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Vertical farming takes root in the US, but foreign markets beckon

Indoor agriculture in the U.S. are harvesting a bumper crop of investment dollars.

While the jury is still out on the viability of these businesses (most of which have yet to hit profitability), the two largest U.S. vertical farming companies, Plenty and Bowery Farming, have now raised roughly $1 billion between them, while the publicly traded indoor ag company AppHarvest is worth about $1.7 billion on public markets.

Investors are clearly buying into the concept that indoor agriculture will blossom in the U.S., but for some, the real market opportunities lie overseas.

That’s because the resource constraints that make indoor agriculture so appealing — lower water use, less fertilizer and chemicals, and the distances between sources of production and consumers — are far more acute in some places in the Middle East, Africa, and Asia, than they are in the U.S.

“There’s so much to do on bringing fresh produce to places where it currently has to be shipped,” said Stonly Baptiste Blue, an investor in Bowery Farming from its earliest days through the climate change and resiliency focused firm

“That’s the climate angle, the resilience angle. You have these additional hooks on why the demand and additional pieces of the supply chain should and can be there… There’s a huge story around optimizing to meet the demand of emerging economies and the emerging middle class in Africa and China.”

Already, businesses are launching in the Middle East to meet the demand and take advantage of the new technologies coming on the market.

Pure Harvest Smart Farms is an indoor agriculture company using greenhouses to grow vegetables in the Abu Dhabi desert, and it raised $60 million in shariah compliant loans to develop the farms.

For the leafy green growers at Plenty and Bowery Farming, it’s a matter of reaching economies of scale.

That’s one reason why Bowery snatched up $300 million in funding earlier this week to bring its total haul to over $460 million, according to Crunchbase. The investment valued the company at $2.3 billion.

“Food is not like some software categories or even service categories where the venture assumption is it has to be winner take all,” said Stonly Blue, a co-founder and managing director of, an early stage investment firm which was one of the first investors in Bowery Farming which has continued to hold a stake in the company.

“For all the billions of dollars of valuation that … the multi-trillion dollar old school agriculture industry hasn’t even noticed yet,” Blue said. “That says that that industry is so big… this is still a rounding error for them.”

The rounding error that indoor agriculture represents for traditional growers is still a multi-billion dollar market. And one that’s attractive enough to bring big investors likeFidelity Management and Research. GV, General Catalyst, GGV Capital, Temasek, Groupe Artémis, Amplo and Gaingels to the table.

Both Bowery and Plenty are selling in places like Whole Foods Market and Safeway, Albertsons, and Walmart, but for Blue and other investors, the real promise lies overseas.

“We think that food production is going to look more and more like semiconductor manufacturing — increasingly automated environments that steadily drive down the costs of production and reducing weather risks,” said co-founder Shaun Abrahamson. “Siting these new farms near their point of consumption will help reduce waste and emissions, and provide new flexibility when food is not optimized for transport.”

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