February 24, 2017

High tech indoor, vertical farming startup Bowery Farming announced it has raised $7.5 million in a seed round led by First Round Capital and including Box Group, Homebrew, Flybridge, Red Swan, RRE, Lerer Hippeau Ventures, and Tom Colicchio – a restauranteur and judge on reality cooking show, Top Chef.

Founded in Kearny, New Jersey, in October 2014 by Irving Fain, David Golden, and Brian Falther, Bowery Farming calls itself the “Modern Farming Company” producing “post-organic produce.” Advances in LED technology, robotics, and data management have made intensive, indoor agriculture more viable than ever, with software and hardware being able to work together to integrate levels of automation into indoor agricultural production systems eliminating human labor.

These advances in technology have come together in FarmOS – Bowery’s proprietary fully integrated software system that uses vision technology and machine learning to monitor crops around the clock while collecting data that can drive actionable insight. By controlling the production process from germination to harvest, Bowery is able to produce non-GMO leafy greens and herbs (Baby Kale, Bowery Blend, Kale Mix, Arugula, Butterhead, and Basil) 365 days a year, using zero pesticides and 95 percent less water, and at a rate that is 100 times more productive than traditional agriculture, according to the Bowery website. Additionally, because indoor facilities can be located in urban settings, Bowery’s produce can be delivered to retail stores and restaurants within one day of harvest compared to weeks from fields.

“With all the technological advances we’ve seen in the last decade, it is now possible to have reliable, consistent production in agriculture,” Irving Fain, cofounder and CEO of Bowery told Tech Crunch. “We started working on this technology two years ago, thinking about what it will take to feed a global population that will soon reach nine billion people, and 35 years down the line when it’s expected that 70% of the world’s population will be living in cities.”

The Case for the Indoors

Population trends aside, there are various macro dynamics behind the decision to invest in indoor agriculture.

Since 1982, 24 million acres of U.S. farmland have been lost to development, and the loss continues at a rate of 40 acres of farm and ranch land every hour, according to the American Farmland Trust. More specifically, the California Climate & Agriculture Network states that California, one of the top-producing agricultural states in the country, has lost an average of 50,000 acres of farmland each year for the past 30 years due to urbanization and development.

Furthermore, traditional agriculture accounts for the use of 70 percent of all the available global water supply, and the U.S. alone uses over 700 million pounds of pesticides per year – all factors that Bowery Farming feels its business model can alleviate.

“In agriculture, everyone agrees that maybe not right away but say in 15 years, water will be expensive, healthy soil will be scarce, and it will be more expensive to farm outdoor than inside. Why wait to work on that problem until it’s a crisis?” Rob Hayes, partner with First Round points out to Tech Crunch.

A Crowding of the Indoor Field

While it is true that Bowery’s technology-linked indoor production methods can increase efficiency and alleviate pressures on the standard agricultural industry, they are not alone. Competition is building as investors and entrepreneurs realize the environmental, social and economic merits of indoor agricultural production.

Kimbal Musk, younger brother of Tesla and SpaceX founder, Elon Musk, and his business partner, Tobias Peggs, announced the planned launch of Square Roots – a new accelerator for urban, vertical farming startups in Brooklyn, New York, last fall.

Key investors and backers of the accelerator include Los Angeles-based Powerplant Ventures, Lightbank, FoodTech Angels, GroundUp, Techstars CTO Jud Valeski, and Ann Marie Gardner, the founder of Modern Farmer.

New York based BrightFarms is tapping the farm-to-table consumer movement also, developing state-of-the-art commercially scaleable greenhouses that can provide locally grown fresh fruit and produce to supermarkets that is weeks fresher than standard produce. In September 2016, the company raised a $30.1 million Series C led by Catalyst Investors, and included WP Global Partners and NGEN Partners.

In December 2016, Paris-based vertical farming startup, Agricool announced it had raised $4.3 million in a round led by the recently launched French venture capital firm, Daphni, along with Henri Seydoux, the founder of drone company, Parrot, and Jean-Daniel Guyot, co-founder of Captain Train.

But particularly close to home for Bowery is Newark, New Jersey-based AeroFarms. Much like Bowery, the New Jersey startup develops high tech, indoor “aeroponic vertical farms” that use only five percent of the water used for conventional agricultural production, and which employ proprietary technologies including systems that target fertilizer directly to a plant’s roots, and software-controlled LED grow lights. Through these state-of-the-art indoor farms, AeroFarms produces 20 different varieties of leafy greens including kale, watercress, and arugula. In December 2015 AeroFarms reported that it raised a $20 million Series B led by Wheatsheaf Group and including previous investors, GSR Ventures, MissionPoint Capital, and Middleland Capital.

As the field of rivals intensifies, Bowery plans to use the funding gained from this round to support the establishment of new indoor farming facilities, to proceed with the development and trialing of new crops for indoor production, and to expand its distribution network of food retailers, restaurants, and e-commerce outlets.

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com