Following BrightFarm’s completion of $30 million in Series C funding from Catalyst Investors last month, CEO Paul Lightfoot has big plans to grow his ‘urban greenhouse’ produce company into a national brand.
During his keynote speech this week at the Agri Investor Forum Chicago, Lightfoot told delegates that his firm is looking to expand from its current three US markets – Pennsylvania, Chicago and Washington, DC – into 17 markets over the course of the next three to four years, with hopes to increase revenue to $100 million.
With the $30 million equity investment from Catalyst, Lightfoot told Agri Investor that his firm has now raised $70 million in capital to help with the ambitious expansion plans, $55 million of which is equity, and in addition to Catalyst, includes investments from WP Global Partners and NGEN Partners.
Catalyst made the commitment out of its $377 million fourth fund. The investment into agriculture from the growth equity venture capital firm, which traditionally invested in the technology, media, and telecom sectors, shows the growing appeal of agriculture businesses to investors who are new to the field.
With sufficient equity in place, BrightFarms’ focus throughout the next several years will shift to securing as much as $100 million in additional project financing – $15 million has been secured so far – as it builds out its business plan and more greenhouses to produce its leafy greens and tomatoes, Lightfoot says.
But he stresses that equity plays a much deeper role in the company than project finance. In the case of Catalyst, Lightfoot says the private equity firm conducted two years of research into the sector prior to the $30 million investment, and the firm is now actively playing a role in board meetings.
“It’s really helpful to get backing from a company like that because it allows us to identify areas for improvement,” he says. “They are investing with a real long-term view and want to ride the upside we create, but they are completely exposed both to the ups and downs.”
The argument for BrightFarms’ greenhouse farms, which are built in partnership with supermarkets, plays to the increased demand for local, fresh food; the potential added safety of a more controlled environment; as well as the lower costs when compared with West Coast field producers who are under constant pressure from water shortages.
Greenhouses use 80 percent less water, 90 percent less land and 95 percent less shipping fuel than traditional suppliers, BrightFarms claims.
So far, the pitch has worked for retailers like Mariano’s (Kroger), Giant Food (Ahold USA), Wegmans and ShopRite, all of which are stocking BrightFarms products.
“Behind the scenes supermarkets are pushing very hard for produce to come from controlled environments,” Lightfoot says. “They want consistency and quality, and the existing supply chain has become more and more unpredictable.”
Lightfoot on to say 79 percent of consumers would like to buy more local food, and that far more people prefer local to organic – 66 versus 26 percent, respectively, and just 8 percent preferring conventionally grown products.
He points to California-based competitor Earthbound, which also produces leafy greens, as a main competitor, even though Earthbound produces its products using traditional growing practices.
So why the rivalry? “They are the ones we are competing with for shelf space and market share,” Lightfoot says.
At the moment Earthbound has the upper hand, thanks to its current growing capacity afforded by 50,000 acres of land. But if Lightfoot’s ambitions come to fruition, that could very well change.