When it involves enterprise capital investment, indoor farming has not fared so well.
Over the years, investors have poured greater than $6 billion into startups in the space, most during the peak period of 2019-2023. So far, they have reaped meager returns.
In recent quarters, large enterprise rounds have largely dried up. And a few high-profile newcomers, including Kentucky tomato grower Harvest Appfolded.
To understand what happened to the investments, we used Crunchbase data to investigate recent funding (or lack thereof) around the topic. We looked at firms focused on indoor and vertical farming operations, growing crops like leafy greens, berries, tomatoes, and fresh herbs.
A herd of unicorns raised indoors
At least 14 indoor and vertical farming firms have raised $100 million or more in enterprise capital, and many others have raised significant funding.
Using Crunchbase data, we chosen a sample of twenty-two such firms that raised funding in the last 4 years.
Most of them have not raised funding since 2022, and only a handful have raised fresh capital this 12 months.
Plenty’s Big Capital
Perhaps the most closely watched and best-known startup in the industry is a company based in South San Francisco, California Lots ofwhich specializes in growing leafy greens and other produce in indoor, vertical farms. The company claims it may possibly grow greens and fruit using little or no water, eliminating the need for pesticides and providing fresh produce in areas reminiscent of deserts or cities where climate or space constraints make traditional farming unattainable.
Plenty is also the best-capitalized company in its group, having raised over $940 million in 2016–2022. SoftBank and other enterprise capitalists. Last week it gained recent momentum, establishment of a three way partnership company based in Abu Dhabi Mawaridsubsidiary Alpha Dhabi HoldingsThe enterprise involves building a network of indoor farms across the Middle East, likely starting with a strawberry farm in Abu Dhabi.
If the effort is successful, it could help position indoor farming as a more attractive proposition, especially in places that are too dry to support traditional farms. To date, startups in the field have struggled to attain the scale and production efficiencies that might allow them to be profitable and cost-competitive with other product options.
Some of them didn’t reach the market
These struggles have resulted in large losses, especially for investors in firms that not exist.
In this category the most famous name is Harvest AppKentucky-based startup that grows tomatoes and lettuce indoors, once counted Republican Party Vice Presidential Candidate JD Vance in the composition of the company’s management board.
AppHarvest, which has tried to position itself as each a sustainable agriculture company and a job creator in its Appalachian region, raised greater than $135 million in enterprise funding in 2019 and 2020. A 12 months later, it went public via SPAC in an offering that originally did well but quickly lost value.
The company filed for bankruptcy a 12 months ago after its stock value plummeted. In its final annual report Before the filing, AppHarvest reported a net lack of $177 million on sales of lower than $15 million.
Iron Oxa San Carlos, Calif.-based startup that developed robotic greenhouses was one other casualty. After raising $102 million in enterprise capital funding, the company ceased operations as Iron Ox, although some of its technology is now being implemented by one other agtech startup, Inevitable technology.
Is this the flawed sector for the enterprise capital model?
Although enterprise capitalists are not investing in large-scale vertical farming startups, indoor farming is here to remain. The global indoor farming market has grown at a regular pace over the past few years and is expected to proceed to grow, in keeping with the latest market research.
What’s more, the use cases haven’t lost their appeal. The vision of more sustainable, organic, year-round, local products is compelling.
However, making the vision a reality is an infrastructure-intensive and expensive endeavor that has not proven to align with enterprise capitalists’ exit timelines. Even if some startups in this space ultimately achieve large exits, it is going to take longer than initially anticipated to reap the rewards.