October 30, 2019

*picture credit to Plenty

By Lynda Kiernan

After launching its San Francisco Bay area vertical farm this summer, Plenty announced that it is branching out to southern California and is building a second vertical farm in Los Angeles. 

Founded by Matt Barnard and Nate Storey in a 52,000 square-foot facility in San Francisco, Plenty grows leafy greens using a highly-efficient vertical system that grows pesticide-free crops in rows of 20-foot tall columns, or walls rather than horizontally. This configuration is highly efficient as it allows water to trickle down each column, enabling nutrients to be gravity fed rather than pumped into the system.

Plenty also uses cutting-edge LED lighting systems that emit less heat than traditional LEDs, along with microsensor technology and big data processing, that together can be used to produce high-quality produce at lower prices.

And because of the configuration of this production system, (which can produce up to 350 times more produce compared to the same area of traditional farmland while using less than five percent of the water), Plenty is able to work with the forces of physics, not against them, enabling the company to save significantly on cost of production.

In July 2017, Plenty made history raising a record-setting $200 million Series B led by SoftBank Vision Fund – the $93 billion all-stage tech fund headed by Japanese billionaire Masayoshi Son. Other participants in the round, which brought total funding for the startup to $226 million, included affiliates of Louis M. Bacon, the founder of Moore Capital Management, and existing investors Eric Schmidt’s Innovation Endeavors, Finistere, DCM, Data Collective, and Bezos Expeditions.

Today, as the startup’s San Francisco-area location is gearing up to roll out products to Bay Area retailers, it has announced the launch of Plenty Los Angeles. Located in Compton, construction of the farm, which will be the approximate size of a soccer field, is expected to begin later this year, with ultra-clean, flavorful produce reaching customers in late 2020.

“Plenty Los Angeles will introduce craveable produce to one of the most discerning food communities in the world, and we can’t wait for residents to get to know us,” said Matt Barnard, CEO and co-founder of Plenty.

“In addition to bringing consistently amazing, clean produce to Southern California, Plenty looks forward to collaborating with the incredible community of Compton — one with rich, agricultural roots. Working with this community to bring this farm to bear has been an experience nothing short of terrific, and we’re eager to further the partnership.”

Plenty drives home that it focuses on a mission centered upon flavor, calling itself the “flavor-first vertical farming company”, growing produce including kale, bok choy, mizuna, and arugula, that “taste like nothing available today because the flavor, texture, and freshness are unique to the growing process.”

“…following my visit to an indoor farm in the Bay area, less than two hours’ drive from Salinas, California, known as the “Salad Bowl of America”, I started to understand the reason why indoor farming makes sense,” said Adam Bergman, Wells Fargo head of AgTech and FoodTech Investment Banking Practice, in his piece Is Indoor Farming Poised to Challenge the Status  Quo? published in GAI News in September. “The most compelling reason is taste. Produce that I have tasted that was grown in indoor farms tastes much better than the field-grown varieties available in stores and restaurants.”

Achieving great taste is a worthy goal after decades of produce varieties being grown for their ability to withstand long-distance transportation rather than how it tastes. But as a business model, vertical farming has had its challenges with achieving scale in a sustainable way while also controlling costs.

“The high capital intensity required for scaling a vertical farming business is also a challenge for an industry that can neither compete on cost nor benefit from a network effect to establish pricing power,” said Djalil Reghis and Nicolas Denjoy of Agroecology Capital, who recently released their Vertical Farming: Industry Report and Investment Thesis – 2019  “Moreover, the potential economies of scale are still unclear, if not insignificant.” 

A range of challenges remain for the nascent vertical farming sector, including multiple competing business models, a limited number and range of suitable crops, and a somewhat narrow customer base that is willing to pay a premium for their produce. However, Bergman assesses the situation saying, “I believe the indoor farming sector is poised to create significant disruption in a number of high-margin specialty crop segments. I foresee that, over time, the indoor farming sector will experience consolidation, leading to indoor farming companies with regional brands achieving a more national presence.”

– 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.