Mounting investor interest in ‘vertical farms’ technology and operations has been demonstrated by U.S. indoor farming company AeroFarms successfully closing a funding round for $100 million at a post-funding valuation of $500 million. Aerofarms, which grows crops indoors under specialist lighting on stacked layers that make for highly efficient use of space is 15-years old.
But the New Jersey-based operation is now taking advantage of increased investor interest in the vertical farming sector to raise expansion capital. The money will largely be directed towards funding new vertical farming warehouses and expanding into new product lines.
The whopping investment round was led by Ikea’s parent company, Ingka Group, which was already an investor in AeroFarms. Existing British investors Wheatsheaf and ADM Capital have also participated in the round. AeroFarms CEO David Rosenberg commented:
“One of the keys of this raise was to align ourselves with patient capital, that is willing to understand how we make a bigger impact.”
Like most vertical, indoor farming facilities, AeroFarms’ warehouses are designed to grow fresh crops with a short shelf life to be delivered to restaurants, caterers and supermarkets within a short radius of usually around 50 kilometres. Some of AeroFarms’ main existing products are rocket lettuce, watercress and baby kale. The company already supplies Whole Foods and ShopRite and has signed an agreement with Singapore Airlines to start suppling its catering service from September this year.
Vertical farms use a relatively high amount of energy because plants are grown under lighting but yields are high and water usage very efficient. This makes them both profitable and environmentally friendly, if the majority of energy needs can be taken from renewable sources. In a world that has to contend with both reducing harmful emissions significantly while still managing to feed a growing human population, indoor vertical farming is seen as a valuable part of the future agriculture mix. And investors also see a lot of potential for strong returns as the sector grows and the technology used in it further develops.
Berlin-based InFarm, another vertical farm company, also raised $100 early this month with their round led by Atomico, the investment firm established by Skype founder Niklas Zennström. Ocado, the British warehouse technology and online groceries company has also recently invested £17 million into the vertical farming sector. Growing Solutions, a vertical farming start-up based in Scotland has also recently raised investment of £5.4 million.
A huge amount of investment capital is currently being ploughed into agritech and foodtech more generally. Many of the biggest tech companies, including Alphabet and Amazon, have a particularly strong interest in the sector. Agriculture is the oldest industry in the world and is also the biggest. Tech companies believe there is still plenty of ‘disruption’ and innovation that can make it more efficient, profitable and environmentally sustainable.