Infarm raises $170M in equity and debt to continue building its ‘vertical farming’ network
Infarm, the vertical farming company that has built a network of urban farms to grow fresh food closer to consumers, has raised $170 million in new investment in a “first close” of a Series C.
Leading the round — which is expected to reach $200 million and is a mixture of equity and debt — is LGT Lightstone, with participation from Hanaco, Bonnier, Haniel, and Latitude. Existing Infarm investors Atomico, TriplePoint Capital, Mons Capital and Astanor Ventures also followed on. It brings the company’s total funding to date to more than $300 million.
That’s likely testament to the speed of new retail partnerships over the last twelve months. They include Albert Heijn (Netherlands), Aldi Süd (Germany), COOP/Irma (Denmark), Empire Company’s Sobeys, Safeway, and Thrifty Foods (Canada), Kinokuniya (Japan), Kroger (U.S.), and Marks & Spencer and Selfridges (U.K.).
With operations across 10 countries and 30 cities worldwide, Infarm says it now harvests over 500,000 plants monthly, and in a much more sustainable way than traditional farming and supply chains. Its modular, IoT-powered vertical farming units claim to use 99.5% less space than soil-based agriculture, 95% less water, 90% less transport and zero chemical pesticides. In addition, 90% of electricity used throughout the Infarm network is from renewable energy and the company has set a target to reach zero emission food production next year.
Founded in 2013 by Osnat Michaeli, and brothers Erez and Guy Galonska, Infarm’s “indoor vertical farming” system is capable of growing herbs, lettuce and other vegetables. It then places these modular farms in a variety of customer-facing city locations, such as grocery stores, restaurants, shopping malls, and schools, thus enabling the end-customer to actually pick the produce themselves. To further scale, it also installs Infarms in local distribution centres.
The distributed system is designed to be infinitely scalable — you simply add more modules, space permitting — whilst the whole thing is cloud-based, meaning the farms can be monitored and controlled from Infarm’s central control centre. It’s also incredibly data-driven, a combination of IoT, Big Data and cloud analytics akin to “Farming-as-a-Service”.
The idea, the founding team told me back in 2017 when I profiled the nascent company, isn’t just to produce fresher and better tasting produce and re-introduce forgotten or rare varieties, but to disrupt the supply chain as a whole, which remains inefficient and produces a lot of waste.
“Behind our farms is a robust hardware and software platform for precision farming,” explained Michaeli at the time. “Each farming unit is its own individual ecosystem, creating the exact environment our plants need to flourish. We are able to develop growing recipes that tailor the light spectrums, temperature, pH, and nutrients to ensure the maximum natural expression of each plant in terms of flavor, colour, and nutritional quality”.
On that note, I caught up with two of Infarm’s founders to get a brief update on the Berlin-headquartered company and to dive a little deeper into how it will continue to scale.
TechCrunch: What assumptions did you make early on that have turned out to be true or, more interestingly, not panned out as expected?
Osnat Michaeli: When we first chatted about four years ago…, we were 40 people in Berlin and much of the conversation centered around the potential that our approach to urban vertical farming might have for retailers. While for many it was intriguing as a concept, we couldn’t have imagined that a few years later we would have expanded to almost 10 countries (Japan is on its way) and 30 cities, with partnerships with some of the largest retailers in the world. Our assumptions at the time were that retailers and their customers would be attracted to the taste and freshness of produce that grew right in front of them in the produce section, in our farms.
What we didn’t anticipate was how much and how quickly the demand for a sustainable, transparent and modular approach to farming would grow as we, as society, begin to feel the impact of climate change and supply chain fragility upon our lives, our choices and our food. Of course we also did not anticipate a global pandemic, which has underscored the urgency of building a new food system that can democratize access to high quality, amazing tasting food, while helping our planet regenerate and heal. The past few months have confirmed the flexibility and resilience of our farming model, and that our mission is more relevant than ever.
In terms of signing on new retailers, based on your progress in the last 12 months, I’m guessing this has got easier, though undoubtedly there are still quite long lead times. How have these conversations changed since you started?
Erez Galonska: While lead times and speed of conversations can vary depending upon the region and retailer. In mature markets where the concept is familiar and we’re already engaged, deal conversations can reach maturity in as little time as 3 months. Since we last spoke we are already working with most of the leading retailers that are well established in Europe, U.K. and North America. Brands which in each of their markets are both forerunners in a retail industry rapidly evolving to meet the demand for consumer-focused innovation, while proving that access to sustainable, high quality, fresh and living produce is not only possible, but can be available in produce aisles today, and every day of the year, with Infarm.
I’m interested to understand where Infarms are installed, in terms of if the majority is in-store and consumer-facing or if the most scalable and bulk of Infarm’s use-cases are really much larger distribution hubs in cities or close to cities i.e. not too far away from places with population/store density but not actually in stores. Perhaps you can enlighten me on what the ratio looks like today and how you see it developing as vertical farming grows?
Erez Galonska: Today across our markets, the split between our farms in stores and in distribution centers is roughly 50:50. However as you anticipate, we will be expanding our network this year with many more distribution hubs. This expansion will likely lead to an 80:20 split as early as next year, with the majority of our regions being served with fresh, living produce delivered throughout the week from centrally-located hubs. This not only offers retailers and restaurants flexibility in terms of volumes of output, and the ability to adapt the presentation of our offerings to floor areas of different sizes, but it also allows us to begin to serve whole regions from our next generation farms under development today.
Based in our hubs, these farms will deliver the crop-equivalent of an acre or more of fresh produce on a 25 m2 footprint, with significant further savings in energy, water, labor and land-use. We believe this technology will truly challenge ideas of what is possible in sustainable, vertical farming and we look forward to talking about it more soon.
Lastly, what are the main product lines in terms of food on the shelves?
Osnat Michaeli: We have a catalog of more than 65 herbs, microgreens, and leafy greens, that is constantly growing. Our offerings range from the known and common varieties like Coriander, Basil, or Mint, to specialty products like Peruvian Mint, Red Veined Sorrel or Wasabi Rucola.
Because our farms give us excellent control over every part of a plant’s growth process, and can imitate the complexity of different ecosystems, we will be able to expand the diversity of Infarm produce available to consumers to include root vegetables, mushrooms, flowering crops and even superfoods from around the world in the near future. What you see today with Infarm is still only the beginning.