit from a network effect to establish pricing power. Moreover, the potential economies of scale are still unclear, if not insignificant. Although, energy prices might be subject to negotiation with energy suppliers, this case has not been witnessed yet given the small scale of current players.
Further, indoor vertical farms are currently able to grow only a limited number of crops. Leafy greens and herbs are easy to grow indoors, but other crops might be harder to grow at scale. The lack of readily available applied scientific research and data might also add risk on this vertical.
No player so far has proven that there is a sizable addressable market ready to pay more for a superior product or a product grown differently. The ability of the industry players to price discriminate might be a critical factor not only in reaching profitability but also in supporting an attractive business model.
Finally, there is no clear winner to date, and the range of current business models such as licensing technology and/or operating farms (the two main ones) might be a sign that the industry is still searching for an appropriate business model.
Venture Capital investment in indoor vertical farming: vertical integration vs. specialization
© Michael Sapryhin
Indoor vertical farming’s value chain might ultimately parallel that of traditional farming. Most of the value creation might be captured either by oligopolistic players at critical steps of the value chain (seeds bioengineering platforms, mass-market brand builders, and production technology providers) or by players with compelling business models.
Developing specific seeds for indoor vertical farming (i.e., optimized for Controlled Environment Agriculture and miniaturized crops) might lead to an improvement in yield and better-quality crops. Increasing crops variety, at an economically viable price, might also expand the addressable market. Startups focusing on seeds breeding and bioengineering for seeds adapted to indoor vertical farming might create attractive venture capital investment opportunities.
Demonstrating the outstanding quality of indoor-grown products will help to create strong brands and decommoditize these products, which might constitute a category of their own. Price positioning indoor-grown products as premium goods will ultimately allow growing companies and retailers to capture a significant share of the value.
Full suite of proprietary technologies (hardware and software) could increase product quality, operations efficiency, and reduce production costs. Data will undoubtedly play a central role in increasing yields and stabilizing/optimizing production. However, growing a crop, unlike improving the performance of chips, do not obey Moore Law. Improvement of production technologies will in fine lead to marginal gains, and value might shift to hardware, software, and ultimately data.
Innovative business models might help solve the capital intensity challenge by outsourcing the capital expenditure required to build facilities. Franchise model, for instance, might allow players to focus their resources on their proprietary technologies (including seeds bioengineering) while having franchisees invest in building facilities.
“In a Gold Rush, Sell Shovels”
Indoor Vertical Farming delivers outstanding returns for consumers (food security, safety, and quality) and probably for the Planet (less water and chemicals use vs. increase in energy consumption?).
However, the industry still needs to demonstrate a clear path to profitability and scalability. In its search of this path, proprietary technology providers (seeds bioengineering and production technology) might play a prominent role while mass-market brand builders might establish a new premium food product category.
From an investment perspective, strong macro drivers are pulling investment toward this industry, which is currently vertically integrated. Investors might want to funnel their investments into more focused and specialized technology players mastering critical parts of the value chain. These players might offer the most promising investment returns by successfully applying the adage “In a Gold Rush, Sell Shovels.”
[1] Weight of product grown with a kWh of energy input.
CIT Gap Funds Invests In On-Demand Farming
The Center for Innovative Technology (CIT) announced that its CIT GAP Funds has made an undisclosed investment in Babylon Micro-Farms, a provider of on-demand indoor farming services
August 20, 2019
By Lynda Kiernan
The Center for Innovative Technology (CIT) announced that its CIT GAP Funds has made an undisclosed investment in Babylon Micro-Farms, a provider of on-demand indoor farming services.
Founded in 1985, CIT focuses on the seed funding and early commercialization of innovation, and provides support to tech entrepreneurs growing new companies that will foster economic growth and create jobs throughout the state of Virginia. CIT GAP Funds is a venture capital vehicle through which to make seed stage equity investments in these technologies.
The latest venture to join the CIT GAP Funds portfolio is Charlottesville, Virginia-based Babylon Micro-Farms. Founded in 2017 by a pair of students at the University of Virginia, Babylon Micro-Farms enables small growers and businesses to gain greater control of their supply of fresh organic produce by making indoor farming more accessible through a range of scalable indoor farming modules.
“The idea for Babylon Micro-Farms was born in a social entrepreneurship class at UVA, when a professor asked my co-founder Graham and I to develop a high impact, low cost product that could help refugees. I quickly discovered and became interested in hydroponics, a way to grow plants without soil, use less water, and grow crops faster,” said Alexander Olesen, co-founder and CEO, Babylon Micro-Farms.
Sales of organic fresh produce increased by 8.6 percent in 2018 to reach $5.6 billion, according to the Organic Produce Network, and increasingly, vertical and indoor farming are stepping in to meet this demand. In just the U.S., the vertical farming market is expected to reach a value of $3 billion by 2024, and on a global scale, the market is forecast to see a CAGR of 24 percent to reach a value of $6.4 billion by 2023.
A relatively new category in agricultural production and agtech, the production of food utilizing highly controlled, closed, and modular hydroponic systems has seen startups evolve on multiple continents and is beginning to gain investor attention.
Boston-based Freight Farms, Paris-based Agricool, and Canada’s TruLeaf are a select few raising capital to bring modular, containerized farming to urban areas that often lack affordable, organic, fresh produce because of long and expensive supply lines.
Babylon’s modular indoor farms are powered by a patented IoT platform that remotely controls each farm’s custom tailored ecosystem, depending on each customer’s needs. The startup’s easy-to-use application guides farmers through each step: when to plant, watering and harvesting schedules, and includes live data and farm health alerts. This system allows for the growth of produce twice as fast as traditional farming, while requiring 90 percent less water, and no pesticides or chemicals.
“The mission to offer more accessible, affordable produce to a wider range of communities across the U.S. is one that CIT is excited to stand behind. Responses from existing Babylon Micro-Farms users, including a UVA dining hall, The Boar’s Head’s Resort, Corner Juice and others have been very positive and showcase the wide use cases for this solution,” said Thomas Weithman, managing director of CIT GAP Funds, and president and CIO of MACH37.
“Being able to grow any kind of produce year round within our communities, such as for local food service industries, education and assisted living, or community farms to name a few, is a game changer for the state of sustainable urban agriculture,” continued Weithman. “CIT is very confident in Babylon’s future success, and we look forward to being part of their journey.”
Supplies are delivered to Babylon customers ready-to-grow, and Babylon provides 24/7 farming support, drastically reducing the upfront costs associated with indoor farming, while also providing the expertise needed for successful harvests.
“Our mission is to develop technology that will inspire a new generation of urban farmers to grow their own fresh, affordable, sustainable produce at the push of a button,” said Olesen. “We are grateful for the support of CIT GAP funds at this stage of our development.”
– Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.
AUDIO: Mounting Investor Interest In Agricultural Technology
As the earth warms and the world’s population grows, more and more companies are growing food indoors in greenhouses and vertical farms
Carole Zimmer
JulY 31, 2019
Investors are paying close attention to the rapidly growing sector that is agricultural technology, or ag-tech.
As the earth warms and the world’s population grows, more and more companies are growing food indoors in greenhouses and vertical farms.
Although demand is increasing, this segment of the agricultural industry faces high costs of both labor, energy costs and equipment, for things like lighting.
Lead image: Angela Weiss/AFP/Getty Images
AeroFarms Raises $100 Million In New Capital
Last year, AeroFarms raised $40 million in Series D funding with the INGKA Group, chef David Chang and retired U.S. general David Petraeus among the investors. At that time, AeroFarms had raised over $130 million; the new investment pushes its total over $230 million
Photo courtesy of AeroFarms
The New Jersey-Based grower Is Valued At $500 Million
According To Its Latest Round of Funding
July 19, 2019
According to an article in the Financial Times, Newark, New Jersey-based indoor farming company AeroFarms has raised $100 million in its latest round of funding. The lead investor is the INKGA Group, the parent company of furniture company IKEA. After this round, AeroFarms is valued at $500 million.
According to the Financial Times, the company's latest round of investment included no new backers. The company has not yet publicly disclosed the new funding.
Last year, AeroFarms raised $40 million in Series D funding with the INGKA Group, chef David Chang and retired U.S. general David Petraeus among the investors. At that time, AeroFarms had raised over $130 million; the new investment pushes its total over $230 million.
As of 2019, AeroFarms has two commercial farms in the U.S. - its flagship 70,000 square foot facility 30,000 square foot farm. The locations opened in 2016 and 2015, respectively.
In March of this year, it was announced that AeroFarms greens would be served on Singapore Airlines flights from Newark to Singapore. It also hired Roger Post, formerly of Danone Foods and Kraft Nabisco,as its new COO in February.