Soli Organic raises $125M to further expansion plans

Dive Brief:

• Organic produce company Soli Organic raised nearly $125 million to build additional large soil-based indoor farms. It’s working toward having 15 farms nationwide, but also has its sights on smaller regional facilities.
• The Series D funding round was led by investment group CDPQ. This is Soli’s third large raise in 12 months. It received $120 million in financing from real estate investment firm Decennial Group last October and reached a $50 million financing arrangement with Horizon Technology Finance in May. 
• Controlled environment agriculture (CEA) companies have had some of 2022’s largest funding rounds in the food business. Last month, Gotham Greens raised $310 million in a Series E round.

Dive Insight:

Soli Organic is one of the many indoor agricultural companies positioning itself to change the way people get access to fresh produce, but it isn’t a newcomer to the game.

Previously known as Shenandoah Growers, the company was founded in 1989. AgFunder News reported last year that it had 35% of the U.S. market for herbs. According to Soli’s website, the company currently serves 20,000 retail locations nationwide and is the top national grower of fresh, organic culinary herbs.

The company had been transitioning into greenhouses and indoor farms for years. The funds raised last year allowed Soli to move 90% of its production to its seven indoor facilities. The company then said it planned to build eight more farms. Soli announced the construction of a new 100,000-square-foot farm in Anderson, South Carolina in August 2021, and another larger farm to be built in Marysville, Washington in February. Production at the South Carolina farm is set to ramp up this month.

Not only does Soli already have a large consumer base, but it has one other big difference from most other indoor growers: Its herbs are grown in soil. Almost all of the other vertical farming companies use soil-free hydroponic growing methods.

“Our unique technology advantage enables us to offer a superior consumer proposition,” CEO Matt Ryan said in a statement. “Growing indoors in soil confers both high quality and better unit economics, breaking the paradigm that organic food must cost more.”

Soli has already broken that cost boundary.

In May, the company’s Indolce Basil product hit about 2,000 store shelves and cost roughly $1 less than organic field-grown basil. The company said in a statement that the lower-priced basil was the first demonstration of “the true potential of CEA technology.” Soli said it would be rolling out other “comparably priced products” in the “near future.”

The company also is working on lowering its cost through partnerships. Rutgers University will use analytical tools to look at seed genetics and optimize crop varieties for Soli’s indoor growth. Koidra, an artificial intelligence provider, is creating a system to allow the farms to run more autonomously and in a way that increases efficiency and quality yields.

Soli has a large presence in the produce space, meaning it doesn’t have to work as hard as newcomers to get retail exposure or attract consumers to a new brand. As one of the few CEA growers that is USDA Organic certified, it has something else to attract consumers’ eyes. Its large scale has started to put it below the cost of other organic products, overcoming the pricing barrier that many indoor agricultural startups have hit as they get their products in stores.

This Series D funding, put together with everything else Soli has going for it, puts the company in prime position to showcase just what indoor agriculture can be to the food system. Proponents of CEA have said it can bring fresher produce to consumers with a much lower carbon footprint, since indoor growing systems can run all year round and are in areas that can easily reach large swaths of population.