Gotham Greens bagged a USD 310 million funding round sending total investments made in indoor vertical farming companies to an impressive USD 2.4 Billion in 2022 (and the year is not finished). This growth is impressive given the macroeconomic conditions we are experiencing in terms of inflation, interest rate hikes, and the slow fall in Venture volume in emerging sectors/ companies.
Nonetheless, these investments appear to be clustered in a handful of countries and companies fearing potential consolidation phases as well as potential missed opportunities. Moreover, the funding rounds fuels the fear of an investment frenzy and perhaps a future swift reversal on investments made in the sector…
Investments in Indoor Vertical Farming Continue To Grow, Unlike Other Emerging Sectors
As seen in the graph above, funding fell by 26% in the quarter compared to the previous year’s quarter contrasting with the investment growth indoor vertical farming has experienced this year.
Why is that?
Given the current macroeconomic conditions, with exponential inflation rates throughout the world, interest rates hikes from central banks, and other geopolitical tensions we could question whether this trend can continue over the next months.
“You would not be blamed for thinking that market conditions should have made it hard for the indoor farming sector to repeat its record year of capital raising last year. However, at this point investment into indoor farming shows no sign of slowing down in 2022” Mentions Adam Bergman, the Global Head of AgTech Investment in Citi, in a recent LinkedIn post “As the indoor farming sector matures, consolidation should accelerate, particularly among greenhouse growers.”
Commenting on that, Light Science Technologies CEO & Founder, Simon Deacon says:
“The events that occurred in 2022 added to the pre-existent issues in terms of diminishing arable land and labor shortages constitute favorable arguments for AgTech and indoor vertical farming growth. To illustrate with an example, labor shortages in the UK have resulted in crops valued at more than £36m being destroyed with the number of applicants for seasonal workers dropping dramatically. The added losses incurred because of the heatwaves experienced this summer, the effects of the Ukrainian war, and the rising energy prices could be offset using adapted indoor vertical farming technologies.”