Bowery Farming, the New York-based vertical farming startup that counts Google, First Round Capital, and famous chef Tom Collichio as investors, has just raised an extra $50 million as an extension to its Series B. Temasek, Singapore’s state fund, led the extension with participation from Henry Kravis, the founder of private equity giant KKR.
Temasek invested in the first tranche of the Series B and was taking advantage of its seat at the table to preemptively invest more into the company on the back of Bowery’s growing commercial success, said CEO Irving Fain, adding that he wasn’t looking for more funding; the company has raised $172.5 million to date. “To their credit, they are phenomenal partners and this deal closed at a nice place from a valuation perspective for us. They have very strong conviction about this space, both because of the macro trends but also after spending a lot of time looking at [vertical farming] before choosing to invest in us.”
The big piece of news coming with the funding announcement was the launch of Bowery’s third farm, a facility in Baltimore that is 3.5 times larger than its last in New Jersey. The farm is already operational and will be selling greens in the New Year, Fain told AFN.
Why Baltimore? From a population perspective, it can serve 26 million people within a 150-mile radius from its location, which is a transportation hub. And the company will be able to hire a workforce from within the community, which Fain says has always been important to them.
Fun fact: the exact location, White Marsh, used to have a farm many moons ago, so Fain likes the idea that Bowery is bringing the area back to its agricultural roots but in a modern way.
This round also coincides with a step-change in Bowery’s commercial activities, which Fain said have been less of a focus until now in favor of the company’s technology platform. As part of this, the company has hired Carmela Cugini as EVP of sales. Cugini comes from Walmart where she led its online grocery business after it acquired Jet.com, and also spent time leading sales divisions at Pepsi. “She’s been both a seller and a buyer at some point and that’s a unique set of skills to find,” said Fain.
Having said that, Bowery has still managed to expand its retail footprint to Whole Foods Markets, Ahold, Amazon Fresh, Jet, Westside Market, among others and recently significantly increased its deal with Whole Foods, Fain told AFN. Bowery’s greens will now appear in Whole Foods stores in all of Manhattan, Westchester, and Connecticut. Fain puts the growth in demand for Bowery produce down to two critical consumer trends that are gathering pace rapidly: the demand for local food and food grown with sustainable farming practices.
Tell us about the tech!
Meeting the growing demand for indoor-grown food has been a challenge for many in the vertical farming industry; the high costs associated with building new facilities and the struggles to find the right talent have been some of the key challenges in scaling this industry. For Bowery, building its internal technology platform has been key to its strategy of “thoughtful scaling,” said Fain.
“With each new farm we’ve opened, we’ve made meaningful improvements and steps forward in the technology, taking time to learn and understand what’s working well and what needs to improve,” he said.
Dubbed BoweryOS, the firm’s technology platform combines sensors, control systems, computer vision, robotics, and machine learning to optimize many of the processes around the farm, making the overall operation more efficient in terms of labor and costs. Not only can it do some of the tasks humans would have previously done such as monitoring and altering the environment or moving plants around the facility, but its machine learning and software platform can also guide workers on what to do and when such as identifying plants ready for harvest and harvesting.
“This means the workforce can look and resemble an Amazon fulfillment center; they don’t need to have grown a crop or have familiarity with farming,” said Fain. The company recently hired Caralyn Cooley as chief people officer, who was also previously with Jet.com, Amazon, and Pepsi. Cooley has deep experience working with an hourly workforce and the types of workers Bowery will be looking for in its farms in terms of experience and salary, said Fain.
Bowery wouldn’t disclose how much of the $170 million-odd raised has been spent on its technology platform — although we know it to be significant — but Fain said its a critical part of the company’s success.
“Building technology is hard, it’s expensive, and it takes time, but the tech you use in indoor ag has a direct and clear impact on the economics of the business you’re creating, the varieties you can grow, and the efficiencies you can generate and we realized this early on,” he said.
As Boaz Toledano recently wrote in a very popular AFN post, this type of second-generation indoor ag technology can enable vertical farms to yield 55 times more than first-generation vertical farms where tasks such as controlling lighting, heat and Co2 were automated to some extent but not optimized with data analysis.
Asked why they decided to build it in-house instead of deploying third-party technology that would have been cheaper, Fain said the ability to control and own the technology meant they could iterate on it and optimize at a very fast rate, unreliant on other vendors to make changes and updates. “The ability to create tech specifically for our system and ecosystem provides enormous efficiencies from farm to farm,” he said of the benefits of internal tech in scaling the company to multiple farms.
But Bowery emphasized that technology is still just one piece of the business; “scaling for Bowery is more than just evolving technology or rapidly opening new farms in new cities – it also means investing in agricultural science and R&D, and hiring top talent across the organization to support this continued growth. All of these factors (and more) ensure the brand can continue expanding their farm network and distribution footprint in 2020, and beyond,” the company said in a statement.
The agricultural science team, under Susan McIsaac, a plant biology PhD, is looking at optimizing and improving the varieties of vegetables the company grows today and researching new ones including new species across root vegetables, vine crops, and fruiting crops. Using BoweryOS data, it also suggests detailed tweaks to how to grow different crops and is looking at “how to push the boundaries in conjunction with the farm design team.” It’s not considering gene editing at this stage though, unlike some others in the space that recently created the Precision Indoor Plants (PIP) Consortium.
Is controlled environment agriculture investable today?