April 7, 2015
Following an exciting two days of panels, exhibitions, and community events, the 3rd annual Indoor Agriculture Conference in Las Vegas, Nevada showcased a number of gaps and opportunities related to investor relations between AgTech startups and VCs. A whitepaper released during the conference, the first of its kind, offered a comprehensive view to the future and potential $9 billion growth of indoor farming.
A rapidly expanding industry practically bursting at the seams with market growth potential and a significant impact on U.S. economics, indoor agriculture- the practice of growing produce sheltered from the outside environment- holds a bright future as a disruptor in the way we think about, grow, and distribute food.
Entrepreneurs are on a constant hunt to enter an industry before its explosion; the indoor agriculture market is driven by pure consumer demand. 39 states in the nation farm less produce than they consume, a consumer call that indoor agriculture can help to alleviate. It is the challenges and opportunities that already beckon entrepreneurs and technologists to invest and innovate in the potential of AgTech and indoor agriculture business solutions.
Here are four key areas for VCs, investors, and technology advocates to get familiar with the sectors of indoor farming that will drive its future.
Growing Systems to Commercial-Scale Technologies
Key indoor growing forms such as greenhouse, warehouse, shipping container, etc., are decided upon and manufactured based on the unique conditions and factors of its geographic area and crop requirements. This is largely dictated by upfront capital availability.
There is a huge opportunity for engineers to standardize and centralize manufacturing forms, and investors to back systems that promote indoor agriculture’s evolution into commercial-scale operations. By incorporating automation and developing more effective sensor technology, indoor farms aim to substantially lower costs and increase crop yields.
Monitoring and Big Data
Because the current large-scale monitoring systems are typically out of the question for startup farms, small-scale indoor farmers find themselves without efficiently and cost-effective means to monitor and regulate lighting, CO2 levels, humidity levels, and more.
Creating a customizable automation system for monitoring, data collection, and efficient alert systems is yet another opportunity for developers and venture capitalists to seize. Affordable online monitoring is the next major obstacle for indoor ag. Regardless of what they’re growing and how they’re growing it, all indoor farmers will soon be using big data, the internet of things, and predictive analytics to maximize yields and protect against loss.
California-based startup Osmo Systems offers affordable hydroponic and aquaculture monitoring and alert services. Their model, already gaining lots of buzz in the industry, hinges on its affordability.
As sensors decrease in cost and more data is collected from tightly controlled systems, big data methods such as linear programming, nonlinear optimization, machine learning, artificial neural networks, cluster analysis, and other artificial intelligence techniques open the door of opportunity for the future development of agriculture technology and investment.
Biolumic is a startup out of New Zealand figured out a way to give short pulses of UV light to seedlings to aid their resistance to pests, and to give different short pulses of UV light to plants just before they’re harvested to help imbue certain flavor profiles in them. The Company says that its tech increases yields by 15 percent for treated lettuces in a space where 5 percent is considered significant.
This is but one example demonstrating the budding future of lighting technologies in the indoor agriculture industry. Major advancements in the way of LED lighting throughout the past five years is directly tied to the success of indoor farming, as LED lighting is commonly thought to equate to better crop yields for farmers.
The opportunity to develop this market further is still there, and is perhaps one of the most lucrative niches of agtech’s future. Adaptive lighting tech that supports even spread across growth spreads, particularly as these farms begin to expand, as well as optimized crop-specific LEDs are two key areas of technology development and investment that stand to not only drive the practice forward, but significantly impact the bottom line of the industry as a whole.
The desire to “eat local” is not simply the product of effective marketing and corporate-backed initiatives. Decentralizing the supply chain and bringing fresh food to the consumer and working to eliminate long-distance transport gives a less technical business opportunity to those interested in developing and investing in practical solutions for the indoor agriculture industry.
Montreal-based Lufa Farms opened its first hydroponic greenhouse in early 2011, and rather than sticking to local farmer’s markets or small-scale grocers, Lufa Farms invested in an online sales platform that give consumers full control and customization of their weekly purchases, and serves as a marketplace for other local artisans. Powered by effective online and social media engagement, Lufa Farms grew their customer base by more than 5,000 weekly subscribers, and their continued expansion is a testament to the success of better built and integrated direct-to-consumer business.
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