$200 million in funding, the largest agtech investment to date

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Indoor vertical farming company Plenty has raised $200 million in a Series B round of funding, the largest agtech investment to date. Keep reading to learn more about the farm and the deal.

FLASH

My friend Jim Pantaleo (who guest posted this great writeup of ICEAA Panama in 2015) shared this news recently and I wanted to help get it out there. I’m going to post the full article from Emma Cosgrove at Agfunder below, but first I want to provide a little bit of context. Plenty is the company that bought BrightAgrotech, manufacturers of ZipGrow. This is there facility, taken from a screencap from their website:plenty vertical farm hype

It’s a good, clean farm. But it’s also nothing revolutionary. We’ve seen these types of farms, the types of claims in this press release about 1% resource use yadda yadda, and we’ve seen plenty of crazy valuations for vertical farms that claim they have a pipeline for farms all over the world. This is exciting, and I wish them the very best, I just want to temper the sensationalism that comes with this type of news.

The interesting question to me is how another farm with a serious influx of cash flow can compete with the other investment darling, AeroFarms.

Here’s the most important quote from the piece:

One agtech venture capitalist said that Plenty had a pre-money valuation of $500 million, but Plenty CEO Matt Barnard would not confirm this figure. The same venture capitalist said that if that figure was true, the valuation would be “crazy” for a company that appears to be pre-revenue.

And the full piece with original link:

Indoor vertical farming company Plenty has raised $200 million in a Series B round of funding, the largest agtech investment to date.

Just one month after the grower acquired indoor agriculture hardware company Bright Agrotech, this round was led by Japan’s SoftBank Vision Fund, a $93 billion, multi-stage tech fund.

Affiliates of Louis M. Bacon, the founder of Moore Capital Management, also joined the round alongside existing investors including Innovation Endeavors, Bezos Expeditions, Chinese VC DCM, Data Collective, and Finistere Ventures.

Plenty uses a vertical growing plane to grow leafy greens in a 52,000 square foot South San Francisco facility. The Series B — which takes total funding for the startup to $226 million — will fuel further expansion and more farms.

One agtech venture capitalist said that Plenty had a pre-money valuation of $500 million, but Plenty CEO Matt Barnard would not confirm this figure. The same venture capitalist said that if that figure was true, the valuation would be “crazy” for a company that appears to be pre-revenue.

But Plenty’s Barnard is confident about Plenty’s “aggressive” expansion plans to improve food quality globally. This expansion will include building farms in Japan, China, and the Middle East, as well as the US.

“This is an enormous investment, which is a testament to the strength of the founders and the strong conviction from Vision Fund in making bets that are true to its mandate,” said Rob Leclerc, CEO of AgFunder. “Plenty is a young company, so there’s going to be a lot of work to for their economics to catch up to the valuation, but if they succeed, this will have looked cheap.”

Barnard offered no specific timeline or number of farms in the near-term, saying that the company prefers to announce new locations when all relevant partners are in place. Further, he did not confirm any retail partners for his South San Francisco farm. But he did say that Japan is a priority. “It is one of our top priorities not only because SoftBank is a partner, but there are some specific needs that we plan to fill,” said Barnard.

The CEO said that Plenty used its $1.5 million seed and $24.5 million Series A rounds of financing to prove to investors that the company had the capability to deliver “vegetables and fruits” as good or better than what is currently on the market.

Barnard, who was introduced to SoftBank by an existing investor, confirmed that in addition to leafy greens,  Plenty has successfully grown strawberries, but would not confirm any other crops. He told Bloomberg that cucumbers are on the way as well.

What Plenty has yet to demonstrate is the ability to operate at scale.

Said Barnard, “Operating any farm, anywhere is extremely difficult and requires a lot of diligence, processes, people, and systems. The thing that is hard about investing is that at some point someone has to invest in scale before the scale is there and SoftBank is both visionary and courageous.”

In addition to global expansion, this round will go toward hiring in computer science, machine learning, mechanical engineering, crop science, biology among others.

“By combining technology with optimal agriculture methods, Plenty is working to make ultra-fresh, nutrient-rich food accessible to everyone in an always-local way that minimizes wastage from transport,” said Masayoshi Son, Chairman & CEO of SoftBank Group Corp. “We believe that Plenty’s team will remake the current food system to improve people’s quality of life.”

Plenty claims to use 1 percent of the water and land of a conventional farm with no pesticides or synthetic fertilizers. Like other large soilless, hi-tech farms growing today, Plenty says it uses custom sensors feeding data-enabled systems resulting in finely-tuned environmental controls to produce greens with superior flavor.

The SoftBank Vision fund invests no less than $100 million checks in deals across internet-of-things, AI, robotics, infrastructure, telecoms, biotech, fintech, mobile apps and more.

Existing fund investments and recent deals include Indian fintech unicorn Paytm, virtual reality Improbable Worlds, China’s Uber killer Didi Chuxing, and global connectivity company OneWeb.

SoftBank Vision Fund’s managing director, Jeffrey Housenbold, will join the Plenty Board of Directors.

Plenty’s Series B pushes microbial crop input products company Indigo off the top position for the largest agtech deal on record; Indigo raised a $100 million Series C round last year, just months after raising a $56 million Series B.

Today’s deal is also far larger than any other in the indoor ag space; SunDrop Farms, the Australian greenhouse operator, raised $100 million from global private equity group in 2014. The closest in the vertical farming space is AeroFarms, which recently announced $34 million of a $40 million Series D round.

Plenty raised $1.5 million in seed funding and a $24.5 million Series A round, both in 2016. The startup’s other investors are Innovation Endeavors Bezos Expeditions , Finistere Ventures, Data CollectiveKirenaga Partners,  DCM Ventures, and Western Technology Investment.

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