Vertical Farms Attract V.C. Dollars

By Andrew Ross Sorkin

Greens on vertical racks at Plenty in South San Francisco, Calif.

Jim Wilson/The New York Times

The fragility of the world’s food supply has been in the spotlight, as the war in Ukraine traps millions of tons of grain that are desperately needed in Egypt, Yemen and elsewhere. This has helped supercharge interest in agricultural technology, or agtech.

“Record high fertilizer prices, war-borne grain shortages and poor weather have created extraordinarily challenging conditions to meet growing global food demand,” the investment research firm PitchBook wrote in a recent report. “Biofertilizers, field robotics and indoor farming technologies will be essential in overcoming these challenges.”

There was record investment in agtech last year, and the deals keep coming. V.C.s invested $10.5 billion across 751 deals in agtech start-ups in 2021, a deal value increase of more than 58 percent over 2020, PitchBook says. That uptick came as climate extremes hurt farming yields, and as awareness of scarcity grew because of pandemic-related supply chain issues. This year, the pressure to find new, sustainable growing methods has intensified, so vertical farming startups — mostly indoor operations that grow crops in stacked racks instead of fields — are finding funding.

Vertical farms solve some but not all agricultural problems. They save space, can be built almost anywhere, are climate-controlled and easy to automate, and they require less water, nutrients and soil than a traditional field. But high-tech farms cost a lot to build, consume huge amounts of energy if poorly designed and can’t accommodate all crops. Perishable produce like leafy greens, berries, and tomatoes flourish in vertical farms, while the grains the world relies upon don’t grow well indoors.

Analysts suspect that rising food prices may nonetheless make vertical farming increasingly attractive and profitable, which is why V.C.s are intrigued and agtech executives are optimistic. “Agriculture is really at the epicenter right now of so many of the global challenges we’re experiencing, and it’s been at the epicenter of the climate crisis,” Irving Fain, founder and C.E.O. of the vertical grower Bowery Farming, told DealBook. “When you look at Russia, Ukraine, what you’re seeing is the world awakening to the reality that food is national security, and food is sovereignty.” https://www.nytimes.com/section/business/ dealbook