Russian-based ag tech firm iFarm Project has secured $1 million in seed financing and is planning to raise another several million in a Series A funding round later this year.
Gagarin Capital Partners was the lead investor and could make a follow-up investment in the Series A round in the third quarter of 2019, Mikhail Taver, managing partner at the venture capitalist, told Agri Investor.
Yury Fedorov, head of Europe at iFarm Project, said his firm plans to hold several larger investment rounds.
Since the firm was set up in 2017, it has developed LED lighting technology for its six urban greenhouses and vertical farms, and cloud-based management software to help grow organic salads, berries and vegetables year-round, Federov said.
The farms located in Moscow and Novosibirsk are connected to a cloud-based management system that sets growing conditions and links them to a sales distribution network, the firm said. Federov added that they are one of the first companies to use LED lighting on a commercial scale. He believes the farms are 85-95 percent more efficient than conventional farms, using no pesticides and significantly less electricity and water.
“The investments from this round will be used to further develop the technology and expand our team, as well as to pilot the technology on the European market,” iFarm chief executive Alexander Lyskovsky said.
The firm plans to expand to the rest of Europe, the Middle East and Africa over the next five years and eventually to the Americas and Asia. It plans to create a farm either in Luxembourg or the Netherlands in the next two months and also extend to floriculture in the near future, Federov said.
Around 40 percent of the funding has been deployed for the construction of pilot greenhouses and shops. The remaining funds will focus on expansion in Europe, he added.
The urban farm units can be set up in empty warehouses, workshop basements, or on rooftops in inner cities, the idea being to provide fresh produce close to the customer, Federov told Agri Investor. The firm currently owns all its greenhouses and fully automated vertical farms, which serve as research and development hubs and demonstration units. The biggest, in Novosibirsk, is 300 square meters in size.
Federov said his firm provides farmers with greenhouse designs, growing recipes, proprietary software and custom-designed hardware. “From our experience, there is a payback period of 24 to 36 months on the initial investment in the vertical farm, but farmers’ returns will depend on many factors, like the cost to rent or own land or premises,” he said.