Vertical Farming

Bringing fresh produce closer to consumers with efficient, advanced technology.

Overview

Vertical farming, a key subsector of the indoor farming industry, refers to growing crops in vertically stacked beds or shelves inside controlled-environment buildings or containers. The process uses artificial lights and soilless growing techniques to simulate a crop’s optimal growing environment and control the desired outcome in terms of yield, texture, size, and other characteristics.

Indoor farming allows growers to grow pesticide-free crops year-round, regardless of weather conditions and the availability of arable land. Demand from growing urban populations and limited arable land drives the industry. The industry's main obstacle is the limitations of proprietary technologies for mass production. As a result, vertically farmed food products currently on the market command a significant price premium due to high capital and operating costs.

Industry Updates

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Market Sizing

The US vertical farming market is estimated to reach USD 1.3 billion–3.5 billion by 2027

Conservative case

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Market Mapping


Hydroponic farm operators account for nearly half of our list of disruptors and total funding in the range USD 1.4 - 1.6 billion.  These companies follow a soilless growing method that places crops’ roots directly in containers filled with nutrient-enriched water without the need for fish farming tanks (as in aquaponics) or air sprinklers (as in aeroponics). Due to ease of use, lower costs, and higher ROI, hydroponic farms are the most popular growing system in the vertical farming industry.

In contrast, less than 10% of our disruptors operate aquaponic or aeroponic growing systems to vertically produce crops. The average funding per start-up in these segments ranges between USD 35 - 60 million.

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Farm Operators: Aeroponics
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Farm Operators: Hydroponics
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Farm Operators: Aquaponics
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The Disruptors


Hydroponic farm operators are the highest funded

Plenty Unlimited, Bowery Farming, and Infarm are the top three vertical farming (VF) players in terms of funding with a combined haul of over USD 1.4 billion. These three players are hydroponic vertical farming operators that produce similar products—primarily leafy greens, microgreens, and herbs—and compete on price, volume, location, and efficiency. 

Small and independent farmers and less well-funded VF startups tend to operate vertical farms in shipping containers so they can position crops near a point of sale to capitalize on freshness and reduce distribution costs. Given the high cost of purchasing a shipping container facility, often over USD 100,000 per unit, independent farmers cannot easily compete with large VF operators or easily attract mainstream consumers.

Funding History

Competitive Analysis


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Incumbents


Supermarket giants show interest in on-site vertical farms 

The vertical farming industry has not significantly attracted the attention of large conventional vegetable producers such as Bonipak Produce, Tanimura & Antle, and Duda Farm Fresh Foods. Tanimura & Antle has meanwhile only developed a hydroponics greenhouse in Livingston, California to accommodate consumer demand for fresh and locally-grown foods. However, the industry is seeing large supermarket chains partnering with startups to either set up vertical farms at stores or source vertically-grown produce for their customers. For instance, Kroger, Sobeys, and Publix partnered with startups to set up on-site vertical farms and source fresh produce for consumers. Companies like McCain Foods also invested in startups to support the development of vertical farming technologies.

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Notable Investors


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Overview

Vertical farms enhance crop yields and improve proximity to sellers

Vertical farming, a key subsector of the indoor farming industry, refers to growing crops in vertically stacked beds or shelves inside controlled-environment buildings or containers. The process uses artificial lights and soilless growing techniques to simulate a crop’s optimal growing environment and control the desired outcome in terms of yield, texture, size, and other characteristics.
Indoor farming, or controlled-environment agriculture (CEA), allows producers to grow pesticide-free crops year-round regardless of weather conditions and the availability of arable soil. CEA also requires fewer resources such as water, which makes it more efficient than traditional farming. 
Greenhouses currently dominate the indoor farming landscape, but commercial vertical farms have become increasingly popular. These high-tech vertical farms generally have light-emitting diode (LED) lighting and various automation technologies. This allows farmers to grow crops just as effectively as greenhouses, which use sunlight, but at a larger scale, as vertical farms can generate higher yields per square foot with their stacked configuration of crops, which allows growers to capitalize on space and maximize yield. 
Since vertical farms can be built in an enclosed space, they can also be situated closer to urban areas than traditional farms and greenhouses, which typically cultivate crops on horizontal planes in rural areas. This improves the freshness of crops by reducing the delivery time to vendors.
Currently, most startups in the vertical farming space cultivate low-growing crops, which can be stacked to greater heights and tend to have fast-growing cycles to maximize yield. Leafy greens, microgreens, and herbs are among the most popular foods grown on vertical farms. Because pesticides are not necessary in contained growing environments, vertical farm crops can be certified organic fairly easily.

Three types of soilless growing techniques

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