Startups Take a Shine to Urban Agriculture; Can They Reward Investors?

Using a smartphone, Jon Friedman can run a whole network of high-tech, urban farms. His company, Freight Farms, developed an app that allows farmers to control the growing conditions of truck-sized shipping containers filled with racks of hydroponically grown veggies.

Before starting Freight Farms, Friedman and co-founder Brad McNamara had no background in food. But once they looked into how the industrial agriculture industry works, they thought they could make a difference by enabling more locally grown, organic food. “It was a problem that grew on us. We fell in love with the idea of solving it,” Friedman says. “We wanted to make urban agriculture a viable industry that could scale.”

And that’s the big question: can tech startups make urban agriculture take root and scale beyond its tiny base now? A number of them, like Boston-based Freight Farms, are trying. In some cases, entrepreneurs are drawn by a desire to make agriculture more sustainable or simply to work in food, an industry everybody can relate to and interact with.

Investors, meanwhile, see the macro trends: the world’s populations are becoming more urban; any innovations that can grow food with less water and land than outdoor farming has potential to at least partially feed cities. The number of venture investments related to agriculture and food this year is on pace to be more than twice the number of deals in 2012 and deal sizes are growing, according to data from the Cleantech Group.

But when it comes to urban agriculture, the jury is still out on whether it fits well with the venture capital funding model. “I just don’t know if it’s a venture play because it’s really hard to scale and be disruptive,” says Troy Ault, the director of research at the Cleantech Group. “We haven’t seen one be wildly successful in the typical venture-exit sense.”

That’s certainly not for lack of ingenuity. New York City-based Bright Farms has developed a greenhouse that can grow tomatoes with one-tenth the land and one-seventh the water than a traditional farm uses. Its hydroponic growing system doesn’t use heavy soil, so it’s built greenhouses on supermarket rooftops, in one case using the excess heat from store bakeries to lower the system’s energy usage and carbon footprint, the company says.

A Bright Farms greenhouse in Pennsylvania.

A Bright Farms greenhouse in Pennsylvania.

A few companies have developed ways to grow food in shipping containers or converted warehouse spaces. In addition to Freight Farms, there is Atlanta-based PodPonics, which touts its proprietary LED lighting and software for optimizing the growing conditions of different vegetables, such as lettuce, basil, or kale. Maplewood, MN-based Garden Fresh Farms grows both greens and fish for local supermarkets and restaurants using aquaponics, a symbiotic system that uses fish waste as fertilizer.

PodPonics, Garden Fresh Farms,  New York City-based Edenworks, and Bright Farms are essentially food suppliers. Others, meanwhile, are developing technology and equipment for other urban farmers to use; those companies include Freight Farms and Dallas-based Greentech Agro.

There are even a couple of startups seeking to help consumers grow their own food indoors. Grove Labs, which works out of cleantech incubator Greentown Labs in Somerville, MA, is using sensors and smartphone apps to teach people how to grow their own vegetables indoors. Similarly, Detroit-based SproutsIO, which has roots at the MIT Media Lab, is developing an automated, hydroponic home-growing system.

The economic argument for urban agriculture is that locally grown food greatly reduces transportation costs, which represents about half the cost of food. Also, greenhouses and other controlled environments produce consistently high-quality food that isn’t susceptible to droughts, pests, or other disruptions. On the other hand, energy costs are higher  … Next Page »

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2 responses to “Startups Warm to Urban Agriculture; Can They Reward Investors?”

  1. Arni Fullerton says:

    Arni Fullerton.

    Almost all Urban Settlements and their supporting
    infrastructure are being / were built on Prime Agricultural. One way
    to recoup this land misuse is to use the high multiplier (.?to?) of food
    density using climate shelters, plant tailored Led lighting, vertical
    layering and much more to extend the growing period to 24 hours from
    daylight only and year round from climate restricted seasonal hardiness

    With imagination one can envision and evolution of the
    Urban Landscape where the skyline is all Greenhouses; basements / below
    grade areas are all Grow-ops and terraces, yards and even public common
    area such as setbacks are used for food and herb production.

    these forerunner projects demonstrate there are ways to compensate for
    the increased use of energy with reduced transportation, multiple use of
    waste heat, renewable energy and amelioration of environmental
    impacts; reduced Health Care costs by moving to more personal
    involvement in in
    organic production of food from large scale, impersonal (not caring
    about the nutritional value of what it produces) Factory farming with
    its life taking pesticides.

    Also it could compensate for the
    under employment of our present, post industrialized, plus generations
    as we integrate basic, health giving, real food production work, distant
    learning along with other givens such as entertainment and recreation,
    all centered in and around one’s home and immediate Neighborhood.

    am convinced that this economic transition will not only succeed but
    will be the final, necessary link to a Neo Home Centered Habitat. It
    actually existed for most of History through the ‘Middle Ages’ up to as
    late as latter part of the 20th Century in places like Nepal and even
    central England where I helped to plan a new City in the mid 1960’s.

    an Architect-Urban Designer and Town Planner with over 50 years
    experience, I am presently acting as Project Developer and have a
    design concept for such a New Neighborhood on 3+ acres of Urban land
    within a City of 80,000 people on Vancouver Island (West Coast Of

  2. Sam White says:

    Great article, Martin! You really bring all of the complicated moving parts of this industry into a nice picture of where things are heading.