January 30, 2020

By Lynda Kiernan

High-tech, climate-controlled greenhouse developer AppHarvest announced it has raised a further $11 million in corporate capital to support the expansion of its indoor farming operations in the U.S. Central Appalachia region, where the company is promoting permanent sustainable advances through the building of some of the largest indoor farms for growing non-GMO, chemical-free tomatoes. 

This round included Equilibrium Capital, the ValueAct Spring Fund managed by ValueAct Capital, Revolution’s Rise of the Rest Seed Fund, and Blake Griffin Enterprises, bringing total funding to $120 million in only two years.

Equilibrium, ValueAct, and Revolution’s Rise of the Rest Seed Funds are all return investors, after investing $82 million in AppHarvest in May 2019 to fund the company’s high-tech, climate controlled greenhouse project in Morehead, Kentucky. 

“Scalability is now the biggest challenge in the controlled environment agriculture space,” said Dave Chen, chairman, Equilibrium. “We see significant demand across retailers, foodservice and consumers for fresh, safe, and local foods. In the next decade, the food sector will be transformed by technology and move towards climate-resilient infrastructure.”

“Equilibrium partners with and invests in the growth of the best-in-class advanced technology greenhouse operators in North America. We are proud to be investors in AppHarvest and of our commitment to the Kentucky greenhouse and AppHarvest’s future greenhouse sites. Equilibrium and our partners are well positioned to meet both the growing market demands and our sustainability challenges,” continued Chen. 

The $82 million all-cash deal was conducted through Equilibrium’s Controlled Environment Foods Fund, and is backing the construction of a 60-acre greenhouse that will be the company’s first of its kind agricultural facility in Appalachia.

“We’re building a Farming Now movement using proven technology to grow more fresh food with far less resources,” said Jonathan Webb, founder and CEO, AppHarvest last May. “Eastern Kentucky is mobilizing to lead the real food revolution and become the AgTech capital of America.”

Once completed and operational this year, the facility will produce non-GMO and pesticide-free tomatoes and cucumbers using 90 percent less water than traditional agriculture through the use of a 10-acre retention pond and circular irrigation system. And, being located within a one-day drive of 70 percent of the U.S. population, AppHarvest plans to distribute its produce to the top 25 grocers in the country through its partner, Mastronardi Produce.

“The 60-acre, state-of the-art facility will be one of the most sustainable, efficient and technologically advanced greenhouses of its kind,” said Paul Mastronardi, president and CEO and the fourth-generation family member to lead Mastronardi Produce, which will distribute the produce to America’s top grocers. “This is a significant milestone for Kentucky’s farming and food sectors.”

With a vision to make Appalachia the ‘agtech capital’ of the U.S., AppHarvest is a Benefit Corporation, receiving recognition for its focus on benefiting society through providing better produce, enacting better farming practices, and creating better jobs.

“AppHarvest is an amazing agri-tech company,” said Andy Beshear, Governor of Kentucky. “Kentucky is eager to expand our agri-tech infrastructure, and we are so pleased to start out on this journey with Jonathan and the team at AppHarvest, growing nutritious food and nearly 300 jobs in Eastern Kentucky that our people need and deserve.”

The non-profit group Feeding America estimates that 12.9 percent of Americans, including 17.5 percent of American children face food insecurity and often lack access to nutritionally adequate foods.

Furthermore, 25 percent of the people living in Appalachia are living in poverty. Appalachia’s dominant industry, the coal industry, has fallen from favor due to its environmental impact, with employment falling to its lowest point since 1988, with 50,000 miners losing their jobs. In Morehead, where the AppHarvest greenhouse is to be built, 23.7 percent of the population lives in poverty, compared to a national average of 12.3 percent.

“We are very excited about the impressive progress made by Jonathan, his team and the communities involved in Kentucky,” said Jeffrey W. Ubben, founder and chairman, ValueAct Capital.

“AgTech is a promising way to address both social and environmental challenges facing our society, and AppHarvest is leading with win/win solutions. We salute the pioneering work being done by the company and are excited to participate in its future.” 

– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.