Why Is Everyone Investing In Vertical Farming In 2024?

What Is Vertical Farming?

Vertical farming is an innovative agricultural approach that allows crops to be grown in vertically stacked layers, typically within controlled indoor environments.

This method leverages advanced technologies like hydroponics, aeroponics, and artificial lighting to optimize plant growth.

Unlike traditional farming, which relies on huge tracts of land, vertical farming can be implemented in urban settings, reducing the distance between farm and table.

This proximity not only decreases transportation costs but also ensures fresher produce.

And by using up to 95% less water and significantly reducing the need for pesticides, vertical farming is significantly better for the environment.

In this article, we will explore why vertical farming is a compelling investment opportunity, examining the technology behind it, the market potential, and how you can get in on some of the green.

The Rise of Vertical Farming

Vertical farming has rapidly evolved from a niche concept into a significant player in the agricultural industry.

Over the past decade, advancements in technology have propelled this method of farming into the spotlight.

Automation, artificial intelligence, and precision agriculture techniques have made it possible to create highly efficient growing environments that can produce crops year round, regardless of external weather conditions.

The global vertical farming market is expected to grow substantially, with projections indicating a multi billion dollar industry in the coming years. This growth is driven by several key factors:

• Urbanization: As more people move to cities, the demand for locally grown, fresh produce is increasing. Vertical farms can be established close to urban centers, reducing the need for long transportation routes and ensuring that produce reaches consumers at peak freshness.
  

• Sustainability: Traditional farming methods are increasingly challenged by climate change, water shortages, and land degradation. Vertical farming offers a solution by using less water, reducing the need for pesticides, and maximizing space efficiency.
  

• Technological Advancements: Innovations in LED lighting, automated systems, and AI-driven crop management are enhancing the efficiency and output of vertical farms. These technologies allow for precise control over growing conditions, resulting in higher yields and reduced waste.

Investing in Vertical Farming

Vertical farming is a revolution in the way we produce food, and it’s creating unprecedented investment opportunities.

Imagine if 12,000 years ago before “regular” farming was discovered a caveman came up to you and said, “I’m telling you man this whole farming thing is gonna take off, you trying to invest?”

That’s essentially what’s happening now, because it’s predicted that by the year 2050 up to 50% of all farming could be vertical.

The global vertical farming market is projected to reach $15.7 billion by 2028, growing at a compound annual growth rate (CAGR) of 25.5%.

That’s like if every year you grew a ¼ of your height taller. By 2030 you’d already be roughly 15 feet tall.

Now image you’re betting some money on a basketball skirmish between two guys, one being 6 feet tall and the other being 15 feet tall.

Which guy would you “invest” in? My money’s on flagpole man.

This explosive growth is driven by increasing demand for sustainable agriculture solutions and the need for fresh, locally sourced produce in urban areas.

For investors, the numbers are compelling:

• High ROI Potential: Vertical farms can yield up to 390 times more produce per square foot compared to traditional farming methods. This incredible efficiency translates to higher revenues from smaller footprints, making it possible to achieve significant returns on investment in a relatively short period.
  

• Reduced Operating Costs: By utilizing advanced technologies such as LED lighting and automated systems, vertical farms can significantly reduce energy and labor costs. The use of hydroponics and aeroponics means these farms require up to 95% less water, further cutting operational expenses.
  

• Market Demand: Consumers are increasingly willing to pay a premium for fresh, pesticide-free produce, and vertical farms are perfectly positioned to meet this demand. The local production model also reduces transportation costs, increasing profitability.
  

• Environmental Impact: Vertical farming reduces the need for arable land, conserves water, and cuts down on carbon emissions associated with long-distance transportation. These factors not only make vertical farming more sustainable but also align it with the growing trend of socially responsible investing (SRI).

A Closer Look at the Profits

The potential profits in vertical farming are drawing in top tier investors from around the world.

And you can get in on some of the action too if you choose to follow in their footsteps.

Some of the biggest names in venture capital, including SoftBank and Google Ventures, have already poured hundreds of millions into vertical farming startups. 

These investors are betting big on the future of agriculture, and early results are proving them right.

For example, AeroFarms, one of the leaders in the vertical farming industry, has raised over $250 million in funding and is projected to reach profitability within just a few years of operation.

Investors in companies like Plenty and Bowery Farming are also seeing substantial returns, as these firms continue to scale up and refine their operations.

With yields significantly higher than traditional farming, up to 10x per acre, these companies are capitalizing on the efficiency of vertical farming to deliver impressive profits.

For individual investors, getting in on the ground floor of vertical farming could mean access to double digit returns.

As the industry matures, those who invest early could see exponential growth in their portfolios, mirroring the explosive rise seen in tech and renewable energy sectors.

With the global population expected to hit 9.7 billion by 2050, the demand for innovative food production methods will only intensify, further driving up the value of investments in vertical farming.

How to Invest in Vertical Farming Today

Investing in vertical farming is an exciting opportunity, but like any investment, it requires a strategic approach. Here are actionable steps and tangible ways to capitalize on this growing industry:

1. Invest in Vertical Farming Startups

• AeroFarms: One of the pioneers in vertical farming, AeroFarms has attracted significant investment for its innovative approach to urban agriculture. They use aeroponics to grow crops without soil and with minimal water. As they continue to expand, investing in AeroFarms—if and when they go public or through private equity—could be a lucrative opportunity.
  

• Plenty: Backed by SoftBank and Jeff Bezos, Plenty is another major player in vertical farming. Their focus on producing high-quality greens with cutting-edge technology makes them a company to watch. Investing in Plenty through venture capital funds or future IPOs could provide high returns as they scale.
  

• Bowery Farming: Based in New York, Bowery Farming is revolutionizing urban agriculture with its smart farming technology. They have raised substantial capital and are expanding rapidly. As they grow, opportunities to invest directly or through associated funds will become available.

2. Invest in Publicly Traded Companies with Vertical Farming Ventures

• Scotts Miracle-Gro (NYSE: SMG): Known for its lawn and garden products, Scotts Miracle-Gro has been investing in vertical farming through its subsidiary, Hawthorne Gardening Company, which focuses on hydroponics and indoor gardening solutions. As vertical farming expands, Scotts is positioned to benefit from increased demand for hydroponic systems.
  

• Kubota Corporation (TYO: 6326): A leader in agricultural machinery, Kubota has been exploring vertical farming technologies as part of its broader strategy to innovate in sustainable agriculture. Investing in Kubota offers exposure to the vertical farming industry through a well-established company.

3. Consider Agritech Funds and ETFs

• ARK Genomic Revolution ETF (ARKG): While not exclusively focused on vertical farming, this ETF invests in companies at the forefront of agricultural innovation, including those involved in sustainable farming practices. It offers diversified exposure to the agritech sector, including vertical farming.
  

• Global X AgTech & Food Innovation ETF (KROP): This ETF focuses on companies that are revolutionizing the agriculture industry, including those involved in vertical farming, precision agriculture, and food technology. It’s a way to gain broad exposure to the growth of sustainable farming practices.

4. Invest in Real Estate for Vertical Farming

• Urban Real Estate: With the rise of vertical farming, urban real estate, particularly in cities, is becoming increasingly valuable for agricultural purposes. Consider investing in commercial real estate that could be leased to vertical farming companies. This is a long-term play that could yield significant returns as demand for urban farming space grows.
  

• Agricultural REITs: Real Estate Investment Trusts (REITs) focused on agricultural land are another way to invest. As vertical farming becomes more prevalent, REITs that adapt to include indoor farming spaces could become profitable.

5. Participate in Crowdfunding Campaigns

• Crowdcube and Seedrs: Platforms like Crowdcube and Seedrs offer opportunities to invest in early-stage vertical farming startups. These platforms allow you to invest smaller amounts in exchange for equity, providing a way to get involved in the industry at a grassroots level.
  

• AgFunder: This platform specializes in agritech investments, including vertical farming. AgFunder connects investors with cutting-edge startups in the food and agriculture sectors, offering a way to back innovative companies at various stages of growth.

The BMM Takeaway

The window of opportunity to invest in vertical farming is wide open, but it won’t last forever.

As more investors recognize the potential of this industry, competition will increase, and the best opportunities will become harder to find.

Now is the time to position yourself in a market that’s not only profitable but also aligned with global trends toward sustainability and urbanization.

By investing in vertical farming, you’re not just investing in a business, you’re investing in the future of food production.

The returns could be substantial, both financially and in terms of contributing to a more sustainable, resilient food system.

For those ready to take advantage of this revolutionary opportunity, the time to act is now.

Disclaimer: Investing in vertical farming, like any investment, comes with risks. The companies and platforms mentioned are for informational purposes only and should not be considered as financial advice. It is important to conduct thorough research or consult with a financial advisor before making any investment decisions. The value of investments can go up as well as down, and you may not get back the original amount invested.