Red Sea Farms plans to close a Series A round later this year to support expansion of its saltwater-based controlled-environment farming systems from Saudi Arabia to other markets facing water scarcity.
Co-founder and chief executive Ryan Lefers told Agri Investor last year’s $16 million pre-Series A round supported construction of a large-scale demonstration facility for Red Sea Farms, which spun-out from Saudi Arabia’s King Abdullah University of Science and Technology (KAUST).
Lefers declined to provide a target for the Series A round. He said discussions have begun with existing investors that have included Saudi Aramco’s investment arm and Public Investment Fund-backed Future Investment Initiative, but Red Sea Farms hopes to add investors from outside the Middle East to support a global expansion that will begin with California, Texas and Arizona.
“We’re really appreciative and we see a lot of opportunities in the Arabian Peninsula and have done good work there; [but] the US is the global home for business, still,” said Lefers, who held research positions at KAUST’s Center for Desert Agriculture for five years before Red Sea Farms’ 2018 founding, according to his LinkedIn profile.
Red Sea Farms’ technology allows for replacement of freshwater typically used in cooling greenhouses with saltwater. It has partnered with universities to develop technologies for day and night cooling, solar energy and humidity control well-suited to harsh, dry environments like the US Southwest.
The company has focused primarily on tomatoes and Lefers said it is in the early stages of testing and deploying additional crops such as quinoa, hybrid cucumbers, peppers and salt-water-reliant fodder for animal feed. Geographically, he explained, the combination of high heat and humidity most conducive to Red Sea Farms’ technology also exists in Southeast Asia, the Caribbean and elsewhere.
“The US expansion is as much about global expansion as it is about opportunities here,” added Lefers, who recently re-located to Arizona. “Arizona has a fantastic trade relationship with Mexico and with the state of Sonora, so it gives us a really good in into Mexico, where there is significant water scarcity issues and a climate similar to the Arabian Peninsula.”
Red Sea Farms aspires to unicorn status of a $1 billion valuation and is in discussion with a variety of global investors, Lefers said. Last year’s pre-seed round included Equilibrium-backed AppHarvest and Birmingham, Alabama-headquartered Bonaventure Capital, along with Global Ventures, a venture capital firm headquartered in the United Arab Emirates.
Lefers added that over the past two years, Red Sea Farms has attracted significant interest from a range of ESG and green finance focused capital.
“We tick a lot of boxes for investors as it relates to green or ESG because of where we came from and our focus on sustainability, climate and climate resiliency,” he said.
Lefers said Red Sea Farms is also in early stages of informal discussions with US government entities about potential support related to a broader Biden Administration focus on “climate smart agriculture”, which includes encouraging use of American technology in developing markets.
“The different pots of money there that we are aware of are project finance-type loans, different grants as well as equity investment, which is on the table from some of the government arms in the US,” he said. “We weren’t aware that equity was on the table from some of these entities, so we are just beginning to explore it. It’s relatively new for them, these equity arms have just been set up in the last six to eight months, so its early stages for them as well.”