On January 28, 2014, New York City-based BrightFarms, Inc., which builds and operates hydroponic greenhouses farms in urban areas, announced it raised $4.9 million in Series B financing. The round was led by GEN Partners, Emil Capital Partners and BrightFarms founder Ted Caplow. Additional participating investors include Paragon Foods president Elaine Bellin; John Mack’s family office; Zac Zeitlin,founding principal at New Ground Ventures; and Todd Kimmel, founder of Coskata, former partner at Mayfield Fund and now founding principal at Montage Ventures. This latest round brings the company’s aggregate funding to $9.2 million.
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BrightFarms finances, builds and operates hydroponic greenhouses on or near the rooftops of grocery stores. Based on a business model that’s been successful for the renewable energy industry, it funds construction of greenhouses and signs 10-year, fixed-price purchase agreements with supermarkets.
“We are trying to change the produce supply chain in this country (United States),” says Brightfarms CEO Paul Lightfoot. “In five years, we will have greenhouses covering the Midwest and East Coast corridors, displacing a number of long-distance produce items that used to be sourced from the West Coast.”
The new capital will enable BrightFarms to fund construction of new greenhouses and to build out its team. It launched its first greenhouse in Bucks County, Pennsylvania in January 2013, and 8 more are in development, in Washington, DC, St Louis MO, New York City, Chicago, Indianapolis, Kansas City, Oklahoma City, and St Paul MN, in partnership with retail partners like A&P, Cub and Pathmark.
While BrightFarms most recent investment comes at a time when there is growing investment interest in food and agriculture, investment is still slow in the urban agriculture space. It has therefore been advantageous for BrightFarms to position itself at the intersection of three areas of interest: increasing consumer demand for local, sustainable food, cleantech (greenhouse technology) and business model innovation, BrightFarms VP of Finance Neal Parikh tells AgFunder.
“There has certainly been an increase in investor interest in the sustainable/urban agriculture space since we closed our Series A round in 2011,” says Lightfoot, “however, there are not a large number of institutional investors, in particular, that are looking at the space.” BrightFarms, thus, continues to work with investors to understand the business model and opportunity, ultimately paving the way for every company in this space.
Disclosure: I worked at BrightFarm Systems (now BrightFarms) when it was a consultancy and before the company was dissolved and acquired by Paul Lightfoot. I never worked with Lightfoot.
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