Bowery Bags $7.5M to Break Into Fast-Growing Indoor Farming Market
[Updated 2/23/2017 11:21 am] City real estate comes with premium prices, so the best way for developers to get the most out of limited space is by building skyward. The same approach holds true in urban agriculture. As vertical farms catch on in more cities, new agtech startup Bowery is entering the market backed by $7.5 million in funding. [Updated headline and text with correct funding amount.]
First Round Capital led the seed round of investment for Kearny, NJ-based Bowery, which has spent the last two years developing technologies and testing crops that can grow in its urban-situated farming system. Growing indoors in vertical stacks enables Bowery to boost yields, producing more food than could be grown on an equivalent-sized field, says Irving Fain, the company’s co-founder and CEO.
But more than just improving yields, Fain says sensors and software allow Bowery to control environmental factors that affect a plant, which in turn enables the company to improve a plant’s health and growth, and even adjust its flavor to a customer’s tastes.
“They say ‘We want to get a mustard green that’s a little bit spicier,’ and we can certainly do that,” Fain says.
Indoor farming is not a new idea. Hydroponics, the practice of growing plants indoors in a solution rich in minerals and nutrients instead of soil, dates to the 1920s, according to the University of Arizona. But the costs of operating an indoor growing facility have made large indoor farms prohibitively expensive. For example, climate controls and lighting are energy hogs, accounting for two of the largest expenses associated with these operations. Now, new technologies that use less energy, require less water, and automate many processes are lowering the cost barriers to indoor farms, allowing a wave of new startups such as Bowery to launch their businesses.
Fain, who was the co-founder and CEO of New York-based loyalty marketing software company CrowdTwist, points to LED lighting as the biggest cost barrier to fall. These lights, which consume less energy and produce less heat, ease the burden on climate control systems. Bowery has also developed proprietary software that uses sensors to monitor plants and collect data across its farm. Machine-learning capabilities enable this system to identify the environmental conditions best for a plant and make changes accordingly, Fain says.
As operating costs have come down, both startups and investors have shown more interest in indoor farming. Novel farming systems, a category that includes indoor farms, accounted for $247 million invested across 43 deals in 2016, according to the annual report on agtech funding produced by online investment marketplace AgFunder. In 2015, that category accounted for $158 million invested in 23 deals.
By revenue, indoor horticulture is roughly 4,000 times more productive than outdoor farming—gains realized by year-round production, higher yields, and higher retail pricing, according to a report from Agrilyst, a New York indoor farming software company. Lettuce, for example, can be harvested four to five times a year when grown conventionally outdoors. By comparison, indoor farmers can harvest their farms an average of 18 times a year, Agrilyst says. The most common crops grown indoors are … Next Page »