Friday, March 8, 2019

K@W: "Why Venture Capital Likes Modular Farming"

From Knowledge@Wharton:

Wharton's Sherryl Kuhlman and Joey Hundert, CEO of Sustainitech, discuss why modular farming has become a hotbed of VC interest.
Modular farming, which is growing crops in self-contained, movable units so they can thrive in difficult climates, is becoming more than just a sustainability goal for social impact organizations. It is also becoming a big business that’s increasingly being backed by venture capitalists and private equity firms. New startups in this market are sometimes models for not only how to make profits while contributing to the social good, but also how such profits can lead to innovation that goes on to create additional social good. 

In this podcast interview, Sherryl Kuhlman, managing director of Wharton Social Impact Initiative (WSII), interviews Joey Hundert, founder and CEO of Sustainitech, about these developments and where the whole movement is heading.

An edited transcript of the conversation follows.
Sherryl Kuhlman: Tell us about Sustainitech.
Joey Hundert: Sustainitech produces indoor agriculture facilities in spaces. We build modular indoor farms to produce crops in places where it’s very hard to grow crops. So, think really harsh winters. Dry, arid regions. Really hot places. We build indoor farms, typically inside of shipping containers that can be put anywhere to grow crops successfully where it can be hard to grow them.

Kuhlman: Who are the clients and consumers?
Hundert: In Canada, we grow lettuces and fresh herbs. And the clients are the everyday consumer. We’ve partnered with food companies – and we grow on their behalf. We package up the produce, ship it to them, and they ship it to the consumer. And then one of our customers is actually an ethnic group in Manhattan that requires produce a specific way. And so, we grow the produce and ship it to them. And they ship it to people who eat it.

Kuhlman: What are the latest trends in indoor container farming?
Hundert: What I’m seeing is trends in indoor farming writ large. It has attracted a lot of capital to the space. The idea is unfortunately sexy. The reason I say that is I think it has whipped up a bit of a frenzy of interest in international media and in the capital markets. And it has chased a lot of money into the space. Now, you might say, “well that sounds great.” And I am happy about that. That’s not the part I don’t like.

It’s that there are unrealistic expectations of the companies in this space. I think some of the money is coming in from Silicon Valley, where there’s a belief that industries can be cornered, and that a winner-take-all approach can be had. But when it comes to fresh food and agriculture, it is a hopelessly [fractured] and diverse space for a reason. And so, I think some of the trends that I’m concerned about with the arrival of so much money is companies are trying to scale into the hundreds of millions.

Kuhlman: So that they can drive out the others.
Hundert: Pretty much. Which looks silly. But beyond that, I see core flaws in their technology — in their whole approach. And I just worry what happens when you hit carbon copy 300 million times on something. And I worry about what the failure of some of these larger startups is going to mean for the rest of the market. And so, we’ve been building our company while keeping in mind that this is happening in the market. And we’ve been offered — like most of our competitors — a lot of cash. We’ve been very conservative about what we will receive and what we will do with it, trying to build a more durable company that’s going to last until the market economics are proven. And that’s the real critique....MORE
Global Market Insights via SB Wire:
Vertical Farming Market in Equipment Segment to Witness 33% CAGR from 2019 to 2024
03/07/2019 -- Vertical Farming Market in technology segment is bifurcated into hydroponics, aeroponics and aquaponics. Aeroponics shows CAGR of around 28.5% over the forecast timespan as this technique helps in growing plants in an air/mist environment without soil and minimal water. It is gradually gaining momentum as it is among one the most suited ways for vertical farming by utilizing 90% less water than the hydroponic system.

Request for a sample of this research report @

On regional basis, Asia Pacific shows the 30% growth rate and is expected to be the largest market for vertical farming by the end of the forecast period. According to a report by the UN, in Asian cities with more than or equal to 500,000 inhabitants are projected to increase by 30% by the end of 2030.

Vertical Farming Market Size will surpass USD 13 billion by 2024; according to a new research report by Global Market Insights, Inc. Growing population and surge in demand of food security owing to arable land scarcity are the reasons constituting towards the vertical farming market growth over the predicted time. Vertical farming is an innovative practice of growing crops in vertically stacked layers....MORE 
And from The Manufacturer, March 8:
Vertical farming: growing food in the air and the role of big data
Previously in agoraphobiafarming:
December 2018
Citi: "How Innovation and Shifting Consumer Preferences Can Help Feed a Growing Planet"
A few notes up front.
1) You have to read past the buzzwords and buzz concepts. There is a lot of good information here but also a lot of hand-waving.

2) The situation is not yet dire. On the other hand, should the world experience two consecutive years of crop failures in any combination of the breadbaskets: northern China, American Midwest, Ukraine/western Russia then there is serious risk of famine.

3) This topic seems to bring out everyone's inner totalitarian and getting past that will be required if there is going to be agreement rather than insurrection.

4) Keep in mind this report was put together by a bank with something to sell. It might be loans, it might be green cred, it might be consulting services, it might be anticipating regulatory actions, it might be propaganda.
Take from it the ideas and data that support your priors and be open to the ideas which which don't.
December 2018
GV, Google’s Venture Capital Arm, Leads $90 Million Round For Indoor Farming Startup, Bowery
July 2018 
Is Vertical Farming Really the Future of Agriculture?
January 2018
Bezos/SoftBank-Backed Indoor Farming Powerhouse Plenty Planning for 300 Farms in China
October 2017
Tesla's Former Battery Director Joins Farming Startup—UPDATED
December 2017
"This Is Why Jeff Bezos Is Spending Millions on an Indoor Farming Startup"

The competition:
December 2017
A Behind-the-Scenes Look at Europe’s Huge New Vertical Farm
December 2015
AeroFarms Raises $20 Million for High-Tech Urban Agriculture
The Other Musk: Overthrow Big Agriculture?