Vertical farming company Bowery raises $300M, valuing firm at $2.3B

Dive Brief:

• Bowery Farming raised $300 million in a funding round that values the largest vertical farming company in the U.S. at $2.3 billion, the company said in a statement.
• Bowery will use the money to build more smart indoor farms, recruit and hire staff and support ongoing research and product innovation efforts to expand beyond leafy greens, kale and basil. The latest investment round was led by Fidelity Management & Research Company. Other investors include GV, the investment arm of Google, singer-songwriter Justin Timberlake and actress Natalie Portman.
• Indoor agriculture has been among the most popular places for investors to put their money during the past year as fresh, locally grown lettuce, tomatoes and other produce have become more popular among consumers looking to eat healthier. 

Dive Insight:

While agriculture has been largely confined outdoors for centuries, investors are betting big that indoor farming will be the future by applying big values to young startup companies.

AppHarvest, the only one of the bunch to go public so far, has seen its value rise from about $1 billion at the time of its special purpose acquisition company (SPAC) deal in 2020 to more than $1.5 billion today. Vertical farming company AeroFarms announced in March it also would use a SPAC to go public. The new company is expected to have an estimated equity value of about $1.2 billion. Other indoor farming operations that have raised significant amounts of money include Revol Greens and BrightFarms.

According to PitchBook data cited by Reuters, nearly $1.9 billion of global venture capital was invested in indoor farming in 2020, nearly tripling the level in 2019.

In the case of Bowery, the New York-based company would command a whopping valuation above $2 billion. The fast-growing business sells its products in more than 850 stores including Albertsons’ Safeway and Acme chains, Walmart and Whole Foods Market. As it builds new farms, invests in expensive technology and hires more staff — all while expanding into other forms of produce like strawberries or tomatoes — Bowery will need plenty of cash.

“This infusion of new capital from Fidelity, other new investors, and the additional support of our long-term investor partners is acknowledgement of the critical need for new solutions to our current agricultural system, and the enormous economic opportunity that comes with supporting our mission,” said Irving Fain, Bowery’s CEO.

The mission of indoor greenhouses like those operated by Bowery mirror many trends that are important to consumers today. They can grow produce all year round and do so using less water and without pesticides. The greenhouses also can be close to cities — cutting down on energy used to transport the produce and feeding large amounts of people in the process — or areas of the country that otherwise would be difficult to serve.

Bowery, founded in 2015, is currently transforming an industrial site in Bethlehem, Pennsylvania, into its largest, most technologically advanced and sustainable farm, expanding its reach further into the Northeast and Pennsylvania region. Bowery will be breaking ground on other large-scale commercial farms in 2021, and is actively engaged in identifying new farm locations in the United States with an eye toward global expansion. 

With demand for produce and interest in how it is grown rising, indoor farms are in a race to obtain a first-mover relationship with many retailers and consumers. 

Striking first could pay dividends down the road as stores decide to display indoor farms’ produce in more locations or carry more varieties of their vegetables and fruits. Indoor farms need to have multiple greenhouses to not only grow numerous kinds of produce but also serve retailers in many regions throughout the country at the same time. They can’t afford to sit idle, and have little choice but to move quickly.