Contain Inc. rang in the new year with a comprehensive briefing paper reviewing the landscape of funding within the indoor ag industry in 2021 and exploring what can be expected for the future. The briefing paper highlights private controlled environment ag funding, indoor ag merger & acquisition (M&A) trends and deals, public market listings/performance, and 2022 forecasts.
“2021 was a banner year for indoor agriculture funding with private fundraising tripling, M&A accelerating and even moves into public listings, albeit with mixed results.”
Private funding was booming
In 2021, private funding tripled in comparison to 2020, flowing plentifully into indoor agriculture firms. The year brought big wins for private funding expansion with 2 of the 4 largest deals spanning outside of the US. With a strong Q2 and new investors like race car driver Lewis Hamilton diving in, private funding laid the ground for an upward trend of success.
Funding in 2021 was driven by consumer preferences, supply chain management, sustainability, tech development, and equity. 85% of private funding went to vertical farm- and greenhouse growers in 2021, and farm tech was also a notable piece with 5% of private funding going to tech deals.
Public listings and M&A’s
Though the universe is growing, public listings remained limited in the sector with 2021 seeing just four new listings, one of which being from greenhouse grower Local Bounti. In addition, the market has been unforgiving when it comes to revenue projection cuts.
Mergers & acquisitions have played a meaningful role in the greenhouse sector and that positive momentum started to penetrate vertical farming in 2020 and 2021 recorded 51 significant deals during the year. CEA firm Kalera was one of the notable deals of the year scoring two acquisitions with the addition of seed breeding specialist Vindara, and of &Ever, expanding its international farm footprint.
So what comes next?
Agriculture is an essential sector, and vertical farms are increasingly providing reliable produce supply. Tech development offers the prospect of better farm economics and is paving the way for growth within the industry. Yet, investors increasingly expect to see more rapid progress on farm expansions and economics than many agtech startups are able to deliver.
Meanwhile, we are headed into unprecedented macroeconomic territory with uncertainty around inflation, labor market, and supply chain issues alike. Given this, we anticipate fewer efforts by vertical farmers to list publicly, but unprecedented undeployed cash at private equity, VC, and family offices will likely keep the private market afloat for some time to come.
See the full report, figures, and takeaways here: 2021 Funding Briefing Report