#VerticalFarming is innovative and risky. Access to capital is a large hurdle as reported in 2020 CEA Census and firms are hesitant to invest with a lack of proven business models, low margins and scarce data.
Here are things they look for that can help you raise funding 👇
Here are things they look for that can help you raise funding 👇
1/ Show market growth potential
Investors are looking for companies that have found their product-market fit with high growth potential.
How big is the local market you’re serving now? How about potential nationally and internationally?
Ability to scale should be obvious
Investors are looking for companies that have found their product-market fit with high growth potential.
How big is the local market you’re serving now? How about potential nationally and internationally?
Ability to scale should be obvious
2/ Highlight your talent
The technology works ⚙️
It’s the acute risk in operating the farms that is complex. ≈50% of founders have no Agricultural experience and there's a lack of workforce for GH/VF. Investors like to see teams experienced in sorting+producing food products.
The technology works ⚙️
It’s the acute risk in operating the farms that is complex. ≈50% of founders have no Agricultural experience and there's a lack of workforce for GH/VF. Investors like to see teams experienced in sorting+producing food products.
3/ Collect data points - What gets measured, gets managed
Collecting metrics are crucial for improvement and comparison
Yield: current output🌿
Waste: % yield goes to waste🗑️
Energy use: kWh + costs ⚡️
Labour: direct labour hours 👩🌾
Unit costs: compare crop costs 💵
Collecting metrics are crucial for improvement and comparison
Yield: current output🌿
Waste: % yield goes to waste🗑️
Energy use: kWh + costs ⚡️
Labour: direct labour hours 👩🌾
Unit costs: compare crop costs 💵
4/ Show continuous improvement
Aggregating the yield/waste data to create an operational history 📈
If you display consistent improvement in yield w/ reducing volatility & waste, this signals that your operation is ironing out the kinks, becoming streamlined and scalable.
Aggregating the yield/waste data to create an operational history 📈
If you display consistent improvement in yield w/ reducing volatility & waste, this signals that your operation is ironing out the kinks, becoming streamlined and scalable.
5/ Build a solid customer base
Can you show a stable & secure customer base? Supermarkets and food service providers are particularly appealing as they have credible reputation.
Highlight growing sales and build confidence that your product is 'sticky'
fourweekmba.com/engines-of-gro…
Can you show a stable & secure customer base? Supermarkets and food service providers are particularly appealing as they have credible reputation.
Highlight growing sales and build confidence that your product is 'sticky'
fourweekmba.com/engines-of-gro…
6/ Can your farm pay off itself?
If your farm can pay off its construction costs and you can prove it then you’re in an extremely good position. Make this obvious!
If not, how are you going to get there? Show your strategy.
If your farm can pay off its construction costs and you can prove it then you’re in an extremely good position. Make this obvious!
If not, how are you going to get there? Show your strategy.
7/ Financial cashflows and statements
Financial income statements that show profitability starts a completely different conversation with investors. Regardless, having positive cashflows is crucial.
Growing gross margins and not too volatile EDITBA show consistency & potential
Financial income statements that show profitability starts a completely different conversation with investors. Regardless, having positive cashflows is crucial.
Growing gross margins and not too volatile EDITBA show consistency & potential
8/ Mitigate talent risk
As stated previously, operators/growers are hard to come by! If one of your team, e.g. head grower, got poached - would you have the expertise and knowledge to sustain output?
Automation, data capture and diverse teams all help mitigate this talent risk
As stated previously, operators/growers are hard to come by! If one of your team, e.g. head grower, got poached - would you have the expertise and knowledge to sustain output?
Automation, data capture and diverse teams all help mitigate this talent risk
9/ Future proof your business
ESG data is growing in popularity of socially conscious investors.
cnbc.com/2020/06/07/sus…
Have you been collecting this? You're ahead of the curve. If not, don’t overhype.. prove 'sustainable' statements with data!
ESG data is growing in popularity of socially conscious investors.
cnbc.com/2020/06/07/sus…
Have you been collecting this? You're ahead of the curve. If not, don’t overhype.. prove 'sustainable' statements with data!
10/ Learned from previous failures
There is a littered landscape of failed vertical farming start-ups, natural for any emerging industry.
How does your business conscientiously mitigate similar mistakes?
More info on failure modes and risks here: livrepository.liverpool.ac.uk/3109995/
There is a littered landscape of failed vertical farming start-ups, natural for any emerging industry.
How does your business conscientiously mitigate similar mistakes?
More info on failure modes and risks here: livrepository.liverpool.ac.uk/3109995/
What else should I add?
I've written these insights based on discussions with several investment firms interested in vertical farming
They told me what stands out from the crowd and why they had or hadn't invested to date.
Helpful resources that I couldn't fit below👇
I've written these insights based on discussions with several investment firms interested in vertical farming
They told me what stands out from the crowd and why they had or hadn't invested to date.
Helpful resources that I couldn't fit below👇
From the first post in this thread, @agritecture and @autogrow's Global #CEA Census from 2019 and 2020
agritecture.com/census
agritecture.com/census
Lean principles in Vertical Farming to increase value to your customer, streamline operations and eliminate waste.
sciencedirect.com/science/articl…
sciencedirect.com/science/articl…
Fascinating examination of shuttered vertical farms from 2017 and reasons for their closure
11/ Cost-benefit analysis on technologies
There are some production technologies that are more effective with higher returns than others.
Dependant on crop type, design, running costs, depreciation, etc.
Weigh up the cost-benefit of technology and show calculated decisions
There are some production technologies that are more effective with higher returns than others.
Dependant on crop type, design, running costs, depreciation, etc.
Weigh up the cost-benefit of technology and show calculated decisions
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