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How 3 AgTech & FoodTech startups are growing with equipment financing

February 20, 2023

Venture capital investors pumped $51.7 billion in financing into agrifood technologies in 2021, which represented a whopping 85% increase over 2020, according to the 2022 AgFunder AgriFoodTech Investment Report. [Disclosure: AFN’s parent company is AgFunder.]

However, for many innovative startups with solid business plans, the challenge isn’t necessarily getting that first round of funding. It’s that there just isn’t enough funding to truly propel growth. Instead of using funding on R&D, to develop the science or technology, or hire talent, these companies use precious capital to build facilities and buy equipment. In other words, they’re using capital on depreciating assets instead of strategies that can help them grow and reach profitability faster.

CSC Leasing specializes in funding equipment and technology, enabling these young companies to build or expand their facilities so that they preserve their capital for more important investments.

Here are three ways agtech and foodtech startups are using complementary funding from CSC to bolster and grow their businesses.

Image credit: iStock

Built a state-of-the-art facility 

After graduating from a Silicon Valley-based accelerator, an autonomous farm startup was ready to launch its pilot program. This would be a new type of vertical hydroponic farming that would help to combat climate change and food shortages.

The seed-stage company wanted to grow its operations but didn’t want to use its equity until it had proved itself in the market. However, the company needed additional funding for equipment to expand operations.

CSC proved to be the ideal partner, providing non-dilutive funding in the form of an equipment lease. As a result, the startup was able to set up its first facility and onboard  customers and revenue sources—within four months of signing the lease.

Image credit: iStock

Scaled a mission critical “as-a-service” platform

To address food security and climate disruption issues, one agricultural startup, which has developed containerized technology, is on a mission to bolster soil health on a large scale. Manufacturing the equipment, which is placed at growers’ locations, requires substantial upfront cost. Without the ability to scale and deploy these specialized assets, the company couldn’t grow its soil-as-a-service based revenue platform across a broad acreage rapidly.

CSC provided the company with a sale leaseback for the specialized proprietary assets. The company manufactures each asset in-house, and CSC reimburses the cost. Then the systems are placed on farms across the country, with farmers paying a monthly subscription fee.

Image credit: iStock

Increased its retail footprint 

To expand its production capabilities, a producer of vegan barbeque needed to build a new production facility. That would require specialty equipment, including smokers and refrigerators, both of which need significant capex. The startup had just raised some venture capital but needed additional funding.

CSC leased much of the equipment required to build the facility. Additionally, CSC was a full-service procurement agent for the business and managed the process of procuring specialty equipment from a long list of vendors so the organization could focus on other priorities.

The company opened a 10,000 sq. ft. facility. Since then, it has dramatically increased its retail footprint and now has placement in numerous major food chains.

Learn more about CSC’s complementary non-dilutive funding

At CSC Leasing, we provide a flexible, affordable financing option you can use to cover the costs of high dollar builds and assets, to complement existing funding or to use as bridge funding until your next round comes through. To discuss specific opportunities for your growing business, contact our regional director, Jordan Stowe today.

 

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