They were hailed as the next big thing in food: indoor vertical farms growing year-round crops using significantly less water, land and energy than farms in the great outdoors. Not only was this hightech solution more sustainable, vertical farms would also help feed the planet. Loads of hype and billions in venture capital investment later, the lights went out at many vertical farms.
Among those that ran into trouble were: Infarm, a Berlin-based startup that declared bankruptcy in major European markets in 2023; New Jersey's AeroFarms, which declared bankruptcy last summer and emerged with a rebuilding plan; and Kentucky's AppHarvest, which also joined the bankruptcy list in 2023.
"I look at it similar to the way the internet bubble was, or even the cannabis [sector]. Everybody thought they could come into the field and make money on it, and some of them were able to raise crazy amounts of money," says Mark Lefsrud, an associate professor in bioresource engineering at McGill University. "I will not say they had a good business plan."
Part of the challenge is vertical farming is a capital-intensive business, and many companies squandered large sums of money and invested in the wrong places, says Barry Murchie, CEO and president of GoodLeaf Farms, a Guelph, Ont.-based vertical farm operation that produces a range of baby greens and microgreens. "Many of them describe themselves as tech companies and they're comfortable with burn rates that are associated with tech companies – and this is food," he says. "You have to be very disciplined in your use of capital, you have to be focused on where you spend your money, and you have to make sure you're building the right foundation." Those companies, he adds, "are the ones that are going to be left standing as this consolidation and culling plays out."
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