Funding Surge & Global Expansion

Exploring recent activity in the indoor farming industry

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Wednesday 22nd May, 2024

Good morning, readers!

We are excited to announce that, due to popular demand, we are introducing a new format to our newsletter. Starting today, we will publish a special editorial on a relevant subject related to indoor farming and Controlled Environment Agriculture (CEA) in each issue.

Stay tuned for insightful articles that delve deeper into the latest trends, innovations, and challenges in the world of indoor farming. Your engagement and interest have inspired us to bring you even more valuable content.

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We Are Launching A New Newsletter Dedicated To Horticulture

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North America, A Funding Boost

Over the past year, the indoor farming market has experienced a significant contraction, with several prominent businesses like AppHarvest, AeroFarms, and Kalera filing for Chapter 11 bankruptcy. According to Pitchbook data, venture capital investments in indoor farming plummeted by 91%, reflecting the industry's struggles.

Various macro events have contributed to this downturn, including soaring energy costs, rising interest rates, and inflation affecting the prices of critical equipment. These factors have collectively strained the financial stability of many companies in the sector.

However, since the fourth quarter of 2023, there has been a noticeable uptick in investments and business activity in the region. Notably, we’ve seen:

  • Hippo Harvest completed a $21 million Series B funding round led by Standard Investments. This investment will expand greenhouse operations and introduce new categories of sustainably grown produce.

  • Canadian innovator Growcer Inc. secured $3 million in funding to expand its modular vertical farming operations. Strategic investors with expertise in manufacturing, sustainability, and the grocery industry are backing this initiative.

  • Oishii secured $134 million in funding to establish a new facility in New Jersey, which will integrate on-site power generation, water recycling, and advanced robotics.

  • Vertical Harvest Farms secured $59.5 million in financing for a new hydroponic vertical farm in Westbrook, Maine. This facility aims to produce 2.5 million pounds of fresh produce annually, emphasizing quick delivery and social inclusivity by creating employment opportunities for people with disabilities.

  • GoodLeaf Farms inaugurated a $52 million facility in Calgary, expected to create over 90 jobs and produce more than two million pounds of fresh greens annually.

  • Cox Enterprises has established Cox Farms, integrating Mucci Farms and BrightFarms to focus on sustainable agriculture.

  • Local Bounti Corporation is set to open a new controlled environment agriculture (CEA) facility in Mount Pleasant, Texas.

The influx of funding and expansions by various companies highlight a promising path forward for the industry, focusing on sustainability, technological innovation, and social inclusivity.

However, it's important to remain cautious as various macro events could still influence these trends positively or negatively. Fluctuations in energy prices, changes in interest rates, and shifts in inflation can all impact the sector's stability and growth. Staying vigilant and adaptable to these external factors will be crucial for sustaining the momentum in the indoor farming market.

Europe, Eyeing Overseas Expansion

Europe's indoor farming market has been more severely impacted than North America's due to the steep rise in energy prices, which has led to significant financial strain on many businesses.

This surge in operational costs has resulted in several high-profile bankruptcies, including notable companies like INFARM, Future Crops, Glowfarms, and Agricool. These bankruptcies highlight the vulnerability of the sector to fluctuations in energy costs, which are critical for the operation of indoor farming facilities.

While there has been a rebound in investments and business activity, it has been less pronounced than in North America. Most of the remaining companies, however, are focusing on further expanding their operations abroad, seeking more stable markets and opportunities outside of Europe to mitigate the risks posed by the volatile economic conditions at home, as well as seeking more profitable crops.

  • hexafarms has secured a €1.3 million pre-seed funding round led by Speedinvest, with additional participation from Mudcake and Techstars. The funds will be used to enhance hexafarms' AI and machine learning capabilities and expand its research and development team.

  • Agriloops has announced a €13 million investment to construct its first commercial-scale aquaponic farm, named “Mangrove #1”. Located in Bréal-sous-Montfort, France, the farm aims to be one of Europe’s largest, producing over 100 tonnes of shrimp and vegetables annually.

  • Jones Food Company recently marked a significant milestone with the opening of its second vertical farm, JFC2, located just outside Lydney in Gloucestershire. This development is a testament to the company’s commitment to advancing sustainable agriculture and technology in the UK.

  • dsm-firmenich, innovators in nutrition, health, and beauty, and Interstellar Lab, a biotech startup specializing in biofarming solutions, have announced a partnership aimed at driving advancements in the production of botanical ingredients.

  • Vertical Future has been granted £1.5 million to develop “Autonomous Agriculture for Space Exploration” project. The initiative aims to create controlled-environment-agriculture systems for space, enabling the production of food, biomaterials, and medicines in space.

  • VitalFluid, a leader in the development of Plasma Activated Water (PAW) applications, announces a €5M seed funding round supported by Future Food Fund, Graduate Entrepreneur Fund, Horticoop, and Innovation Industries.

  • Innovation Agritech Group announced the successful installation of their GrowFrame360™ system at the University of Essex. This installation is the first of its kind in a UK university and is located within the University’s new £3 million Smart Technology Experimental Plant Suite (STEPS).

  • LettUs Grow has partnered with Valoya India to expand its reach into India and the Middle East. This collaboration marks a significant step in LettUs Grow’s global strategy to promote its aeroponic systems, previously validated through successful trials at Wageningen University and Stockbridge Technology Centre.

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Oceania, South East Asia, LATAM & Middle East in Indoor Farming

Indoor farming markets in Oceania, Southeast Asia, Latin America (LATAM), and the Middle East are often less highlighted in global discussions. Yet, they remain significant in terms of activity and investments. Each region has faced unique challenges: Oceania with rising water and energy costs, Southeast Asia with logistical and operational expenses, Latin America with inflation and economic instability, and the Middle East with climate conditions and challenging logistics.

Despite these challenges, there has been a rebound in investments and business activity, supported by government programs to enhance food independence and security. These initiatives are driving the expansion of operations into more stable and promising markets abroad.

  • New Zealand, AgriZeroNZ’s investment in BioLumic shows commitment to reducing agricultural emissions. They aim to develop low-emissions ryegrass using BioLumic’s UV light treatment technology, aligning with climate targets and sustainable agricultural practices.

  • Centuria Capital Group’s acquisition of a 21-hectare glasshouse from Katunga Fresh in Victoria highlights the growing interest in high-quality agricultural assets. Now part of the Centuria Agriculture Fund (CAF), this facility is crucial for Australia’s agricultural infrastructure, ensuring stable, long-term yields and contributing to the region’s food security.

  • Saudi Arabia has achieved a remarkable milestone by exporting fresh tomatoes to Europe for the first time, overcoming its arid climate and longstanding dependence on imports. This extraordinary accomplishment is spearheaded by Dava Agricultural Co., which leverages state-of-the-art greenhouses and cutting-edge vertical farming techniques.

  • Tiamat Sciences Corporation’s breakthrough in producing T7 polymerase in plants marks a significant advancement in sustainable biotechnology. This development is essential for mRNA vaccine production, offering a more efficient, scalable, and sustainable method. Such innovations are crucial as the world seeks more resilient healthcare solutions.

  • Chilean vertical farming company Agrourbana recently secured $6 million in Series B funding. This investment is pivotal for scaling their operations, with plans to multiply production twentyfold in three years. Despite not yet being profitable, this funding reflects investor confidence in Agrourbana’s innovative approach and potential impact on urban agriculture.

  • Stacked Farm® has commenced full production at its robotic vertical farm on the Gold Coast, Australia. This state-of-the-art facility, fully automated from seed to dispatch, represents a major leap in sustainable agriculture. The company’s commitment to operational cost-efficiency and high output per square meter sets a new standard in the industry.

  • Emirates Flight Catering’s acquisition of Emirates Bustanica solidifies the UAE’s commitment to enhancing food and water security. This strategic move allows for better utilization of local expertise and technological advancements, aligning with the nation’s vision for sustainable food production.

  • Driscoll’s strategic acquisition of Costa Group, alongside a consortium led by Paine Schwartz Partners, underscores a significant expansion in the horticultural sector. Costa Group’s strong focus on innovation, particularly in blueberries, and its global reach make this a formidable partnership poised to drive growth and sustainability in fresh produce markets.

Wrapping-Up The Latest Developments

As we wrap up this edition of our Indoor Farming newsletter, it's evident that the indoor farming industry is undergoing transformative changes across the globe. Each region, from North America to Europe, and Oceania to South East Asia, is making significant strides in adopting innovative technologies, securing substantial investments, and emphasizing sustainability to ensure a robust future for agriculture. Here’s a brief recap of the key developments we covered:

North America: A Funding Boost

North America's indoor farming sector is witnessing a surge in funding and technological advancements. Companies like Cox Enterprises, Phylos, and Innovafeed are leading the way with substantial investments and innovative projects. The emphasis on sustainability and efficient production methods is paving the way for a more resilient agricultural framework.

Europe: Catching Up and Eyeing Overseas Expansion

Europe's indoor farming market is rapidly evolving, driven by strategic partnerships and a strong focus on sustainability. With projects like the WA3RM and KUBO collaboration and the introduction of VitalFluid’s Plasma Activated Water systems, Europe is positioning itself as a formidable player in the global indoor farming industry. The region's emphasis on reducing carbon footprints and integrating advanced technologies highlights its commitment to sustainable agriculture.

Oceania, South East Asia, LATAM & Middle East: Expanding Horizons

The indoor farming industry in Oceania, South East Asia, LATAM, and the Middle East is experiencing significant growth through strategic investments and technological innovations. Partnerships like AgriZeroNZ and BioLumic in New Zealand and the expansion efforts by Centuria Capital Group in Australia demonstrate the regions' commitment to sustainable practices and food security. Additionally, the acquisition of Costa Group by Driscoll’s and the robotic vertical farm by Stacked Farm® highlight the technological advancements driving the industry forward.

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