CDPQ leads $125m Series D for Soli Organic

Senior director for climate venture capital and private equity Franck De Santis says the jury is still out on the best way to finance indoor farming, but the data center market could provide some guidance.

Caisse de dépôt et placement du Québec led a $125 million Series D for Soli Organic as part of the C$392 billion ($285 million; €289 million) pension’s climate-focused partnership with S2G Ventures.

In addition to both of those firms, the round also included Portugal-headquartered Movendo Capital, Canadian investment firm XPV Water Partners and Bill Gates-backed Cascade Investments, which made a previous investment of an undisclosed size into Soli in November 2021.

Rockingham, Virginia-headquartered Soli is a grower and marketer of organic culinary herbs grown indoors in soil for retailers including Walmart and Kroger. Its nationally integrated platform currently includes production and logistics facilities and seven indoor farming facilities. Soli is currently evaluating sites for farms in the Midwest and Northwest as part of a plan to have a total of 15 facilities across the US.

CDPQ senior director for climate venture capital and private equity Franck De Santis told Agri Investor that the company’s focus on produce grown organically in greenhouses using natural fertilizers was a natural extension of an existing focus on sustainability within its ag investments. He explained that Soli’s varied experience in the sector – which includes having grown outdoors and in greenhouses while operating as Shenandoah Growers between 1989 and a rebranding last year – helped distinguish the company from other segments of the still-developing controlled environment ag market that CDPQ was looking to avoid.

“Most of the hype around some other ventures, they were more technology-driven, trying to ride the hype and do agriculture,” explained De Santis, who assumed his current position in January after previous roles with CDPQ and BNP Paribas, according to his LinkedIn profile. “Our focus here was really the agriculture first and then have a tech-enabled agriculture sector, not the other way around.”

In late 2020, CDPQ established a joint platform with S2G to deploy as much as $125 million over three years into ag-related investments, which contribute to the pension’s 2025 carbon intensity targets as part of its Climate Innovation Fund. De Santis explained that although CDPQ was the lead investor in the latest round for Soli, the pension worked in close collaboration with S2G, which was already an investor in the company.

Capital from the Series D will help Soli continue constructing its network of controlled environment farms as part of its on-going effort to reach price parity with field-grown produce. It will compliment a $120 million financing agreement Soli announced in November with Decennial Group, a Chicago-headquartered real estate development firm that plans to help finance three 100,000-square-foot facilities.

De Santis noted that while interest in CEA is widespread among institutional investors – including many real estate and infrastructure funds – the market itself is still in its early innings.

“I see this evolving into an asset class like data centers. Would you finance just the construction as a real estate player? The entire thing with building and equipment financing with contracts as an infrastructure player? Should I separate the equipment financing from the building? There are a lot of considerations there,” he said. “I don’t think we’re there yet in finding the cheapest form of capital to finance this.”