Indoor vertical farms are the new kid on the block, with commercial production farms being a little more than a decade old. The vertical farming market is projected to reach USD 7.3 billion by 2025 from USD 2.9 billion in 2020; it is expected to grow at a CAGR of 20.2% during the forecast period. ¹

One vertical farm startup has raised over $250 million, and another has a valuation of over $1 billion. Are vertical farms hype, urban legend, or a good investment? Conducting thorough due diligence by a qualified expert is critical when considering an investment in a vertical farm.  

Here are a few pointers to consider when exploring investment candidates.

Business Model

A good business model is a start to creating a profitable vertical farm. The model should include: where the farm will be located, who is the anchor customer, what crop will be grown and what volume, how produce will be packaged, how it will be distributed, and how it will be sold. In addition, it should speak to the type of farm that will be built- a turnkey operation “seed to supermarket” vs. a grow farm, that contracts germination, packing and sales. Startups always take longer than expected to get up and running, make sure there is a grace period built into the plan for initial operations and distribution challenges.

Management Team

After you have developed the winning business model, you need a qualified team to execute the business plan. Now that vertical farming has been around for several years, it’s easier to find qualified people with experience operating these types of farms. The C Suite should consist of professionals experienced in business administration and a technical team with horticultural production experience. This includes a senior grower, production manager, food safety manager, chief ag engineer, and sales manager. Depending on the farm; for example, a highly automated farm could look to related industries to find an operations manager with experience in a mechanized food production facility.

Marketing and Sales

The produce market is very competitive and is referred to as “a pennies business” with tight margins and profit being made on large volume. Shrink can minimize the profitability of a vertical farm. The worst thing for any operator is throwing away crop and shrink can happen at each point of the growing chain (seeding, germination, nursery, growth, harvesting, packing, and shipping). In addition, produce is perishables having a short shelf life of 1-3 weeks. The best way to reduce shrink is to grow high-quality produce that is pre-sold. This will also yield the highest price. Having an experienced sales team with relationships with a wide variety of produce buyers is paramount to success. A well-thought-out marketing and a branding plan are also required to position your crop for the target buyer and detail how to make your brand known, such as in store samples / tastings, sponsorships, chef partnerships, merchandising…

Technology

What technology will be used in the growing operation? Will the farm be designed and built by the management team, or will they contract an experienced farm design and builder? Will they use a proven hydroponic, aeroponic, or aquaponics growing system or deploy a disruptive new technology A well-designed farm will include a seeding area, a germ room, a nursery, a growing area, a packing area, and a cooler. It will require the Temperature (T), Relative Humidity (RH), and air circulation to be monitored and controlled at each operation. At a minimum, it will require specialized equipment to control the climate, irrigation, treat nutrient water, enrich the grow room with CO₂ and control LED lights. In addition, the farm should have adequate sensors, a central data collection system with automated vales, so the delivery of all inputs can be precisely controlled. A disruptive technology can be transformative when scaling the business, increasing yields, generating profit and optimizing productivity.

Capital is the grease that lubricates the wheels of innovation. Investors continue to explore opportunities in the vertical farming market helping the industry grow. 

Investors be(a)aware, there is a lot of hype in this market and much nuance in operating a successful vertical farm that does not show up in financial projections or a business plan. A good business model, a seasoned management team, and a proven growing technology, can all add up to make a vertical farm profitable.

1.  PRNewswire, NY, Aug 17, 2020.

Robert Colangelo is the founder of Green Sense Farms Holdings, Inc. (GSF. He is an early adopter in Controlled Environment Agriculture (CEA) and has over ten years of experience with the design-build, operations and raising capital for vertical farms. 

GSF provides contract research, consulting, and farm design and build services.

Our webinar series is a great way to keep up to date on the latest regulations, farming techniques and business tips that will help you succeed in the emerging hemp market.

Wednesday, December 2nd: 12:00pm–1:00pm CST

Moderator: Robert Colangelo, Founding Farmer, Hemplet Farms

State of the Hemp Market

W. Ian Laird, CFO & General Council for Hemp Benchmarks
Ian has 35+ years as a finance lawyer, investment banker and private equity investor. He has extensive experience structuring financings that address commodity price risk in energy, mining, pulp and paper. Ian will provide an overview of the state of the hemp market from the supply side — which is the key factor impacting wholesale prices. His presentation will include data on biomass (and extracted products for cannabinoids) grain and fiber.

Hemp Busters: Analytical Testing- Urban Legend vs Facts

Ryan Bellone, Commercial Director, KCA Laboratories
Ryan Bellone is Commercial Director for independent hemp testing lab KCA
Laboratories in Nicholasville, KY. Prior to KCA Labs, Ryan managed business development in international markets for a prominent dietary supplement testing laboratory with a focus on banned substance contamination prevention and mitigation. Ryan’s presentation discusses THC limits, sampling, THC isomers (d8-THC and d9-THC), raising the threshold and field tests.

Maria I. Marshall, Ph.D., Professor
Department of Agricultural Economics
Purdue University

Dr. Maria Marshall is Professor in the Department of Agricultural Economics at Purdue University and Director of the Purdue Institute for Family Business. She has an internationally recognized program focused on small and family business development. Dr. Marshall will provide an overview of the Hemp market. The overview will include trends associated with licensing, pricing, and production. She will also provide a summary of recent producer surveys detailing 2019 producer expectation and experience. In addition, she will touch on the COVID- 19 Virus and the impact to the Hemp industry.

Join us for our 6-Part Webinar Series Keep up to date on the latest regulations, growing techniques and business tips that will help you succeed in the emerging hemp industry!

Registration is FREE. Space is limited, sign up today!

Join Every Wednesday from 12:00–1:00 CST to hear the most up to date information!

Hydroponic vegetable production, vertical farming, urban agriculture continues to be an area of focus as we work to figure out how to feed the world while using less energy and resources. Hort Americas works brings technically advanced, cost effective products to the greenhouse growers across North America and also has its finger on the pulse of the indoor growing news. General Manager Chris Higgins joins us.

Check out more from Green Sense Radio featuring Urban Ag News founder, Chris Higgins.

Please contact kubota.10@osu.edu to join the café.

To meet the increasing demand for clean, safe produce in both the U.S. and China, Green Sense Farms looks to open additional vertical farming operations along with a training facility to create job-ready graduates to grow in controlled environments.

Robert Colangelo, founding farmer and CEO at Green Sense Farms, in Portage, Ind., knows what it takes to be successful in emerging markets.

“I have been very fortuitous in my career,” Colangelo said. “I have been at the forefront of three emerging markets. In the 1990s I operated one of the first companies in the Soviet Union and rode that wave of democratization and privatization of state-owned Russian businesses.

“I was at the forefront of the brownfield industry. Redeveloping contaminated properties, repositioning them for new and productive use. And now I have been lucky to be at the forefront of the emerging vertical farming market.”

Colangelo said all of the new markets he has been involved with have very similar patterns.

“They all require tenacity as the early phase of the market ebbs and flows until it reaches a critical mass,” he said. “They require flexibility and the ability to manage technology. It’s the culmination of my previous experiences that have allowed me to have a diverse amount of skills required to make vertical farming work. This is probably one of the more complex ventures I have ever undertaken, but I love it. I also have a great partner, Carl Wenz, who is a CPA and has complementary skills to mine.

“To be successful in vertical farming, you really have to understand the produce business, have a good understanding of fundamental business operations and be able to integrate many different technologies into a working system. You have to understand plant physiology, packing and post-harvest processes. And you have to have marketing and sales skills and be able to raise capital. That is a unique skill set for one person and requires an experienced team. If you’re not good at all of those areas of expertise, then you’re going to have a real challenge succeeding in the vertical farming market.”

Starting out with “big” partners

Even though Green Sense Farms has only been producing crops since 2014, the company was formed in 2012 and has been doing research and development since 2009. The company’s vertical farm operation is located in a 120,000-square-foot industrial warehouse building. It leases 20,000 square feet in a multi-tenant building.

“We have two grow rooms,” Colangelo said. “Each room measures 60- by 60- by 25-feet tall. One room is dedicated to lettuce. It has nine vertical towers that are 14 levels high. The second room has seven towers with 10 levels in which we produce baby greens, including kale, arugula, bok choy, watercress, upland cress and culinary herbs. About 80 percent of the product goes to grocery stores and 20 percent goes to produce companies, which service restaurants and institutions.”

Colangelo said in order for his company to be a major player in the vertical farming industry required picking “big” partners.

“We looked at lighting and picked a lighting partner,” he said. “This allowed us to focus on building the best vertical farm and our lighting partner can provide us with constant R&D on LED lights. We picked a fertigation partner that could take a well-defined fertigator from the greenhouse industry and customize and tweak it so that it would work in an indoor vertical farm and create the automation controls that link all the different systems together. We formed a partnership with a climate control company so that we just don’t treat our air and filter it and cool it, but we also adjust the humidity because plants transpire and put a lot of moisture in the air. Lastly, we are working with a seed company that together with our LED company can breed non-GMO seeds that grow best under LED lights in indoor controlled environments. This enables us to not only maximize our yields, but through using the right seed with the right LED light recipe, we can double our yields and productivity. This is complex stuff and you have to pay attention to the details. And you have to be at a scale that is big enough to make this economical.”

Expansion in the U.S.

Green Sense Farms is in the process of building additional farms in the U.S.

“We have formed a partnership with Ivy Tech Community College in South Bend, Ind., to build a hands-on training center on the campus,” Colangelo said. “This will be a working commercial farm.

“One of the challenges in this industry is that there are not enough trained people. So we are creating our own “farm team” to mine talent. The training center will be similar to McDonald’s Hamburger U. in Oak Brook, Ill. We plan to train 15 students every six months. At the end of the six months the students are job-ready to work in the ag industry and to also work in vertical farms. We call it “earn to learn.” The students will be paid to work at the farm. This facility will be larger than the one we are operating in Portage.”

Green Sense Farms is also in discussion to put a vertical farm at distribution centers in the Indianapolis area operated by grocery store chains.

“Our goal is to blanket the Midwest,” Colangelo said. “Our strategy is to put these vertical farms at the points of consumption and distribution. We are planning to build farms at perishable food distribution centers and at institutional campuses, including hospitals, colleges, corporate campuses and military bases.

“After Chicago, Indianapolis is the next up-and-coming Midwest city. There is a great food scene. It is also an entrance to the South. The Midwest is a good location because of its short growing season and its cold winters. With the vertical farms we can grow indoors 24/7 and harvest 365 days a year.”

Expansion in China

At the same time that Green Sense Farms is expanding its vertical farms in the U.S., it is also building a network of farms in China. The company’s goal is to build 100 farms in China with its local operating partner Star Global Agriculture. It began work on its first China facility in March 2015. Located in the city of Shenzhen, the vertical farm is expected to start growing produce in June.

“Shenzhen is located right across the border from Hong Kong,” Colangelo said. “There are 48 million people within 50 miles of our farm. Our plan is to build 10 farms in the city in the next 24 months. They would serve Hong Kong and Macau, which is considered the Las Vegas of the East.

“China has 1.4 billion people. The country is transforming from a manufacturing economy into the largest consumer economy. In a very short time China is going to have incredible buying power. As a middle class emerges, Chinese consumers are demanding higher quality food.”

Colangelo said China’s transformation over the last 25 years into one of largest industrial manufacturing economies ate up a lot of farm land and produced heavy pollution.

“A lot of the food supply has been affected by the industrialization,” he said. “There is heavy air pollution, ground water has been contaminated in the large cities and there are terrible traffic jams. Putting vertical farms in the cities close to the people reduces congestion, controls the cleanliness of the food, and supplies emerging markets that want to eat healthy, fresh greens.

“There is a tremendous amount of capital available. In China there aren’t as many rules and regulations as we have had to deal with in the states so we can move much more quickly. Even though we started in the U.S. and we will continue to build our network here, with the availability of capital and less regulations to deal with in China, we feel that we can build a network of farms much more rapidly there.”

Colangelo said the company’s goal in China is to pioneer the lettuce market.

“We know there is an emerging lettuce market. We feel that we can dominate that,” he said “But we also know that we have to grow different greens for the Chinese palette. Some of the crops include Chinese onions, baby bok choy and mustard greens. Some of the herbs will also be different such as coriander.”

Colangelo said with China’s population the potential market is immense.

“Initially we will put as many farms as we can in Shenzhen,” he said. “Then we’ll blanket Shanghai, Beijing and Chengdu. Those cities have large population centers (20 million plus) where we can build a circle of farms around the cities.

“The traffic congestion is so bad in China that it would be better to build smaller farms closer to consumers. Even in a small area it takes a long time to go a short distance during rush hour. It’s better to have several small farms then to have a big farm in a central location.”

The future of vertical farming

Colangelo said the indoor vertical farming market in the U.S. is a rapidly emerging market.

“There are a lot people rushing into vertical farming either because they see it as a way to stop world hunger, as a lifestyle change or they see it as a responsible and sustainable way to grow,” he said. “All those things are great. Vertical farming can help those things, but it is not a panacea.”

He said vertical farming has raised the bar for sustainable farming.

“You are seeing some field farmers becoming much more sustainable, as they use precision farming techniques to conserve water, fertilizer and pesticides,” he said. “Greenhouse growers are also becoming much more responsible on how they minimize water and fertilizer use.

“Each of those methods of farming are targeted to grow different crop types better. Field farming is fantastic for commodity crops like corn, wheat and soybeans. Greenhouses are great for tomatoes, cucumbers and peppers. Vertical farming is a great way to grow leafy greens. Vertical farming really takes a skilled practitioner with a good management team, a good understanding of the produce business and good understanding of controlled environment agriculture and patient capital.”

Colangelo sees more people rushing into vertical farming which will result in a high failure rate.

“I expect that eventually a few companies will emerge in the long run that will be large scale companies,” he said. “Internationally I see vertical farming growing in constrained markets where produce travels great distances. There is either a lack of water, a lack of land or heavy pollution that drive the creation of farms.”

Colangelo said the vertical farming market is rapidly expanding at the same time it is maturing quickly.

“When I started in this industry in 2009, it was a cottage industry,” he said. “Today you really need to bring your A team to start a vertical farm. You have to have a strong management team. You have to be well capitalized. You have to be strategically focused with a cogent business plan. You have to have an experienced growing team in place. You have to have a good command of the technology that’s ever changing. And you have to be willing to constantly innovate and be agnostic towards your current technology.

“Our first grow room is going on three years old and it’s already a museum. We have already retrofitted it with new technology. We have farm designs that go way beyond where we’re at now and we’re just getting started. The only constant in life is change, either be the catalyst for change, be changed or die.”

For more: Green Sense Farms, (219) 762-9990; robert@greensensefarms.com

http://greensensefarms.com.

David Kuack is a freelance technical writer in Fort Worth, Texas; dkuack@gmail.com.

The 20,000-square foot indoor vertical farm will be an innovative workforce training center for the next generation of farmers as it grows micro greens, baby greens, herbs, and lettuces for local customers. Many of these customers were on hand to celebrate the groundbreaking and show their support, including representatives from Martin’s Super Markets, Morris Inn at the University of Notre
Dame, Café Navarre, Sodexo, and Four Winds Casinos.

With support from the city of South Bend, Green Sense Farms will construct the state-of- the-art facility to work as a hands-on training center and working commercial farm to create much needed job-ready graduates to work in food service, produce and as modern indoor vertical farmers. Land, which was approved by Ivy Tech’s state board of trustees on Feb. 2, will be transferred to the Portage-based company with the requirement of cooperatively creating a workforce training program.

Ivy Tech gains access to the working commercial vertical farming as a result of the partnership without the large-scale investment needed to acquire equipment.

Students will receive technical training as well as the soft skills that are in high demand, making them job ready. Courses will begin as non-credit or through courses complementing other programs. The farm is expected to be completed by Q2 2018.

Organic Foods

Nov. 28, 2016

Chris Higgins of Urban Ag News has at organic foods, our feature on urban agriculture.

About Green Sense Radio:

Founding Farmer Robert Colangelo is also founder and host of the nationally syndicated Green Sense Radio show. Recorded live on the Farm, Green Sense Radio features entrepreneurs, innovators, academics, and policy makers who are making the world a better place.

The program is heard coast to coast every week. Send us an email if you’re interested in sponsorship opportunities so your sustainable message can reach our millions of listeners!

Click here to listen to the latest Green Sense Program and subscribe to our weekly podcast.

Container Farms

Sept. 4, 2016

Chris Higgins of Urban Ag News gives us an update on container farms around the world.

About Green Sense Radio:

Founding Farmer Robert Colangelo is also founder and host of the nationally syndicated Green Sense Radio show. Recorded live on the Farm, Green Sense Radio features entrepreneurs, innovators, academics, and policy makers who are making the world a better place.

The program is heard coast to coast every week. Send us an email if you’re interested in sponsorship opportunities so your sustainable message can reach our millions of listeners!

Click here to listen to the latest Green Sense Program and subscribe to our weekly podcast.

Salad Bars in Public Schools

Sept. 4, 2016

Chris Higgins of Urban Ag News gives us an update on putting salad bars in schools through Tour de Fresh.

About Green Sense Radio:

Founding Farmer Robert Colangelo is also founder and host of the nationally syndicated Green Sense Radio show. Recorded live on the Farm, Green Sense Radio features entrepreneurs, innovators, academics, and policy makers who are making the world a better place.

The program is heard coast to coast every week. Send us an email if you’re interested in sponsorship opportunities so your sustainable message can reach our millions of listeners!

Click here to listen to the latest Green Sense Program and subscribe to our weekly podcast.

Growing Green with Chris Higgins of Urban Ag News, Singularity University, HP’s Deforestation Goals

Aug. 7, 2016  Chris Higgins of Urban Ag News and Hort Americas joins us for our feature, a look at the latest in green agriculture, Growing Green. He’ll tell us about the new Agrihood trend.

Singularity University is a benefit corporation that helps people,  businesses, institutions, investors, NGOs and governments understand cutting-edge technologies, and how to use them to positively impact billions of people. Nicholas Haan is Director of Global Grand Challenges and Team Project Leader at Singularity University.

The year 2020 could be a big one for HP, maker of printers, PCs, mobile devices and other technologies. It recently made the pledge to achieve zero deforestation by that year. To explain more is Judy Glazer, global head of product sustainability with HP.

About Green Sense Radio:

Founding Farmer Robert Colangelo is also founder and host of the nationally syndicated Green Sense Radio show. Recorded live on the Farm, Green Sense Radio features entrepreneurs, innovators, academics, and policy makers who are making the world a better place.

The program is heard coast to coast every week. Send us an email if you’re interested in sponsorship opportunities so your sustainable message can reach our millions of listeners!

Click here to listen to the latest Green Sense Program and subscribe to our weekly podcast.

Urban Ag News Issue 13  |  April 2016

Spring has sprung and so has Urban Ag News Issue 13. Be sure to check out the latest issue which contains some great articles and videos on controlled environment agriculture and urban farming.

Urban Ag News’ Issue 13 cover story looks at Green Sense Farms’ efforts to meet the increasing demand for clean, safe produce in both the U.S. and China. Founding farmer and CEO Robert Colangelo talks about how his company is opening additional vertical farming operations in both countries along with a training facility to create job-ready graduates to grow in controlled environments.

Thinking about installing a water treatment system for your growing operation? University of Florida professor Paul Fisher said you should know your goals before investing in a treatment system. A treatment system won’t add value to your product, but it will reduce the risk of crop losses.

Duron Chavis, indoor urban farm director at Virginia State University, is helping citizens of Richmond and Petersburg, Va., have access to locally-grown produce year round. His efforts along with community leaders and university colleagues are helping people eat and live healthier through urban agriculture.

ISSUE 13 INCLUDES:

On the cover: Robert Colangelo, founding farmer and CEO at Green Sense Farms
Green Sense Farms to expand its Vertical Farming Operations in the U.S. and China

Helping people eat, live healthier through urban agriculture, with Duron Chavis

An Interview with Dr. Gary Stutte

Urban Ag Zoning: Lessons from San Antonio

NY SunWorks: Is the future of farming in public schools?

Know your goals before investing in a water treatment system

Tour de Fresh 2016 by Chris Higgins
Indoor Ag Con Las Vegas April 2016
e-Gro Webinars
Japan Plant Factories Special Report by Eri Hayashi
FDCEA 2016 Events to Attend
University of Arizona, CEAC, Patricia Rorabaugh Retires
Infographic: Living Wage Calculation for Dallas, Texas

News from the Industry features these and more:

How LED lighting treatments affect greenhouse tomato quality
AeroFarms offers new level of safety and flavor for delicious, nutritious leafy greens
Dr. Roberto Lopez joins Michigan State University Horticulture faculty
Lettuce See The Future: LED Lighting Helps Farming Go High-Tech In Japan
Interim president and CEO of AmericanHort steps down
Growtainer and Glenn Behrman
HydroGarden starts international school sponsorship to mark 20th year in business
The Diane Rehm Show: The Growth Of Large-Scale Indoor Urban Farming
GreenTech 2016 to be packed with inspiring sessions and speakers
CropKing Introductory Grower Workshop
2016 Tour de Fresh Sponsorships Available Now
New white paper available on the immense potential of Asia’s Indoor Ag Industry
Critical Foodscapes: what does the future hold for urban gardening?
New Case study on Urban Produce available from Hort Americas
Study Finds Philips LED Lights Provide Improved Energy Efficiency and Production for Growing Food Crops in Space
Sustainable Agriculture Training / Cal Poly Pomona Launch New Hybrid Course and a New School Name

Reprints worth Reading:

New Growing System Arrives in UK

Formed earlier this year, the Green Sense Farms Advisory board will assist Green Sense as it continues expanding in both domestic and international markets. The Board consists of business leaders representing agriculture, the environment, finance, LED lighting, genome sequencing, information technology, and more. Bob Parker is chairman of the advisory board, and is Vice President and Global Commercial Manager for ExxonMobil’s Environmental Services Company.

“Green Sense Farms is advancing the field of indoor vertical farming worldwide. Working together helps us all improve the global food chain,” said van Leeuwen. “Working with professionals such as Marco van Leeuwen means that we now can focus on finding seeds that grow best indoors under LED lights, eventually allowing us to double crop yields, advancing the industry and creating a better product for consumers,” said Robert Colangelo, CEO and Founding Farmer for Green Sense Farms.

Green Sense Farms’ innovative indoor, vertical growing system means their farms can grow 365 days per year in perfect growing conditions, without herbicides, pesticides, or GMO seeds. Popular Science recently named Green Sense Farms to its list of the year’s 100 Greatest Inventions for the farm’s innovative sustainable farming. Headquartered in Portage, Indiana, Green Sense Farms has announced the formation of Green Sense Farms, Asia Pacific, Ltd. and plans to build more than 12 indoor farms in the People’s Republic of China, as well as additional farms in the United States and beyond.