September 26, 2016

BrightFarms, a greenhouse farming startup, announced it has closed on a $30.1 million Series C led by Catalyst Investors. The round was also joined by existing investors, Chicago-based WP Global Partners and New York-based NGEN Partners.

The New York-based company is tapping into the farm-to-table consumer movement, developing state-of-the-art commercially scaleable greenhouses that can provide locally grown fresh fruit and produce to supermarkets that is one week fresher than standard produce, which is often shipped long distances prior to sale.

From its greenhouse farms located in Northern Virginia, Rochelle, Illinois, and Bucks County, Pennsylvania, BrightFarm’s production systems produce pesticide-free and non-GMO foods using 80 percent less water, 90 percent less land, and 95 percent less shipping fuel compared to standard businesses acting in the food value chain.

BrightFarms plans to use the funding, which it claims is the largest equity investment to date in the U.S. controlled environment local produce sector, to strengthen its position within the space and to further its goal of making all U.S. fresh fruit and vegetables locally sourced. In addition to planning more greenhouses, the company is also exploring plans to expand the crops its grows to include green peppers and strawberries.

“Having the backing of Catalyst Investors further validates BrightFarms’ innovative solution for providing consumers with fresh, local, sustainable produce at a commercial scale,” said BrightFarms’ CEO Paul Lightfoot. “This investment will enable us to dramatically expand our markets and provide more Americans with fresh, delicious, locally grown produce on a year-round basis.”

Road to Expansion

Much like the business model used in the solar power industry, TechCrunch reports that BrightFarms offers its wholesale customers a long-term fixed rate on the leafy greens and tomatoes the company produces in its greenhouses. Once an agreement is fixed, BrightFarms then raises funds from economic development programs, banks, and equity firms to finance the building of a new greenhouse to serve that contract – giving the company guaranteed offtake and revenue prior to growing their first plant.

BrightFarms is definitely tapping into a segment ripe for disruption. Approximately 90 percent of the salad greens consumed in the U.S. is sourced from California and Arizona – two sites that not only need to secure long-distance shipping, resulting in older produce on the market shelf, but are both regions facing challenging drought scenarios.

Research conducted by the U.S. Department of Agriculture (USDA) determined that local food sales in 2014 topped a value of $12 billion, but are on pace to reach a value of $20 billion by 2019, according to TechCrunch.

“Where the seasons don’t cooperate, we just didn’t have the option to buy local before. So that feels good,” Tyler Newton of Catalyst told TechCrunch. “But when you taste a tomato or some arugula from BrightFarms, and compare it to something that’s been shipped from out West, there is an obvious taste advantage, too. That’s what grocers want.”

A Field of Rivals

BrightFarms is not alone in trying to capitalize on the local food trend.

In March 2015, AeroFarm closed on $30 million in funding from RBH Group and its partners, Goldman Sachs Urban Investment Group, Prudential Financial Inc., the City of Newark, and the New Jersey Economic Development Authority for the construction of the world’s largest indoor farming operation located in Newark, New Jersey. Meanwhile, Boston-based startup, Freight Farms is developing controlled environment food production units inside portable shipping containers.

However, BrightFarms’ unique model of securing offtake agreements prior to construction of greenhouses designed to meet that demand gives the company greater ability for scalability, while the ability of its greenhouses to incorporate natural light translates to lower energy usage and cost.

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Lynda Kiernan