Indoor Farming Startups Continue to Raise Money to Grow Businesses, Some Run Into Obstacles

Ruth Simon reported last week at The Wall Street Journal Online that, “A crop of startups have emerged in recent years to grow vegetables on city rooftops or turn old factories into indoor farms. But their quest for locally grown lettuce is running into challenging business realities.

“BrightFarms Inc. last year pulled the plug on a planned greenhouse in Washington, D.C., 10 months into the process of getting permits, and earlier exited an effort to develop a rooftop farm in Brooklyn, New York. FarmedHere LLC, which operates a farm in a former box factory outside Chicago, shut down for six months last August to revamp its strategy.

“Building farms on city rooftops is ‘a foolish endeavor’ because of the higher costs and the additional time for permitting, said Paul Lightfoot, chief executive of BrightFarms. The firm, which has raised more than $25 million in equity and more than $15 million in project finance, is now focusing on greenhouse farms in locations outside of urban centers.”

Ms. Simon noted that, “Venture-backed for-profit farming startups have sought to reshape agriculture by growing crops such as salad greens and herbs in or near big cities. The idea is that urban farms promise year-round supplies of greens, with less spoilage and lower transportation costs than soil-raised produce from California or Mexico.

“The undertaking is a far cry from the community gardens on once-vacant lots that are typically associated with urban farming. Gotham Greens Farms LLC, which has raised about $30 million, said it currently sells more than 20 million heads of lettuce and leafy greens a year to restaurants, food-service companies and retailers such as Whole Foods Market Inc.”

The Journal article explained that, “High-tech indoor farming can involve millions of dollars in investments and a sophisticated mix of crop science, fertilizer know-how as well as expensive lighting and sensor systems to monitor temperature, moisture and other conditions.

“‘This is very much a technology play,’ said David Rosenberg, chief executive of Newark, N.J.-based AeroFarms LLC, which currently operates one indoor commercial farm as well as a research and development farm and a farm in a local school.”

“Most startups grow lettuce and herbs that have short growing cycles and thrive in controlled environments. Brooklyn-based Edenworks says it can produce many varieties of baby lettuce in its indoor farm in just 18 to 21 days compared with 28 to 35 days for field-grown products,” the article said.

And, the Journal article pointed out that, “‘Plants are not widgets,’ said [Gotham Greens CEO Viraj Puri]. ‘There are a lot of dependent variables.‘”

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