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US (NY): Taking on the Eastcoast in phased expansion, raising another $10 million

"Baking profitability into our model from the start, we minimized our external inputs and designed our systems to work with and enhance agricultural land(s). Additionally, we sized our Grow Hubs proportionately to provide sufficient production to meet the demands of a 50 - 100-mile radius. In this way, we'll be creating a mesh network of vertical farming Grow Hubs that are tailored per local need," says Ryan McGann, Founder and CEO of CubicAcres, a NY-based vertical farming company.

"Distributing the placement of our Grow Hubs to cover a 50 to 100-mile radius of an urban area covers plenty of lands, making various farmers eligible partners for the on-site model, helping to significantly boost agricultural production of existing infrastructure."

US (NY): Cubic Acres secures $3.7 million to build new farm on Long IslandRyan McGann, pictured on the left as he closed the deal back in February with IGS' David Farquhar.

Another funding round
Having closed a $3.7 million funding round in July this year, Ryan is planning to raise an additional funding round of $10 million to expand operations even further. According to Ryan, the East Coast is a prime location for a vertical farm to be positioned, given it is 2,800 miles from the West Coast (California's Central Valley & Arizona), where 97% of lettuce is currently grown. Consumers notice the fresh and quality difference instantly and see the value.

"When we first started out, we supplied full-head lettuces in bulk to restaurants, given this model was consistent, less overhead with packaging, and good chefs are usually keen on quality. We recently started working with some distributors such as Sysco, and would like to also include grocery stores as well."

"Our goal is to go from Seed to Salad, with no hands touching the produce," says Ryan. Combining the best-in-class systems, such as IGS towers and TTAs transplanting machines, and others, Ryan plans to grow a wide array of leafy greens, arugula, basil, kale, romaine lettuce, butter lettuce, microgreens and herbs for Long Island and NYC residents, with a focus on full head lettuces. "We will be working closely with restaurants and distribution partners to gauge crop demands for our production pipeline."

Phased expansion
The current 1000m2 farm is in the works of being constructed and scheduled to be up for production in Q1 2024. "The modularity of these systems is great, allowing us to expand as needed without disrupting existing production. We'll be adding 16 grow towers over a 3-year timeline, and our 2nd grow hub will be located in the New York Metro area in upstate New York, New Jersey, and maybe even inside New York City."

Vertical farming didn't fall out of the sky for Ryan as he believes that the US is (going to be) in dire need of indoor farming, making it a necessity. "Right now, vertical farming is a 'nice to have,' but will soon be a 'need to have' as agricultural land is decreasing, he points out at a breakneck speed. I recently read a report highlighting there's only an average of half an acre per person to support their needs for the year, including dairy and meat, fruit, veggies, cotton, etc. On top of all this, we're heading towards an el niño pattern, which will accelerate the demand."

Ryan pictured in his first farming project, using container farms that are still in use for R&D purposes (Photo credit: Freight Farms).

Correction period
Ryan believes that the industry is currently positioned in a correction period. "For the past 2 years, we were sitting on the sidelines with a small pilot project, honing our methods and shaping our strategy. We had a great vantage point to observe the industry and why other vertical farming companies were experiencing difficulties, and we were able to adjust our plan to mitigate these same risks, whether it be a spike in power costs, high labor costs, bloated R&D overhead, etc."

He adds that many early vertical farming operations had a long time horizon to see their vision through. "As well as the choppy waters of a pandemic, the war in Ukraine, and economic shifts caused some of these firms to pivot and change their strategy, or unfortunately close down." Coming out of this correction period, we will see more vertical farming companies fortified against hard times. There has not been a lack of demand for produce grown in vertical farms, but a challenge with profitability.

As he finds Long Island is a great spot to start this given the existing diverse agricultural infrastructure, a long distance from California's Central Valley, numerous high-end restaurants in the Hamptons, and everything in between to Manhattan. Seeing a shortfall in quality greens and herbs due to logistic fragility, Ryan made the decision to fill up this gap.

For more information:
Ryan McGann, Founder and CEO
Tel.: +1 631 678 6231
[email protected]