The lights dim on Bowery Farming

Bowery Farming, one of the largest vertical farm companies in the U.S., shuttered the doors of all its facilities, located in Pennsylvania, Maryland, New Jersey and New York. According to published reports, the company was once valued at more than $2 billion.

The New York-based company, founded in 2015, had big plans, access to big capital and the ear of big-time celebrities like Justin Timberlake. In 2017, Bowery raised $20 million from a group of investors, including General Catalyst, GGV Capital and GV (formerly Google Ventures).

In 2021, Bowery secured $325 million in Series C funding, led by Fidelity Management & Research Company. The following year, it received a $150 million credit facility led by private credit accounts managed by KKR. The company expanded from its home base of New York and neighboring New Jersey facilities and opened high-tech farms in Bethlehem, Pennsylvania, and Nottingham, Maryland.

But the growth strategy wound up being too aggressive, and additional funding wasn’t available. The company terminated plans to build two new facilities in Arlington, Texas, and the Atlanta metro area last year.

Bowery employees have claimed on social media that the Maryland and Pennsylvania facilities were growing and packaging product up until the first week of November. Some media outlets reported the plants had been closed for several weeks.

It will be a while before the industry completes its post-mortem on another CEA business closure. Valuable lessons will come from it, and investors aren’t turning their backs on this industry. Investors’ requirements have changed and will continue to do so. Expectations must be tweaked. Prior to this announcement, the investment community had already started to change how it viewed CEA.

Earlier this year at the Indoor AgTech Innovation Summit, Johanna Waterous, a senior adviser at COFRA Holding’s Sustainable Food Group, shared during a panel discussion how investors have shifted their view of CEA. She said investors started out thinking about the technology aspect of CEA with lower risk and higher returns.

“Then we started to work out, OK, this isn’t a tech business. It’s about crops,” she said. “We worked out that the most important person in these companies wasn’t the CTO; it was the head grower.”

On that same panel, Nick Houshower, managing director at Equilibrium Capital, explained CEA will be viewed as a tool and not an asset class or “a category in and of itself.”

“We’re starting to ask, ‘Where and how is CEA a useful tool to the business of a food and ag company?’ I think branded CEA companies will likely become parts of bigger companies that have non-CEA exposure,” he said. “And you have to start to think about how to partner with the well-established companies that control something of value, which is the customer, the end demand. And at the end of the day, that’s what generates cashflow. That’s what generates scale and sustainable business models to support some of the tools in this industry.”