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'The time to invest in vertical farming is now'

"We are now starting to fill the gaps in the fresh produce supply chain in close collaboration with retailers. If you are an investor, now is the time to get back into vertical farming," says Endre Harnes, Chief commercial officer at Avisomo, a Norwegian vertical farming system supplier.

Over the last few weeks, Endre has been trying to feel the pulse of the agri-tech investment space by visiting the industry conferences Indoor Ag-Con, Word Agri-tech Innovation Summit and Future Food-Tech in Las Vegas and San Francisco. After the numerous promising panels and tons of talks with industry colleagues and investors alike, Endre emphasized that "vertical farming should be on top of your watch lists right now."

Norway: Avisomo bags €2 million seed round to build automated POC facility
Endre Harnes

"You might think I'm crazy to say so: VC investments into the agri-tech space have fallen by 60% since 2021. For vertical farming specifically the image is even more gloomy: Investments in vertical farming fell 91% from the start of 2022 to the end of 2023. At the moment, vertical farming surely is the ugly duckling of the agri-tech investment space."

Given the very public bankruptcies and challenges seen among the early movers in the industry over the last 18 months, it's not a big surprise that «not looking at indoor farming at the moment» seems to be a unified chorus among global VCs. However, Endre is confident that for investors looking for the next big opportunity in agri-tech, now is the time to invest in vertical farming. Just like Vinod Khosla of Khosla Ventures said during his panel at the World Agri-tech Innovation Summit in San Francisco a few weeks ago. 'Big returns are made by identifying investable industries at the time no one else is investing in them.'.

So here are Endre's top five reasons showcasing why investors should get back to investing in vertical farming before the train leaves the station:

Growth. Despite recent setbacks and early-mover bankruptcies, vertical farming is still expanding at an accelerating rate. The total global revenue from vertical farms grew by over 20% from 2022 to 2023, in a year that saw the collapse of several large players. And growth seems to accelerate further; Latest projections from Fortune business insights show a potential 26,4% CAGR throughout 2032, up from the 2022 estimates of 24,9%. (Numbers from March 2024)

Pain points.
Unprecedented challenges with sourcing fresh produce among retail store chains are opening more and more eyes to the supply security, stability, and quality of vertically farmed produce. There is an opportunity to integrate production directly into local supply chains to address both these issues and local seasonality. An example of this is what the retail store chain Coop in Norway is doing in collaboration with Avisomo.

Vertical farming technology, business models, and the industry in general are transcending their early-stage phases. Cheaper systems and automation, cheaper and more efficient LEDs, and cheaper renewable energy production are a triple whammy pointing toward the industry's inflection point. Is that a hockey stick I see on the horizon?

Public-private projects.
Large-scale, government supported projects like the +$100M ReFarm project in Dubai featuring 200 IGS towers is just the first of many sizable efforts to support food security all over the planet. Note that this project is estimated to replace no more than 1% of Dubai's imported produce. Still room for more of those.

The Avisomo Growth Stations, with a produce trolley being autonomously moved by a Lowpad robot

Collaboration and transparency.
Gone are the days of lofty promises and expansive secrecy. Following the many ups and downs in the industry, more people have become more outspoken about what they've struggled with, creating a sense of unity. Now more and more companies are collaborating, specializing, and sharing information to drive the development of better grow systems, on-premise Co2 production, innovative substrates. And an incredible amount of different ways to promote and accelerate plant growth - from electrical stimulation via generative AI to various biological compounds.

Each one effort combined, chipping away at the industry's golden benchmark: Unit economics.

"Bottom line? There currently is a clear discrepancy between popular opinions on vertical farming and the development we see from inside the industry. We now seem to be on the path to finally delivering on the promise that vertical farming made. We would love to have the global investor community along for the ride towards implementing vertical farming into mainstream food production," Endre affirms.

For more information:

Endre Harnes, Chief commercial officer
[email protected]