The last ten years have seen an unprecedented rush of venture capital into agtech. Between 2013 and 2019, funding to agtech startups have increased by 900% from $2.2 billion to $19.8 billion. In 2019 alone, indoor farming investments rose 38% over 2018.
This rise in investments didn’t spring out of nowhere. Inefficiencies in traditional agriculture have set the stage for the entire industry, especially indoor vertical farming. Researchers from Barclays Capital call vertical farming “one of the few tangible sustainability initiatives in agriculture and a method that could benefit the planet, consumers and investors.”
But comparing 2020 to 2019 has a few major flaws, the most glaring of course, is a global pandemic that has shifted nearly everything, including investors. So where do we stand so far in agtech investments in 2020?
As of August, 2020, $2.6 billion has already been given, positioning 2020 to be as good or even better than previous years. According to AgFunder, the change in 2020 is coming about where that money is going. For the first time since 2013 when agtech started its meteoric rise, upstream funding is outpacing downstream funding. The importance of this change is long-term, proving that investors are more committed to making long-term and earlier bets on technology that will fundamentally change the food system.
The typical investment community isn’t the only one taking note of the indoor farming industry. AppHarvest, a U.S. based firm, recently announced a $475 million merger, even signing some more notable board members, like investor Jeffrey Ubben and media mogul Martha Stewart, who says they are “riding a wave into the future.” The AppHarvest news is even more important than just gathering celebrity investors, as it is the first major SPAC deal for an agtech or food tech company and, according to experts, opens a window to potentially large amounts of new capital sources.
The fast-food chain Wendy’s is also riding the indoor farming wave, committing to 100% Canadian, CEA-grown lettuce in all its salads and sandwiches. BlackRock, often mentioned as the biggest investment business in the world, has recently committed to putting sustainability at the center of its investment decisions. BlackRock chairman Larry Fink says, “Our investment conviction is that sustainability and climate-integrated portfolios can provide better risk-adjusted returns to investors. And with the impact of sustainability on investment returns increasing, we believe that sustainable investing is the strongest foundation for client portfolios going forward.”
Notable investments in 2020 so far include:
- AppHarvest – $475 million, the majority through a private investment in public equity form, along with $28 million in a Series C. Today AppHarvest has a valuation of around $1 billion.
- Infarm – $170 million raised in the first close of a Series C funding round expected to reach $200 million, bringing Infarm’s total funding to date to more than $300 million.
- Unfold – $30 million to focus on the genetic component of vegetable varieties specific to indoor vertical farming.
- PlantLab – €20 million in growth capital. Reported to be using the funds to open indoor production locations in the Netherlands, the U.S. and in the Bahamas.
- Root AI – $7.2 million in seed funding for a total of $9.5 million. Root AI focuses on automated harvesting solutions for indoor farms.
- iFarm – Raised $4M to provide indoor farming technology for growing fresh greens, berries and vegetables.
Looking for more information on investing in this hot industry? Get in touch with one of our knowledgeable teammates today or check out our Investment page, where you’ll find information on investing in Urban Health Farms, our Brochures and how you can get involved.