Indoor growing is at an inflection point, with billions of dollars in funding but limited sales.According to Pitchbook, the industry received $1.9 billion in funding in 2020. This is more than all the industry has earned in the past decade. Aerofarms is one of a number of vertical farming companies that are well-funded but not profitable and are now preparing to be listed publicly. This follows AppHarvest, a public greenhouse startup that sparked consolidation rumors after it announced an AI acquisition. Privately owned brands are also doing well. Bowery, a lettuce grower, achieved a valuation of $2.3 billion after raising $300 million at May's end.It is a ridiculously high price. David Barber, an investor and cofounder of the Center for Stone Barns, said that even the Bowery valuation in the last round was outrageously high. The addressable market, however, is huge. It is all about food security. How can you develop the capabilities to feed people in any environment?Aerofarm's first vertical farm facility in Newark, New Jersey. AerofarmsBarber, who claims he chose Bowery due to its proprietary operating system as his investment, is not the only one placing his bet. This year has seen a frenzy surrounding funding these businesses, with debt financings of $715 million and additional funding secured by startups. There is also the expectation of two more SPAC listing in the U.S., and a third in Europe.This is a lot of expectations for an industry that has had very little impact. From just 22,000 stores, the top 20 brands that sell leafy greens indoors have generated about $135 million in U.S. retail sales. None of these top brands has reached more than 3,000 doors by themselves. They also represent less than 3% of all the grocery stores nationwide. Brightfarms is an indoor farming company that was established in 2010 and which sold a majority stake in October 2020 to Cox Enterprises. It has distribution in over 2,500 stores.DatawrapperBoth local Bounti (backed by Cargill and Fidelity) and Newark-based Aerofarms will be listed via SPAC this year. Both are unprofitable at the moment and have limited distribution.Aerofarms CEO David Rosenberg says this is a cost-efficient way to scale up to tap the public market. He expects his 17-year old company to be listed in the summer, subject to regulatory approval. We feel that we can prove our business model in several hundred or many thousand supermarkets, regardless of whether we are there in a few hundred or a few thousand.DatawrapperAppHarvest, which produces tomatoes, broke ground this month on its fourth- and fifth Appalachia greenhouses. The stock has fallen half a percent since its January public offering. AppHarvest's first quarter net sales were $2.3 million. This was despite selling 3.8 millions pounds of tomatoes. Its current market cap is $1.5 billion.We can't produce enough product due to the huge demand. We don't have to worry about the demand. AppHarvest president David Lee stated at the Indoor Ag Tech Conference that we need to be concerned about supply and quality and being financially viable. We are bankable right now at very affordable and non-dilutive structure that will only get better. There is plenty of room for growth.This article was published by Chloes newsletter Forbes Fresh Take. It is about big ideas that will change the future of food. Register here.
