2023 has been the hottest 12 months on record, and it doesn’t appear to be we’re going to cool down anytime soon. Rising temperatures are making farming increasingly difficult in areas that were once major agricultural resources, where heat and drought have severely impacted crops.
For most farmers who rely on traditional methods and do not have access to state-of-the-art greenhouses, the need for flexible, ready-to-use solutions is of paramount importance. This is where ag corporations like to go Iyrisbased in Riyad, Abu Dhabi and Delaware. The startup that is providing a lifesaver for farmers and helping them address the challenges of climate change with its agriculture solutions pronounces a $16 million Series A funding round.
Executive Chairman John Kepplertold TechCrunch that the funding gives Iyris dry powder to “continue to scale and grow a company that solves the incredibly difficult problem of growing fresh produce and increasing yields in the face of climate change and rising temperatures, heat, and drought.”
The round was led by San Francisco-based climate and sustainability fund Ecosystem Integrity Fund (EIF), with participation from Global Ventures (which also invested in seed capital from the company led by Wa’ed, a unit of Aramco), Dubai Future District Fund (DFDF ), Kanoo Ventures, Globivest and Bonaventure Capital.
While so much of climate technology coverage is focused on expensive, robust technologies which may be fit for purpose but are difficult to adopt, Keppler says Iyris is focused on a low- and medium-tech world. Farmers in this segment use protected farming methods resembling polyethylene covers, acrylic, shade nets and screens to mitigate the environmental impact of large-scale crop production. These methods include fields and tunnels that aim to limit ecological damage while making them more accessible and practical for general use, Keppler explained.
Advances in business agriculture in hot climates around the world
Iyris is based on innovations developed at King Abdullah University of Science and Technology (KAUST) in Saudi Arabia. Co-founder by CEO Ryan Lefers, expert in agricultural engineering; Mark Tester, plant scientist; and Derya Baran in 2018, the company, formerly Red Sea Farms, initially used heat-locking technology to grow and sell tomatoes in the Middle Eastern country, then brought the technology to market and sold it to other farmers.
Iyris’s flagship technology, called SecondSky, involves adding additives to the production of polyethylene. The additive blocks near-infrared radiation, significantly reducing heat generation, while allowing photosynthetically energetic radiation (light needed by plants for photosynthesis) to go through. To put this in perspective, Keppler explained that if we compare standing under a traditional polyethylene roof to one with an additive, we’ll notice a significant temperature difference due to the heat blocking properties of the additive.
This means farmers can reduce cooling costs, water and electricity consumption to manage growing conditions on farms. This allows farmers to plant earlier and extend the growing season, resulting in higher yields and healthier plants (which use energy to grow and fruit, reasonably than producing more leaves for transpiration). The six-year-old startup claims its proprietary technologies (including resilient plant genetics) reduce energy and water consumption by up to 90%.
“We’ve seen a pretty dramatic increase in profitability compared to the benchmarks,” investor-turned-executive chairman Keppler commented. “In fact, these are some of the few innovations that have come to this industry for the better part of three to four decades, according to some of our customers who are some of the largest growers in the world. This makes growing plants in difficult conditions easier and more profitable.”
Starting close to home near KAUST, Iyris has flourished in the United Arab Emirates, Egypt and Morocco. These regions, where desert agriculture is the norm, face difficult growing conditions, making them ideal for testing and validating the effectiveness of this technology. However, as climate change intensifies, similar challenges are emerging around the world, prompting the adoption of Iyris technology in places resembling the US, Portugal, Spain and Mexico. Keppler said major fresh produce growers in these areas are trying to mitigate latest climate challenges and adopt proven solutions used in more difficult climates.
Ensuring food security in the GCC and other arid climate zones
He added that SecondSky’s ability to reduce production costs and, most significantly, extend growing seasons is attracting growers from some arid regions. These farmers and growers using SecondSky can proceed producing when their competitors are unable to, allowing them to command higher prices and make more cash. Keppler says this results in a refund for the purchase of SecondSky products inside a 12 months.
“So the way it works is that the growers we serve have regular product replacement cycles with a typical lifespan of three to five years, depending on region and application. These replacement cycles create a recurring revenue stream for suppliers of these materials,” he explained. “We sell our products to growers through local distributors, and we supply our additives to producers and distributors who incorporate them into their products. Although our product is more expensive, the benefits growers realize are recouped within the first year of the growing cycle.”
Aramco-backed climate technology works with two essential customer groups: large international growers who operate farms around the world, and smaller growers and farmers reached through manufacturing and distribution partners. It sells polycarbonate, polyethylene, mesh and soon-to-be-released SecondSky shade screens to customers in 11 countries, including Turkey and the UK. Some of his clients include Silal, Armando Alvarez Group and Criado & Lopez.
Keppler argues that there is currently limited competition in the horticulture industry. Companies resembling US-based AppHarvest and AeroFarms have entered and exited bankruptcy in recent years despite raising a whole lot of tens of millions of dollars, signaling how difficult could also be running a vertical farming business. One of the reasons Iyris stays in business is that it has demonstrated the effectiveness of its technology by applying it in-house, which has ultimately built trust with other growers, the executive chairman noted.
“There have been numerous attempts to commercialize innovative agriculture on a large scale. In some cases, these solutions are a hit. However, our thesis is that providing a drop-in solution to existing agricultural infrastructure using the existing supply chain is often more effective,” noted Keppler, former founder and CEO of wood pellet maker Enviva until its recent bankruptcy. “Thanks to this, farmers do not have to change their behavior. They can continue to do what they do best – grow produce in their regions. Our goal is to make their lives a little easier, extend the growing season, and at the same time increase their profitability.”
Serving a global market of greater than $6 billion in recurring annual greenhouse cover sales, Iyris attracted more customers and sold more products (or achieved more revenue) in the first quarter of 2024 than in all of 2023, according to Keppler. He added that the company will look to develop other metrics resembling total acres covered by SecondSky, regions served (expanding to countries including India and China) and square meters of product installed at customers.