Riding the Agriculture & Food Wave – Indoor Vertical Farming

Leo Zhang

Following our recent blog post on alternative proteins, let’s take another look at the agriculture & food sector and touch on a related topic of sustainable food production – indoor vertical farming. Although vertical farming has yet to attract similar level of investments compared to alternative proteins, this space is certainly worth keeping track of as we expect more mega-cities to form over the next decade, and subsequently, the demand for a more sustainable food production system.

Below is a quick overview of what we are seeing in terms of innovators and investors, and for a close look at this space, please do get in touch with us at research@cleantech.com.

Hydroponics, Aquapoincs, and Aeroponics

There are three main types of vertical farming systems – hydroponics, aquapoincs, and aeropoincs. The hydroponic system grows plants without soil using mineral solutions in water, and it is the predominant system currently used in vertical farms. The aquaponic system combines a plant hydroponic system with indoor fish ponds. Finally, the aeroponic system grows plants without soil, and uses an air or mist solution to deliver nutrients. Examples of innovators include:

 

Who’s Interested?

We have seen the rise in the overall agriculture & food investment amount starting in 2014. Among this wave of investments, agricultural software, plant genomics, and even drones & robotics make up a large percentage of the total investment. Nevertheless, we have tracked a number of venture deals in the vertical farming subsector, particularly by early-stage investors.

For example, Bowery, a New York-based indoor produce grower, raised $7.5M in seed funding in April 2017. Participating early-stage investors include First Round Capital, SV Angel, Lerer Hippeau Ventures, in addition to a number of private angel investors.

Another notable example to highlight is Plenty, a California-based developer of vertical farms that incorporates AI, data analytics and IoT sensors, which raised an astonishing $26M in Series A funding earlier this year. Two noteworthy investors to highlight here – Bezos Expeditions (Amazon’s Jeff Bezos) and Innovation Endeavors (Google’s Eric Schmidt) – signify the growing importance of sustainable food production.

What’s Next?

As most vertical farm companies are still operating at a very small scale, it is expected that most of the funding has come from angel and seed investors. However, will the next wave of investments in this space come from corporate investors? Will vertical farming be able to scale up to massive food production systems?

We will certainly be keeping our eyes on this space. Let us know your thoughts via research@cleantech.com

 

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  • Kyle Be

    Two words: Embodied Energy

  • Laura Shenkar

    Great article, Leo! You’ve sketched out the landscape, and we’re looking forward to the first results from the early leaders.