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.

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.

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As we continue to find better ways to make the most out of our resources, one way we can do more with less is by moving our farms indoors. With an update on the latest in urban ag news, we’re joined by Chris Higgins of Hort Americas who recently attended the Green Tech convention in Amsterdam. 

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

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.

March 31, 2017

Price and technology is changing to make controlled environment agriculture more affordable and efficient. Growing indoors with LED grow lights is becoming more important. It also allows growing year-round in environments and locations where there isn’t much sunlight throughout the year.

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.

Feb. 26, 2017

Non-profits, like Grow North Texas, are trying to create awareness on what we are eating and where it is coming from.

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.

What’s trending in Agriculture

Jan. 3, 2016

2016 – the year in urban farming. Chris Higgins of Urban Ag News gives us an update on the big trends for the year that was.

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.

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.

Capital and Funding in Urban Agriculture

Nov. 16, 2016

Chris Higgins of Urban Ag News has a look on Growing Green, 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.