September 13, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

New investors BMO Impact Investment Fund (IIF), a sustainability-focused investment fund of the Bank of Montreal (BMO), has stepped up along with Ares Management funds to lead a $310 million Series E for indoor farming pioneer Gotham Greens.

This round, which was also backed by new investors Commonfund, RockCreek, and Kimco Realty Corporation, and existing investors Manna Tree Partners and The Silverman Group, dwarfs all previous fundraising, bringing total funding since the company’s founding in 2009 to $440 million.

Launched by co-founders Viraj Puri, Eric Haley, and Jennifer Nelkin Frymark with a single 15,000 square-foot greenhouse on the roof of a bowling alley in Brooklyn, New York, Gotham Greens has grown into a leading indoor agriculture and plant-based food innovator operating one of the largest and most advanced networks of of hydroponic greenhouses and a product line that includes leafy greens, herbs, salad dressings, dips, and cooking sauces.

With this new committed capital, Gotham Greens plans to continue pursuing its mission to decentralize agricultural production by increasing access to greenhouse-grown fresh produce and plant-based foods to U.S. consumers through channel and geographic market expansion, increased operational capacity, and new product development.

“Gotham Greens was founded with a vision to advance indoor farming and sustainably grow high-quality leafy greens in cities across America every day of the year,” said Viraj Puri, co-founder and CEO, Gotham Greens. “Today, our ambitions and footprint are outgrowing our roots in the best way, and we’re humbled to receive this funding from new and existing investors to continue our national expansion in order to reach our goal of delivering Gotham Greens fresh produce within a day’s drive from our greenhouses to 90 percent of consumers across the U.S.”

This latest fundraising will support Gotham Greens’ new greenhouse projects currently underway in Seagoville, Texas, Monroe, Georgia, and Windsor, Colorado. It also will fund the company’s existing greenhouses in the Chicago, Illinois, and Providence, Rhode Island, areas, as well as future projects and acquisitions across various regions of the U.S. 

“With increasing climate and supply chain related issues facing our food system, it’s more important than ever to bring innovative farming solutions that grow high-quality produce while using fewer precious natural resources,” said Puri. “Gotham Greens is growing fast, and we look forward to bringing our brand to new markets in the coming months.”

As part of this strategy, Gotham Greens also recently closed on the acquisition of FreshH2O Growers Inc., a hydroponic grower with a 540,000 square-foot greenhouse in Stevensburg, Virginia, near Washington D.C. that produces and sells leafy green salad products in grocery stores across the U.S. Mid-Atlantic region.

“We are proud to pass the torch of the greenhouse facility and business to Gotham Greens, our trusted friends and industry partners,” said Joe Van Wingerden, former owner of FresH2O Growers, Inc.

“We have admired Gotham Greens’ outstanding track record of success in the industry and being exceptional growers, and there was no better choice in the CEA industry to continue what we built in Virginia.”

“Gotham Greens and FresH2O shared a desire to advance greenhouse agriculture and to bring more fresh, local and sustainably grown produce to consumers across the country, and we are confident they will continue to service our customers with high-quality, longer lasting leafy greens and other exciting innovations in the years to come.”

Indeed, Gotham Greens has no intention of slowing down. With current greenhouse farms operating in New York, Rhode Island, Maryland, Illinois, Colorado, and California, and more in development, by 2023, the company states it will own and operate 13 high-tech, climate-controlled, hydroponic greenhouses totaling more than 40 acres, or 1.8 million square-feet, across nine U.S. states.

After more than a decade in production, Gotham continues to grow, posting 26 percent year-on-year growth in the leafy greens category alone, compared to a standard growth rate of 3 percent for conventional production and 2 percent for organic production.

“The Gotham Greens management team has a demonstrated track record of successful execution, having developed a distributed network of greenhouse facilities with near national reach while producing positive facility level unit economics, a key differentiator in the indoor farming space,” said Marc Khouzami, managing director, BMO Impact Investment Fund.

This growth has been strategically determined, with Gotham’s facilities being located in specific locations where hydroponic food production can have the greatest impact. For instance, a water crisis in the West is intensifying as the drying of the Colorado River affects seven states, including California and Arizona. In California, where Gotham opened a greenhouse last year, more than 37 million people are being hit by drought, with 87 percent of the state classified as being in Severe or Extreme Drought.

Hydroponic food production in such areas uses 95 percent less water and 97 percent less land compared to conventional farming. The company’s farms are also in close proximity to major population centers in order to reduce long-distance refrigerated transportation and improve shelf-life. 

“Through its innovative approach to food production, Gotham Greens has built a resilient business model that also drives positive environmental and social impact within its communities,” said Mike Roth, partner, Ares Infrastructure Opportunities strategy. “We look forward to collaborating with the Gotham Greens team as we continue to advance our commitment to support sustainable climate infrastructure while seeking to deliver attractive returns for our investors.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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