May 11, 2021
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Controlled Environment Agriculture (CEA) has been of great interest to Agritecture since day 1. But, as of the recent few years, fueled by the covid-19 pandemic and diminishing resources, the CEA sector has been heating up even faster. According to S2G Ventures, the CEA sector, particularly in the United States, will grow 5x over the next 10 years. Investment in CEA has already surpassed $2.0B across North America and Europe.
Agritecture’s upcoming webinar titled “How To Invest In Controlled Environment Agriculture With Confidence” will bring together industry experts to discuss what investors need to know before investing in CEA operations.
Why Investors Need To Know More
Andrew Carter, Co-Founder & CEO at Smallhold sets the scene by explaining how “indoor agriculture plays into trends that excite most investors - consumer products, ESG, and food. The realities of the industry are much more nuanced, though. Single category growers (i.e., lettuce, microgreens) pitch the entire produce category with emerging technology that takes industry knowledge to wade through, incumbent indoor producers receive less publicity than well-funded startups, and automation and methods developed decades ago are overshadowed by how much another company has raised.”
Henry Gordon-Smith, the Founder & CEO at Agritecture, often converses with investors, and builds onto Andrew’s words saying that he is “seeing many investors fund startups in this sector without a robust thesis for CEA and without technical due diligence. This is resulting in a ‘gold rush’ mentality where hype and a fear of missing out may be the leading factor in a fundraise.”
Louisa Burwood Taylor, Head of Media & Research at AgFunder, shares the complexities of the industry by saying that “it's a resource-intensive category that crosses asset classes; it's an infrastructure play, it's a venture capital play; it's a real asset play. Finding the right type of investor for a project is just the first step - from there you need to make them comfortable investing in what is still a nascent category.” Robert Glanville, Senior Advisor at REG Consulting LLC, adds that “there are limited success case examples at scale.” Additionally, there are more complexities like the “changing underlying technology,” “uncertain government regulation, support, and tax,” “unproven investment or financing structures and approaches,” and “investor impatience vs the true timeline to proven success.”
Key Mistakes & Top Tips From Henry Gordon-Smith
At the webinar, Henry will be sharing with attendees the realities of vertical farming, and the ‘graveyard’ that exists to help investors understand the risks of CEA investing. “Whether it's FarmedHere, Podponics, Local Garden, or Metropolis Farms, there are enough examples of vertical farms failing to be cautious. With over $30M lost between these companies, surely some investors regret their decisions to back the companies they chose. We want to provide some clarity for future investments.”
Henry builds that while the top CEA mistakes will be covered in the webinar, “most of all, it's about not conducting a thorough technical and benchmarking analysis. Also, CEA performs best when it responds to specific market drivers and not every operator raising funding does this well. Other concerns relate to how CEA operations scale, and the trust investors are putting in operators to grow their operations and their sales.”
He shares some of his top tips for smart CEA investing. These include: “firstly, you need to understand the fundamental drivers and unit economics of CEA. Then, you need to understand the technology stack in CEA and how it scales. Also, knowing the red flags to look for helps a lot to avoid bad investments. Finally, understanding the future trajectory of CEA will help investors understand the risks and expected returns.”
The Industry Experts Speaking At This Webinar
As the Founder & CEO at Agritecture, the leading CEA advisory and digital services firm, Henry has “personally assisted 100s of new and current CEA operators. I have also visited more vertical farming operations than most. This experience gives me a unique perspective on the industry, and an ability to benchmark what is useful to CEA investors.”
Robert Glanville, Senior Advisor at REG Consulting LLC, is an institutional quality and standard at-scale investor, and a growth equity investor focused on asset-intensive sectors like CEA. He has “34 years of finance, financing, and investment experience across developed and developing markets around the globe,” and has been “involved in double-digit $b "franchise builds" from concept/whiteboard to full execution and value realization.” Overall, he is “able to articulate the connection between macro business opportunity, micro-business economics, management's capabilities, and skills, and the model (how much capital we need when to build the business), AKA "The 4 M's.”
Louisa Burwood Taylor, Head of Media & Research at AgFunder, has “been tracking and reporting on CEA for over 6 years including creating AgFunder's annual AgTech investment reports.”
Andrew Carter, as the Co-Founder & CEO at Smallhold, an early stage indoor farming company, works closely with consumers. His business has products that “can be found in over 125 stores in NYC and Texas, most of which have launched over the last 6 months. I have been working in indoor agriculture for over 12 years and have designed, developed, and managed commercial operations for leafy green, herb, and mushroom productions worldwide.”
Djavid Amidi-Abraham is the Director Of Consulting at Agritecture, and, as a result, has tons of experience within the CEA industry, and working with clients to kickstart CEA operations.
As the CFO at Bowery Farming, Darren Thompson, specializes in setting and executing business strategy in complex and competitive market, extensive private and public market capital raising, financial risk management, and driving organizational growth/change.
“This webinar will help investors understand the key opportunities and challenges in CEA and develop a more realistic investment strategy. ”
