As the vertical farming sector undergoes a significant market correction, a few resilient companies are emerging stronger than ever. Among them is the UK-based Grow Up Farms, which recently secured a substantial £38 million ($50 million) investment from Generate Capital. This investment is not merely a financial endorsement but a testament to Grow Up Farms’ innovative approach to vertical farming, which has set it apart from its competitors.
Grow Up Farms specializes in growing leafy greens indoors through vertical farming, a method that has gained traction for its potential to revolutionize agriculture. However, the industry has been grappling with high energy costs, a challenge that Grow Up Farms has adeptly navigated by co-locating its operations next to a biogas facility. This strategic move allows the company to run entirely on renewable energy, significantly cutting down operational costs and enhancing sustainability.
Eduardo Clemente, managing director on Generate’s European investment team, highlighted the uniqueness of Grow Up Farms’ approach. “We benchmarked across all the vertical farming operators in Europe and found that Grow Up had a very unique approach,” Clemente told AgFunderNews. Generate Capital, known for its focus on sustainability infrastructure, provides both capital and operational expertise to companies across various sectors, including power, mobility, waste, green digital, water and agriculture, and industrial decarbonization.
Generate Capital’s investment philosophy revolves around supporting sectors with proven technologies that need a push to scale up. Clemente noted that the firm has been a pioneer in several areas, including energy storage and biogas, and is now channeling its expertise into controlled environment agriculture (CEA), another term for indoor crop farming. The firm’s decision to back Grow Up Farms is rooted in a belief that there is a better, more sustainable way to grow food locally.
“Our first investment with Grow Up was back in 2021,” Clemente said. “Since then, the company has effectively delivered on its promises. We’ve been on the shelves of the largest UK retailers for more than a year, and this additional investment will help Grow Up expand its capacity and develop further.”
One of the compelling reasons Generate chose to invest in Grow Up Farms is its ability to produce at scale with affordable prices for consumers, thanks to its renewable energy approach. This stands in contrast to many vertical farming ventures that focus on premium products, which only capture a small segment of the market. The high initial investment and significant energy requirements of vertical farming make it crucial to achieve high volumes to ensure a reasonable payback period. Grow Up Farms’ innovative energy strategy allows it to produce cost-competitive products, making it viable for mass-market retailers like Iceland.
Clemente also emphasized the importance of focus and specialization in the vertical farming sector. “There have been a lot of lessons learned from the last few years, and there have been very different approaches to vertical farming,” he explained. Some companies have tried to build entirely new technologies or grow a wide range of produce, adding complexity to an already intricate process. In contrast, Grow Up Farms has concentrated on its core strength—leafy greens—optimizing its operations and expanding capacity methodically.
The vertical farming industry has seen its share of ups and downs, with the last 12 to 18 months being particularly challenging. However, companies like Grow Up Farms that have managed to navigate these turbulent times are now setting the stage for a more sustainable and efficient future in agriculture. As the sector continues to evolve, the success of Grow Up Farms serves as a beacon for what focused, innovative approaches can achieve.