AeroFarms investment vehicle raises $35m

Private equity-backed AeroFarms has launched an investment vehicle to support the vertical farming business’ international expansion plans.

A regulatory filing shows that a holding company for New Jersey-based Aero Farms, Dream Holdings, has raised $34.3 million for an investment vehicle with a target of $40 million.

AeroFarms co-founder and chief executive officer David Rosenberg confirmed the vehicle and told Agri Investor it has a $35 million target with the remaining portion set aside for future strategic investors.

Rosenberg said that previous AeroFarms investors have contributed to the new vehicle, and have been joined by new investors including ADM Capital’s Cibus Fund, AllianceBernstein and Meraas, an investment vehicle connected with Mohammed bin Rashid Al Maktoum, Emir of Dubai.

“We’re the world-leader in the space, probably by about two years,” Rosenberg said. “This [fund] speaks to our ambitions of growing internationally and these parties helping us expand internationally. Its more than just money, there is a strategic element to the money.”

Rosenberg identified the Gulf Cooperation Council countries and Asia as key markets AeroFarms’ plans to target in its international expansion.

Existing investors in AeroFarms include Wheatsheaf Group, an agriculture-focused subsidiary of the Duke of Westminster’s Grosvenor Estate; Beijing-based venture capital firm GSR Ventures; ag-focused venture capital firm Middleland Capital and MissionPoint Capital, a sustainability-focused private equity firm.

Rosenberg said that the decision to create the new fund structure was also related to an organizational change from a limited liability company to a C corporation as part of an effort to attract larger investors and align itself with its consumer-facing baby greens brand, Dream Greens.

Founded in 2004, AeroFarms currently operates nine vertical farms in the New York metro area growing baby leafy greens without sun, soil or pesticides. Using aeroponic mist, LED lighting and data analytics to ensure input efficiency, each farm can produce two million pounds of baby leafy greens per year, according Rosenberg.

Rosenberg said he thinks 90 percent of companies currently in the vertical farming industry will be forced out of business in the next two to three years and that over the long-term, the sector could attract capital from investors other than the mostly venture capital firms that have been active thus far.

“In terms of private equity coming into the space, I think the space is going to be attractive, but it’s hard to pick winners and losers and there’s lots of maturing that’s going to happen in the next three to five years,” he said. “There’s a romanticized notion of local food production, but there’s an under-appreciation of the complexity of what it takes to achieve.”