Interestingly, Fujitsu’s facility is less than 100km away from the location of the 2011 Fukushima nuclear disaster, and it grows 3000 heads of lettuce a day, which sell for three times the price of other lettuce.

Fig. 2: Each crop has an ideal light recipe for best quality, taste and yield (Image courtesy: Philips)

Toshiba has a high-tech vertical farm near Tokyo where it grows lettuces—it projects that the produce will be around three million heads of lettuce per year. Basically, these vertical farming setups have a two-fold benefit. Not only can the produce be sold in the market, but once the systems are fine-tuned, these can be sold to several vertical farms, worldwide.

Tech based enablers. There are technologies that can help all kinds of vertical farmers, whether or not they use technology to control the environment. If you can think up innovative technologies that can help this segment, say a mobile-enabled sensor network to monitor the nutrient levels or a mobile app to exclusively shop for vertical farming needs, then you have an existing market to tap, and might get quicker returns.

Raising money to raise crops

In India, tech based vertical farming is a greenfield. Internationally, startups in this space are hopeful of being very profitable, but most are still in their first year of operation. So there is no clear business model for you to follow; no black-and-white instruction on what is right or what is wrong.

Here are some tips gleaned from here and there, for those who wish to foray into this unexplored terrain:

1. If you are developing off-the-shelf products for vertical farming, you can start small by crowd-sourcing funds. After developing one or two successful products, you can expand your product range later with the profits earned from initial products. Greenopia, for instance, raised funds on Wishberry. They crossed their funding goal in just two months, raising ` 958,500, contributed by 17 backers from six countries. Their campaign was backed by popular names like Rajan Anandhan, managing director and vice president of Google India, Sarad Sharma, former chief executive officer of Yahoo India, Dori Tunstall, a renowned professor in design anthropology, Diana Greenberg, a well-known user experience designer, and Margaret Atwood, the famous writer.

2. If you want to do vertical farming yourself, in a tech-intensive setup, a small terrace area will not make sense because the volume of business will not justify the heavy investment. You need to go for a larger infrastructure, preferably situated close to a city.

Learning from their past mistakes, Paul Lightfoot, chief executive of BrightFarms, stated in a Wall Street Journal story that, “Building farms on city rooftops is a foolish endeavour because of higher costs and additional time for permitting.” The firm, which has raised more than US$ 25 million in equity and more than US$ 15 million in project finance, is now focusing on greenhouse farms in locations outside of urban centres. Speaking of city terrace based farms, Lightfoot says, “You would scale very slowly, and waste investors’ money.”

3. AeroFarms, one of the global pioneers in this space, has raised US$ 70 million in corporate and project financing. The company is not yet profitable, but expects to become cash-flow positive in its first year of operation. In a financial news report last year, chief executive officer of Aerofarms quipped that, they are always in capital-raising mode due to the nature of the business. When planning the finances of a vertical farming startup, you need to remember that even business activities like planning and hiring need money.

4. Funding experts suggest that if you wish to go into the business of vertical farming or vertical farming technology, you would have to start small and set a track record, while gradually increasing the size and complexity of projects. That way, your funding model will also be more manageable, as your growth can be partly organic and partly funded.
Second, you need to remember that most investors do not fund farms; they fund farming mechanisms and infrastructure!

5. Being an emerging field and one that the government is interested in promoting, you can expect funding from industry bodies like Confederation of Indian Industry, too. Some of the organic farming startups in the North East, for example, are funded by Confederation of Indian Industry-Ahmedabad and organisations like Village Capital, USA.

The wait before the cash register chimes

“I think commercial viability of vertical farming, its reliability, potential to scale to meet demand and the like are yet to be proven. Not to mention proof-of-value of soil-less agriculture from nutrition and health perspectives. Consequently, like any other revolution, we need both an abundance of timely resources and a good measure of restraint. We also need a concerted effort from several stakeholders, especially the government—not just subsidies, but rather complete ownership of infrastructure and policy pieces with respect to space, power, regulation, policy and tax breaks. This is about creating the ecosystem, not just funding pieces of the puzzle. The business model, ideally, should be a private and public partnership, for it to work in the long term,” says Malhotra.
The good news is that the government is in favour of vertical farming. Last year’s Vertical Farming Conference in Bengaluru was a step towards getting hi-tech agriculture within the reach of local farmers. Speaking to The Hindu at the conference, N.K. Krishna Kumar, deputy director general of ICAR, mentioned that the scope of vertical farming goes far beyond terrace gardening. It involves cultivation of various horticultural crops—fruits and vegetables, besides rare varieties of flowers such as orchids in multiple layers—with the help of proper supporting structures. He said it is possible to grow enough vegetables and fruits or flowers even in apartments through vertical gardening. Urban residents can grow their own food, or even take up commercial farming.

Irrespective of the business model, Malhotra has a word of caution for technopreneurs, “Technology players will fail regardless of the amount and term of funding if they continue to be siloed in their approach, as has been endemic in the sector. Technology companies, including information technology, try to avoid solving the larger business problem and are reluctant to go beyond the scope of their own narrow expertise.

“Additionally, technology can help in forecasting demand and understanding customers’ real needs. Focus has to be more on the consumer. Put simply, any technology needed to support the vertical farming business must be oriented to the customer (farmer), and prototype solutions should be quickly tested for efficacy.

“A design-thinking intervention, done seriously at the beginning of each exercise, will ensure a holistic view to bring out a coherent and sustainable solution, tested beforehand for efficacy and need fulfilment.”

Vertical farming is fresh pasture for technopreneurs in India. Its benefits have, however, been proven abroad, especially in land-scarce regions like Singapore. With the right team and tech in place, it is possible to enter this segment profitably in India, too. But as Malhotra says, the key would be to set the business up in partnership with the right government bodies, to lower the risk and improve market reach. Even more important is the technologist’s mindset—the ability to put aside technology and think like a farmer.

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Janani Gopalakrishnan Vikram is a technically-qualified freelance writer, editor and hands-on mom based in Chennai


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