Agtech startup Vertical Farming Systems (VFS) has raised $1 million for its technology that does exactly what it says on the tin.
The startup “engineers labour out of growing green, leafy vegetables,” founder and chief executive Ashley Thomson tells StartupSmart.
Using an indoor pod and a cocktail of organic nutrients, the team has created an automated farming system equivalent to growing crops in optimum soil conditions, Thomson says.
“But ours is quicker,” he adds.
Currently, the startup’s shed houses eight acres worth of crops, producing 400kg of vegetables every week.
“The environment is perfect for what we do.”
The $1 million comes from one investor with significant experience in the agriculture industry, Thomson says.
The funds will be used to fuel work on new technologies, as the startup works on commercialising the existing concept.
Specifically, the team is working on an automated fodder machine, which will deliver organic nutrient-rich feed to livestock for 14 days without any intervention.
It’s also developing an automated mealworm farm system, producing high-protein feed for the poultry industry, as well as creating a high-nutrient fertiliser.
“We only wanted to do a small raise, because the shareholders wanted to keep as much equity in the business as possible,” Thomson says.
The funding is pegged for accelerating the development of these products, at a time when the startup is on the cusp of serious growth in Australia and internationally.
According to the founder, the startup is currently finalising contracts for projects in the US and Trinidad.
“We’re getting into full commercialisation,” he says.
“That was why we needed to do the capital raise, just to accelerate the speed we were moving at.”
However, the raise was also about getting additional industry knowledge into the venture.
The new backer “has invested an enormous wealth of industry knowledge inside that farming space, which is something the company didn’t have,” Thomson adds.
“We strengthened our team up.”
We don’t have many options
In vertical farming technology, it’s the US that is leading the way, Thomson says. And, while VFS has “been at it quite a long time”, it’s still a fairly new industry.
“You tend to learn more from your mistakes than from what literature is out there,” he explains.
However, these types of technologies may soon become critical.
As the population increases and water becomes more scarce, “we don’t have too many options other than to become smarter and more efficient”.
At the same time, “we don’t have the labour resources out there either”.
Extreme weather events, drought and crop losses mean food and water security is an issue on people’s minds more than ever before. At the same time, there’s demand for cheap food.
“It’s getting harder and harder to make a dollar as a farmer,” Thomson says.
“The viability of moving your crops closer to consumers and reducing food miles, plus avoiding crop losses, is something that we see.”
Finding a market
When you’re developing new technology, there are inevitably going to ups and downs, Thomson says.
“You will have more failures than successes, but you learn from those,” he says.
“There are no shortcuts.”
However, the VFS team have learnt a few things along the way, the founder adds. And they’re still coming across new ones.
“We started with what we thought was an engineering challenge. That moved into a horticultural challenge, and now we’re in a marketing challenge,” Thomson explains.
“How do you bring a new product or a disruptive product into a food-chain industry that’s thousands of years old?”
It can take time to get an established industry to accept a new niche product or technology, he adds.
“Our trial plant produces 400kg per week. You’ve got to find a market for that.”
A big challenge startups face is finding where their product fits in the current ecosystem, Thomson warns.
“Once you’ve developed your idea, once you’ve got your product, once your product has been prototyped, trialled and it works, you’ve got to make a space inside the market chain.