Key Takeaways:
- Square Roots Restructures: The vertical farming startup, co-founded by Kimbal Musk, is closing multiple locations and laying off staff as it shifts to a new business model.
- AppHarvest Navigates Bankruptcy: The company has filed for Chapter 11 protection but plans to continue operating with debtor-in-possession financing.
- Planted Detroit Closure: Financial constraints have forced Planted Detroit to shut down, with operations ending in August.
- Industry Volatility: These developments highlight the financial challenges and shifting strategies in the vertical farming sector.
Square Roots: Restructuring Amid Layoffs
Square Roots, the vertical farming startup co-founded by Kimbal Musk, is undergoing significant operational changes. Known for using shipping containers and artificial light to create year-round farming, the company appeared to be on a strong growth trajectory with a partnership with Gordon Food Service and $90 million in funding as of 2022.
However, Square Roots recently announced layoffs and the closure of multiple locations, including those in Springfield, Ohio, Shepherdsville, Kentucky, and Kenosha, Wisconsin. The company is shifting focus from direct product packaging to “farming as a service,” supporting its partners like Gordon Food Service. This pivot has created uncertainty for employees, particularly in areas with few alternative opportunities in hydroponic farming.
AppHarvest: Seeking Financial Protection
In contrast, AppHarvest is navigating a different challenge. The public benefit corporation has voluntarily filed for Chapter 11 bankruptcy protection to manage its liabilities while maintaining operations. The company, which supplies major grocery chains and restaurants, has secured $30 million in debtor-in-possession (DIP) financing from its largest secured creditor, Equilibrium, to continue operating its farms in Morehead, Richmond, and Somerset, Kentucky.
Despite these financial hurdles, AppHarvest remains committed to its mission of sustainable farming and plans to restructure while continuing production.
Planted Detroit: Shutting Down
Planted Detroit, a community-supported agriculture (CSA) company, announced its closure due to budget constraints. Founder Tom Adamczyk expressed regret but assured customers that the company would fulfill all outstanding orders and commitments before ceasing operations at the end of July.
Glowfarms: Struggles Lead to Shutdown
Glowfarms, a vertical farming startup in the Netherlands, has shut down after 2.5 years of operation. The company faced rising energy costs and external pressures, which hampered its ability to maintain production efficiency. Despite its innovative modular farming system, which used 95% less water and promised high yields with minimal environmental impact, Glowfarms was unable to secure sufficient funding to survive these challenges. The company’s sudden closure marks the end of its efforts to scale sustainable farming in Europe.
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