Ospraie Ag Science teamed with the investment unit of water management company Aliaxis to co-lead a $17.5 million Series B to support the expansion by containerized farming company Freight Farms.
Brussels, Belgium-headquartered Aliaxis provides water pipes and management systems to customers in more than 40 countries. Its Aliaxis Next unit was launched in January to incubate, nurture and grow businesses adjacent to the company’s core business that have potential for societal impact.
Aliaxis Next head Fredrik Östbye told Agri Investor that 70 percent of the unit’s strategy is devoted to existing business segments adjacent to the parent Aliaxis’ water management business. The remainder of the strategy, he said, is designated for “futuristic” innovations likely to have societal impact over the long term.
Östbye considers Freight Farms among such long-term investments, adding that while the firm has investigated all subsectors of controlled-environment ag and would consider investing in large-scale indoor farms, the market’s early leaders do not match with the societal aims of the fund.
“They are not selling to the next generation of farmers. They are the next generation of farmers and that’s not good enough for us,” said Östbye, who spent four years with Danish industrial machinery provider Grundfos before joining Aliaxis in January, according to his LinkedIn profile. “We want this technology to be available for the masses so that more can use the technology. That’s a big criteria for us. If you are a food-producing company; sorry.”
Boston-headquartered Freight Farms offers indoor farming units housed in shipping containers complete with related software, which are used to grow up to 500 different crops based on local demand, prices and energy costs. It has sold more than 600 units to small business farmers, corporates, hospitality, education and non-profit customers in 39 countries since its 2012 founding. Freight Farms’ Greenery S commercial scale hydroponic farming unit costs $149,000.
Capital from the Series B round will support hardware and software development as well as sales and marketing to the non-profit and education sectors.
“This is a tech company that has industrialized the technology that can be decentralized,” Östbye said. “They may not have the same efficiency like a massive farm, but in other ways they are potentially even more efficient because they are located so close to the consumption. Instead of putting ourselves next to a distribution center, we are putting ourselves next to the consumer.”
Aliaxis Next has also invested in Tel Aviv–headquartered ag analytics company CropX in addition to start-ups focused on water use efficiency in construction and materials. Östbye declined to disclose how much more ag investment can be expected from the vehicle, which he described as being capitalized by “hundreds of millions of euros” to deploy across a variety of markets adjacent to its core water business.
“We are well-equipped to not just enter a company. We are there to be the industrial, potential taker over time,” he said. “We do majority strategic investments, where we have really looked into and categorized where we want to play; among all the companies active in the area, this is the one we want to go in and fuel, then we can have that company to do bolt-on acquisitions or investments with money funneled from us.”
Ospraie Ag Science is a limited liability corporation affiliated with New York-headquartered investment firm Ospraie Management, which declined to comment and managed $494 million across funds and managed accounts as of a March filing. The filing explains OAS has established a profit-sharing plan in which affiliates of Ospraie Management will participate based on a percentage of appreciation in the net asset value of OAS over “the applicable measurement period,” subject to an unidentified annual hurdle rate.
According to a September filing, Ospraie has collected $205.4 million into the OAS vehicle.