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Starting a vertical farm is a difficult but exciting proposition. Luckily JJ Reidy, CEO of the Urban Pastoral Collective, has helped us come up with a step-by-step approach to do just that. Why would such a talented social entrepreneur share his secrets? He just shrugged it off when I asked him about risks. “It’s about owning who I am; a cultivator.” With JJ’s insight, in this post we tackle:
- The Rust Belt Hypothesis of Vertical Farming
- His Step-By-Step Process for starting a vertical farm
- Pursuing a passion
- JJ’s number 1 tip for getting funding
- BoxUp quick stats (financial info gold mine!)
- Why craft beer competition is like vertical farming competition
- Why a rooftop beats a warehouse
I met JJ, like Dustin (the entrepreneur behind living furniture), at the vertical farming workshop in New York. Well, actually, we met after the workshop when I lept through a fast-closing subway door to catch the train and almost ran him over. He was talking with one of his teammates from the design competition and I found out that JJ has already started a small vertical farm with hopes to expand to a 20,000 sq ft facility on the rooftops of Baltimore.
We did the networking thing and were able to catch up a few months later. Talking to him teased out something very important about the conditions that go into how to plan a vertical farm.
The Rust Belt Hypothesis of Vertical Farming
I’ve long been fascinated with identifying the conditions that allow vertical farms to prosper. In fact, it was partially the subject of my first and most popular post on the site where I looked at those conditions in Singapore, as well as the subject of my undergraduate research. This interest is more than academic: by identifying the variables that make vertical farms work, you can plan any business or food system solution with enough background information to not waste your time.
So, let’s take another look at some of the basic conditions in Singapore that make for a successful vertical farm:
- Dense and urban population (Singapore is an island a little more than 3 times the size of Washington, DC with a population of 5.6 million people. Their population is 100% urbanized)
- Production proximity to market (New, government-sponsored industrial parks allow companies to build their businesses on the island)
- Existing infrastructure (Singapore is a developed, high-tech country whose purchasing power parity ranks 41st in the world)
- Cheap energy (Energy is reliable and affordable, especially when supplemented with renewable resources)
- Legislative Support (Singapore’s government not only has the laudable sustainability goals of 20% self-sufficiency in the coming years, but also established a 20 million dollar fund to boost domestic food production. This helps enormously in the face of insane vertical farming start-up costs.)
- Local Demand (Expensive imports from China and Japan currently fill Singapore’s supermarkets. Singapore only produces 7% of the produce it consumes.)
Originally, doing this analysis in Singapore was important for two reasons: first, because Singapore’s government is so dedicated to increasing their self-sufficiency, they aren’t going to put unnecessary legislative blocks on vertical farm projects and instead will let market forces decide what succeeds; and second, there were two vertical farms competing with very different models for the same concentrated market. In other words, there’s a freedom to fail and weed out the bad ideas while other environmental variables remain constant.
Examining conditions like local demand, urban density, and existing infrastructure (and we’re finishing a white paper for our mailing list that talks about them more, beyond just Singapore) for a given area, gives a sort of framework for thinking about how well vertical farming would do in those areas.
The Rust Belt Hypothesis of Vertical Farming, an extension of that framework, is something that I’ve been thinking about for awhile, and it’s far from polished. The idea is that declining industrial cities are perfect environments for vertical farms because of the high number of socioeconomic conditions that would allow a vertical farm to prosper.
Is this testable? Why yes, and there is an extensive research plan in place here at the Urban Vertical Project for doing just that. It involves a lot of man hours digging through community metrics and piecing together data from various sources, but at the end, we’ll be able to determine the validity of The Rust Belt Hypothesis.
Going even beyond the indicators above, there is an important cultural element to this hypothesis. JJ was born in New Orleans, grew up in Buffalo, and can explain that culture a bit more: “I am a product of the rust belt, and I have such respect for the entrepreneurs who have forged lasting businesses in these cities. They are blue-collar cities. They are filled with locally run businesses because the big box stores didn’t want anything to do with these markets, and that is what makes these cities great; they actually have character.”
In other words, there is a different kind of feeling in the Rust Belt; one that will most likely prove hospitable to the green collar working environment that will accompany the adoption of vertical farm technology. People in these places want this local power! That’s why you see “Made in Detroit” car commercials and fierce local pride despite the perceived economic decline across the region.
There are of course more practical reasons why these cities will be more adaptive to a vertical farming revolution. “Like many rust belt cities across America, there is an urban revival going on, and these cities are ripe with opportunity for burgeoning entrepreneurs,” JJ says. Perhaps even more important for his case in Baltimore is the fact that “land is cheap, the government is very supportive of Baltimore grown businesses, and it’s largely a very affordable city.” That affordability plays across many other cities in the Rust Belt area – one reason why we’ve seen such a big uptick of urban and vertical farming in Detroit.
We’ll look at Rust Belt Vertical Farming in a later post, but now let’s see how JJ was able to put his ideas into practice in Baltimore with 3 Steps to Starting a Vertical Farm.
3 Steps to Starting a Vertical Farm
JJ was really generous with his time and his answers to my questions. I was able to put the pieces of our conversations together with conversations I’ve had with guys like Brian Falther of Future Tech Farm and Chad Sykes of Indoor Harvest to find these three common steps to starting a vertical farm business. Of course, there are more common themes, like how to get initial investment, but that’s going to change based on each project’s particular variables. I have a special surprise later where I share JJ’s number 1 tip for getting funding, but first we’ll walk through the 3 common steps using Urban Pastoral as an example.
Step 1: Proof of Concept
First, you need to have an idea and then you need to prove that idea will work. Through his work as CEO at Urban Pastoral (UP), JJ is in charge of developing their proof of concept. “Prior to engaging the investment community for a significant raise, we will design, build, operate, and finance a small-scale, 8 x 40’, insulated shipping container growing facility, BoxUP,” he explains. “BoxUP will begin production in the summer of 2015, and produce approximately 250 lbs. of fresh greens and herbs per week.”
This is a critical calculation JJ is making. Of course he is busy forming important partnerships with The Baltimore Food Hub and other incubator groups in the city, always expanding his network, but the understanding is that you can’t ask for big money without delivering big results. It’s easier to show investors that there is a guarantee for their money at a small scale through a proof of concept before asking for the serious money necessary for a larger vertical farm to take off.
Step 2: Secure Sales
Fun fact: I love the tv show Shark Tank. Shark Tank is a “reality pitch” program on ABC where entrepreneurs pitch their ideas for a product to a billionaire panel of judges who have to make an immediate decision on whether or not they will fund the business. If the ideas are initially sound, their decisions almost always come down to one thing; can you actually sell it.
People in vertical farming have the most success when they have a sales contract before they go into production. For UP, “Bon Appétit has agreed to begin purchasing approximately 1,000 lbs. per month, with the intent to increase orders as UP scales,” JJ says. This is going to allow UP to leverage their initial investment into further growth and gives them the freedom to grow that a sense of secure sales provides.
By finding a buyer, not only do you know you have a market and a source of income, but you know that your product is actually worth something to somebody. People can talk about how good an idea is until the cows come home, but it’s a different story when there’s money on the table.
Step 3: Execute
Even the best contracts are worthless if you can’t execute. Of course, this is the most difficult and ambiguous of any of the steps I’ve identified, but only because so much is possible. Everyone’s skills, backgrounds, and opportunities are different and this is where it can help to have an adviser or someone who has done this before to help you fill in some of the crucial blanks. I asked JJ about his outlook for his dream, and his answer is full of confidence. “When it comes down to it, our success is simply a matter of execution. I have the team, I have the technology, I have the customers, and now we have to make it happen. I have no worries, just pressure.”
Execution takes drive and planning. To that point, Urban Pastoral already has a timeline in place. In JJ’s words:
“From a commercial standpoint, UP is working with real estate developers to create plans for two FarmUP sites over a 5 year timeline; Green Street Academy, a progressive charter school in West Baltimore, and the Hoen Lithograph Factory, located behind the Johns Hopkins Hospital, two blocks from the Food Hub. These sites are strategically located in areas where UP can have the greatest social and economic impact.
Our first operation will use 20,000 sq. ft. of rooftop growing space, and produce approximately 350,000 lbs. of fresh, pesticide-free produce, annually. To provide an idea of scale, we will grow more on a small rooftop than a farm the size of 20 football fields. That is enough to feed entire hospitals, universities, corporations, or public school systems, which are our primary partners.”
So, JJ’s execution starts with the BoxUp proof of concept and then moves to the FarmUp rooftop gardens to really get his business started.
But everything else comes first…
Before you get to the 20,000 sq. ft. rooftop farm, you have to demonstrate your drive, otherwise your just a guy or girl daydreaming in a cubicle. Investors and potential partners don’t like daydreamers, they like passion.
“Looking back on my childhood, I said to my teacher that I wanted to be a chef in space,” says JJ. Food has always been a part of his life, and when he read The Vertical Farm while working on a farm in Vermont, he felt “that this was exactly what I was put on this Earth to do.”
Vertical farming has the potential to really contribute to society, and that’s the sense of duty that JJ draws from. JJ notes that besides supplying healthy, pesticide-free produce, “Ultimately, our impact expands far beyond food production. We will stimulate the local economy, promote youth education, and create a green job market.” With everyone I’ve talked to about vertical farming, there is a desire to do real good, a desire to do mankind’s original good deed; feed the hungry.
“My vision is much more than a business venture; it is my life’s mission, and there is simply no other path,” JJ says. That’s not just important to know for his investors to know when they think about supporting him, but it’s also important for people on this website who see this as the next game changing production shift. We want the good guys working towards the vision and we want the good guys to know how to do it!
JJ isn’t alone in working towards his life’s mission. He’s put together a stellar team to help him deliver. “Through my work with Innovation Factory and the JHU Tech Ventures Social Innovation Lab, I connected with Julie Buisson and Mark Verdecia,” he says. The Innovation Factory is a student-run organization at John’s Hopkins University that connects teams of entrepreneurs to the Hopkins community at large while the Social Innovation Lab was actually UP’s source of seed funding. Use your networks!
I asked JJ to describe his team and why he thought they were good partners. “Julie, our Chief Designer, recently finished the progressive design leadership program with a dual degree in design and business from MICA and Hopkins. Julie has a background in marketing and a passion from sustainable agriculture, and will use principles of human centered design to drive sustainable innovations at UP. Mark our COO, is a seasoned biochemist and budding entrepreneur who we were lucky enough to steal from the NIH. Mark, has spent years conducting research in plant and aquatic science, and will be responsible for our hydroponic operations and nutrient sciences.”
JJ is really excited about his team, and this highlights another important step on the road to any kind of entrepreneurial success. For different people, building a team might come even before proof of concept, for others it might be a part of the execution, but:
If you want that nugget in a copy/paste tweetable form: “No matter how brilliant your mind or strategy, if you’re playing a solo game, you’ll always lose out to a team” Reid Hoffman. Hoffman is best known as one of the original Facebook investors as well as helping to found LinkedIn, so he knows what he’s talking about when it comes to taking startups big.
JJ isn’t just along for the ride either. He brings a diverse set of skills and talents. “I began my career in business development, scaling [a] high growth startup, LivingSocial,” he says. “I experienced the boom and bust of the industry, and I left the startup bustle to pursue my passion for food. I moved to VT, where I helped run 4 markets and a 50-acre organic farm. Most recently, I worked with USAID in Ethiopia to develop sustainable supply chains and cooperative unions for rural coffee farmers.”
You may be asking yourself why I’m including these seemingly trivial points of background on 3 people who you may never meet. The reason is very important; not only do successful startups have talented teams, but they have teams that complement each other! Julie is a designer, Mark is a scientist, and JJ does business development. These three disciplines, combined with the passion JJ spoke about above, come together to give a business like Urban Pastoral the drive and capability to achieve a vision. The same was true when I talked to Dustin at Green Towers LLC, the same was true with Future Tech Farms, and a quick glance at the advisers page for Indoor Harvest confirms the trend that your team needs a diverse skillset. JJ has his own group of advisers to help him too.
So let’s review what a vertical farming venture needs to do:
Start with passion, passion, and passion!
Step 1: develop a proof of concept
Step 2: secure sales
Step 3: execute
And somewhere in there you need to pull together people who will know how to handle each separate aspect of your business. Remember, solo games lose to teams.
Even with this knowledge, something else is still missing.
Money Greases The Wheels: JJ’s Number 1 Tip for Getting Funding
We’ve all thought about funding a vertical farm and we’ve all heard about how much it costs. The Urban Vertical Project helped out by sending a venture capital pitch template on our mailing list, but the challenge is still huge. JJ himself says a commercial greenhouse could run as high as $2 million, and with slower ROI than tech investments and more uncertainty than other, more established sectors, vertical farming isn’t always an attractive option for investors. So, I came right out and asked JJ “What tricks do you use to get in touch with potential investors?” His answer was as good as any and I’m happy to be able to share with you below.
“Honestly, the trick is never sending a cold email or call. Find mentors, enter competitions, pitch your venture as much as possible. As you do this you meet people, and those people will connect you to others, and you will start to build your network over time. Personally, I’ve leveraged being a student as much as possible. As a student you are non-threatening, you are trying to learn, and for the most part people will open their doors for you. I worked with an entrepreneurial group and hosted tech summits and had a shark tank style event where we [invite] VCs and have student startups pitch. That is where I got my first exposure. I threw myself into the fire and pitched in front of a huge room of people. It was terrifying, but it got people talking and engage on the dialogue of our mission.”
Let’s break it down:
- Never send a cold email or make a cold call – setup an introduction through your network
- Find a mentor
- Pitch as much as possible
- Leverage being a student if you can
- Go to events
And I’ll add another one for effect:
- Network! (If you want a kickstart, go ahead and reach out to me on LinkedIn, I’m always happy to talk)
We’re going to be exploring the idea of niche networking, and vertical farming is certainly a niche, in a later post, but for now, these are some good tips to keep in mind to get you started. Even if you’re not quite there, ask yourself: “What can I do to put myself into a position where this advice is relevant?” Your answer to that question is your next step. After that, it all comes back to the process we outlined above.
While this advice might not fit everyone’s strategy or personality, if you’re having trouble figuring out how to get started, this might be a good place to begin.
How has JJ’s team gotten funding themselves? “Any opportunity to share our concept with the community, we go after,” he says. And it seems to be paying off: “We received or seed investments from the Johns Hopkins Technology Ventures, Social Innovation Lab. SIL is a social enterprise incubator run through Hopkins. We have also acquired funding through a mix of grants and business plan competitions as well.”
Bringing Everything Together
It all starts with an idea. Once you have an idea for a vertical farm, a community garden, a crazy building integrated architecture project, or an aquaponic warehouse, it’s up to you to think it through. You can test your idea with things like the Rust Belt Hypothesis, or you can use various other case studies that might be more applicable to your plan (For instance, have you ever thought about starting a farm in the desert?).
Then, it’s showtime. You have to start moving and setting up your proof of concept, securing sales, and executing your vision. You’ll need to put together your team, those who are experts in areas where you are not, and, if you don’t have it yourself, start going after funding using the tips above.
Don’t ever let your passion for this technology run out. “Will Snapchat, Spotify, or Instagram be completely obsolete 10 years from now?” JJ asked. His answer? “Probably. However, what will never change is that we need to feed to the globe in a sustainable manner.”
This is important work, this is good work. JJ and Urban Pastoral used this information to start a business, and you can too. It’s time to bring everything together and go for it.
This is a huge post with a lot of extremely valuable information packed into it. I want to send a huge “thank you” to JJ who was very generous in taking his time to extensively answer all of my questions and for providing real numbers for everyone to use to make their own planning a little more realistic. Get ready for those vertical farm financial numbers below.
Let’s take a closer look under the hood of JJ’s and UP’s proof of concept BoxUp. I’ve heard feedback time and time again that the hydroponic and vertical farming industries are tight-lipped; they don’t want to share anything for fear of losing their “first actor” edge. However, JJ points out that “we really have not reached a point where competition is relevant. The demand for fresh produce, especially local and organic, exceeds the supply a thousand fold, thus, there is plenty of room for many players.”
In other words, there really isn’t a solid reason not to share information. Especially when you are sharing things like best practices; best practices are not always patent-ready intellectual property, and all they do is ensure the industry as a whole is operating at a higher standard. This would only enhance market perception of vertical farms and plays out for everyone’s benefit in the long run.
Sharing finance information like what you see below is another net positive. Especially when, as JJ says, you consider that “the goal of this global movement [is] to redefine the way we look at farming, and inspire others to start growing.” By providing other players ballpark information for what they will actually need to bring to the table to get started, you’ll ensure that more realistic projects are developed which will in turn improve the practices and technology used to address our global hunger, nutrition, and sustainability challenges.
JJ reiterates that there is plenty of space: “Currently in Baltimore, 97% of our produce is coming from out of state. There are simply no local producers that can meet year-round demand.” He also paints an interesting parallel with the craft beer movement. “Three breweries have opened in Baltimore in the past 5 years, and they would answer this question the same way,” he explains. “The owners feel a sense of camaraderie because they are a part of a larger movement, and they recognize that there is room for everyone.”
Let’s first look at exactly what BoxUp is doing and then dig into their metrics.
Above, I’ve categorized BoxUp using the Association For Vertical Farming’s typology. In JJ’s words, BoxUp is an “insulated shipping container growing facility.” That means UP will be able to tweak all the environmental controls for their produce at a small scale to not only ensure consistent production, but also grow plants in their preferred environments with exactly the right blends of nutrients to ensure the best taste.
JJ was also kind enough to share his hard numbers about the project.
|Cost of Facility||Size||Production Capacity||Product||Capitalization Time|
|$60,000||320 sq ft||250 lbs per week||Fresh Greens and Herbs||7 months|
Earlier, when we were talking about securing sales I mentioned JJ and Urban Pastoral’s relationship with Bon Appetit. Bon Appetit had agreed to buy 1000 lbs of product each month. This matches BoxUp’s production capacity exactly with their market demand, reducing product waste on both ends, a further benefit of controlled environment agriculture and vertical farming.
Taking those numbers a level deeper, and let’s say we use a figure I got from the Red Horse Steak House in Frederick, Maryland where the wholesale price per pound of mixed greens is $5, what that really means is he’s looking at somewhere around $750 weekly revenues from BoxUp.*
*Mixed greens is a value added product which often sells for much higher than wholesale produce, so we halved the $5 and added a $.50 premium for local production. We then multiplied that by the 250 lbs per week figure from the table above.
But, if you remember, BoxUp is only a proof of concept, and depending on what the deal is with Bon Appetit , those numbers could be much higher. Not only are they looking to expand into more shipping container farms, Urban Pastoral is looking to build a massive rooftop growing space called FarmUp.
|Cost of Facility||Size||Production Capacity||Product||Recoup Investment|
|Over $2 million||20,000 sq ft||350,000 annually||Fresh Greens and Herbs||2 years (projected)|
In addition to just producing food, these businesses come from JJ’s passion to give people healthy options and create a vibrant, local economy. “Each of our commercial facilities will employ approximately 25 full time staff,” JJ says. It’s more holistic than just a produce output.
The benefits to the local economy don’t just stop at jobs either. Instead, Urban Pastoral will take it a step further by “providing high school students and the formerly incarcerated with the skills and expertise to build their careers around food, agriculture, and technology, regardless of their degree level.” This is what it means when vertical farm enthusiasts talk about the Green Collar Workforce!
Why a rooftop?
JJ brought up one more important point when I asked him why he settled on a rooftop model for his business while others contend for warehouse space or vacant lots. Warehouses were out of the question because UP wanted to rely on natural sunlight instead of artificial lighting, but JJ was ready with 3 main reasons about why to go vertical instead of staying on the ground:
- Security Risk
- Contamination Risk
- Space Efficiency
“It is no secret, Baltimore City has issues with crime and vandalism,” he says. “Having a glass greenhouse at street level leaves our operation exposed to events beyond our control. For example, Big City Farms lost several greenhouses due to vandalism over the past two years alone.” Big City Farms is a ground level hoop-house system that’s also in Baltimore. “If UP were to elect to build at ground level, security expenses would also increase significantly. With such a large investment, it would require 24 hr. security.”
Additionally, by building on a roof, they are able to limit and control the number of people with access to the facility, ensuring only those who are properly trained have access. This reduces food safety and crop contamination risks.
When asked about building on ground level outside of the city to reduce real estate costs, JJ notes that “building outside of the city undermines our mission of incorporating principles of ecology into urban design, and the core logic behind space efficiency.” Plus, as he says, “Real estate in Baltimore is relatively inexpensive comparable to other cities. There are few cities across the country where this is feasible.” Building directly in the city pushes their sustainability mission forward as well. “The only way we can eliminate the distance from farm to fork, and the negative environmental effects it causes, is truly integrating the farm into the city.”
This was the longest post on the Urban Vertical Project so far, and one of the most in-depth looks at urban vertical farming. If you’ve made it to the end, congratulations! We gave you a quick theoretical framework to evaluate possible urban vertical farm locations, a step-by-step guide on how to start a vertical farm, great tips for pitching ag-tech investors, and a quick analysis of some vertical farm financial information.
But, we can always do better. What did I miss? What do you think about the farm? Will JJ and Urban Pastoral make it? Let me know in the comments or on Twitter.
Until next time,
How detailed do you like your vertical farming information? We’re going to go even deeper soon when we start sending out our white papers to the mailing list. This is the type of analysis and information that successful entrepreneurs want to be armed with. Sign up for the mailing list and I’ll make sure you get it.