Indoor farming is catching on in more urban areas, giving city dwellers more choices for locally grown produce. Agtech startup Bowery aims to make its leafy greens part of that retail mix, and it has raised $20 million in new funding to support its expansion.
General Catalyst and GGV Capital co-led the Series A round, which also included GV, the investment arm of Google formerly known as Google Ventures. The funding news comes four months after New York-based Bowery unveiled a $7.5 million seed round. CEO Irving Fain now says the seed round was actually raised in 2015 and the February announcement marked the formal public launch of the company. Since then, Bowery has reached consumers by selling its products through select grocery stores. Fain says Bowery’s goal is to compete on price and quality with conventionally farmed produce.
“We’re already selling it at a price point that’s lower than a lot of the field-grown products,” Fain says. “We want everybody to have access to high-quality, nutritious food.”
Bowery currently operates one indoor farm in Kearny, NJ, that grows produce sent to stores in the tri-state area. With the latest funding, Fain says, Bowery will build another tri-state-area farm. “Soon after,” he adds, the company will expand to other cities and then other countries.
Fain won’t yet say which places he has in mind, nor would he give a timeline for the expansion. But he suggests that Asia is on Bowery’s radar. GGV Capital, he says, has a strong presence in Asia, along with a track record of backing “category-defining companies that have come out of China,” such as online commerce company Alibaba (NYSE: [[ticker:BABA]]).
A Bowery farm overseas would likely replicate the systems that the company now has in place at its New Jersey farm. The warehouse-sized operation is entirely enclosed, allowing for control of every facet of a plant’s life cycle from planting to harvest. Light comes from energy-efficient LED systems. Sensors monitor the plants’ growth. Bowery’s proprietary software allows the company to automate many farm tasks, according to Fain.
Automation is the hallmark of the indoor farming operations that are sprouting throughout the country and attracting investors along the way. Agtech startup Freight Farms, for example, sells shipping containers housing hydroponic growing systems. Last week, the Boston company raised $7.3 million in a Series B investment round to bring its growing systems to more sites around the country and across the world. Freight Farms says that sensors and software automate much of the growing operation, which drives down costs.
Other indoor farming startups have business models that more closely resemble Bowery’s. New York-based BrightFarms started in 2007 as a greenhouse consultancy and now operates large, indoor farms that supply grocery stores serving the Philadelphia, Washington, DC, and Chicago metro areas. Last year, BrightFarms raised $30.1 million in a Series C round to support its growth—the largest indoor farming deal of 2016, according to AgFunder, an online agtech investment marketplace.
Meanwhile, the founders of Plenty, a South San Francisco-based agtech startup backed by investors that include Amazon.com founder Jeff Bezos and Eric Schmidt, executive chairman of Google’s parent company, Alphabet, told the Wall Street Journal that they aim to build indoor farms at sites outside of major cities in the U.S. and around the world. Fain acknowledged that other agtech startups are bringing automation to indoor farming, but he claims that Bowery uses “techniques others aren’t employing.” (He would not specify what those techniques are.)
Most indoor farming startups sell their produce through grocery stores, striking up agreements to become one of their suppliers. Consumers can find Bowery-grown produce at some Whole Foods and Foragers stores in the tri-state area. The company also has arrangements with some New York restaurants. Bowery currently supplies retailers with six leafy green products, though Fain notes that the company’s farm has grown more than 100 different crops in its research. He expects the list of retail products and retail partners will expand.
Bowery will also expand its workforce of 12. Fain says the latest funding round will support hires in sales, agricultural science, software development, and systems and mechanical engineering.
Photo by Bowery.
