Infarm raises $170m in first close of Series C

Infarm, a Berlin-based startup putting micro-vertical farms in urban locations like supermarkets, hospitals, and restaurants, has raised $170 million in the first close of its Series C round. The company expects the round to surpass $200 million at final close.

Led by LGT Lightstone — an investment vehicle owned by the Princely House of Liechtenstein — this first close includes participation from Hanaco, Bonnier, Haniel, and Latitude, and was supported by existing Infarm investors Atomico, TriplePoint Capital, Mons Capital, and Astanor Ventures.

With a mix of equity and debt financing, the fresh capital infusion brings Infarm’s total funding to date to more than $300 million.

Cloud connected vertical farms

Founded in 2013 by Osnat Michaeli and brothers Erez and Guy Galonska, Infarm says the investment will be used to expand its global farming network, and to complete the development of a new generation of vertical cloud-connected farms. The company hopes these will be capable of generating the crop-equivalent of acres of farmland. Focus will also turn to amplifying the diversity of produce currently available through vertical farming.

By 2025, Infarm is now pledging that its operations will reach more than 5 million square feet to become the largest distributed farming network in the world. Earlier this year, the startup outlined its regional expansion plans for countries like Canada and Japan to AFN, and the company has since looked unfazed by the Covid-19 pandemic.

In fact, CEO Erez thinks the pandemic has “put a global spotlight on the urgent agricultural and ecological challenges of our time,” heightening awareness of the need for hyperlocal supply chains. “At Infarm,” he says, “we believe there’s a better, healthier way to feed our cities: increasing access to fresh, pure, sustainable produce, grown as close as possible to people.”

In the past year, the startup has formed new partnerships with retailers like Albert Heijn in the Netherlands, Aldi Süd in Germany, Canada’s Empire Company, Japan’s Kinokuniya, and Kroger in the US, driving market expansion beyond its initial core markets of Germany, France, Luxembourg, and Switzerland.

Infarm now has operations across 10 countries and 30 cities worldwide, and it claims to harvest 500,000-plus plants monthly. In doing so, it’s keen to cite a few statistics popular among vertical farmers: namely, that it uses 99.5% less space than soil-based agriculture, 95% less water, 90% less transport, and zero chemical pesticides. Today, 90% of electricity use throughout the Infarm network is from renewable energy, and the company has set a target to reach zero-emission food production next year.

A win for distributed?

The funding is an apparent win for a distributed vision of vertical farming, and builds on Infarm’s earlier breakthrough last year with its $100 million Series B round. Centralized facilities have previously been the preferred option for VCs, though distributed and decentralized models have been gaining pace.

Proponents of centralized systems argue that large-scale production — and financial viability — depends on ever-bigger and higher farms. One of these, Plenty, scooped up a whopping $200 million in Series B funding back in 2017. Fellow US-based players AeroFarms and Fifth Season secured $100 million and $50 million, respectively, in 2019 rounds.

Nevertheless, even after years of progress as access to relevant technologies has improved, the operational side of vertical farming remains inhibited by frustratingly difficult logistics. Drawbacks like high electricity and rental costs combine with the complexity of indoor plant science, high-spec robotics, and artificial intelligence.

That’s why some early-stage investors have sought out ventures more tangentially related. San Francisco-based AgFunder, for instance, invested in IGS, a UK startup providing tech for prospective indoor farmers including smart grid systems that can reduce electricity usage. [Disclosure: AgFunder is the parent company of AFN.]

Similarly, iFarm — a Helsinki-based startup providing software and advisory services for indoor farms — is another ‘picks-and-shovel seller’ at the entrance to the vertical farming goldmine. It’s working on solving some of the AI backbone pain points for anyone building their own vertical farm, and recently raised $4 million in funding. For indoor seed technologies, there are also new companies like Unfold, which German biochemicals giant Bayer and Singaporean sovereign fund Temasek helped launch last month with a joint funding pile of $30 million.