As 2022 draws to a close, I thought I might give my 2 cents on what has happened in the vertical farming industry. 🤔
⭐ Disclaimer: This is just my view of what I've seen over the last few years up to the culmination of difficulties that have impacted the industry considerably at present. Also, I'm not calling any company out in particular, keeping this as unbiased as possible.
Overall, it was a bit of a perfect storm with a looming recession, impacts of inflation/supply chain, and increased energy costs. 💸
Things I've noticed:
1) The nature of VC funding has forced many vertical farming companies to overly focus on tech (e.g. robotics, AI, machine learning, computer vision). 🤖
VCs don't want to fund a regular greenhouse operation. They want IP, SaaS, and things that can give them 100X returns. 💰 💰
There is nothing wrong with striving to increase technology in agriculture, but you need to be able to create a GOOD and CONSISTENT product above all else.
2) Vertical farms can't scale like a SaaS business. No matter how efficient your tech/greenhouse is, you'll have to build a new one to increase capacity at some point. 🏦 🏦 🏦
3) It's also a 2 part business. Creating new technology is only half the battle. The other half is the actual produce part and how you're going to sell it. 🥕
Produce margins are razor thin. At some point automation/robotics will drive end product costs down, but can the farm survive until then?
4) Overly reliant pitch about 90% less water usage and 90% land usage. Let's talk about scalability, energy, and downstream waste more.
5) There are tons of large-scale commercial greenhouses that have been in operation for 10-20+ years. Learn from them. They're doing something right.
It seems like some farms are trying to do step 10 when they haven't done step 1 yet. 🏃♂️
What do you think the next few years will be like for the vertical farming industry?