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What the numbers say: Indoor farming startups are struggling due to high operational expenses, rising energy bills, high supply costs, and pest infestations. Their troubles are further amplified due to a lack of VC funding, which previously kept them afloat. VC funding for the sector slumped to $198.4M in Q1 2023, 4.5 times less than quarterly peak totals of $895M from the same period last year, per AgFunder. In the ongoing quarter, VCs have invested less than $10M into indoor farming startups, indicating that funding will continue to slide further from last month. What happened: Indoor farming is divided into high-tech greenhouses and vertical farms. The former have been operating profitability, unlike the latter. Vertical farming startups —which attracted funding from Cargill and Walmart— have suffered due to steep costs associated with operating new facilities, heating and ventilation, and lighting.
Why it matters: In recent months, four indoor farming companies either declared bankruptcy or shut down. Their publicly listed counterparts have also not fared well, with stock prices of AppHarvest and Local Bounti down 95% over their respective listing prices. AppHarvest —once valued at $825M— fears that it will not be able to survive without additional funding. |
