Q&A: Springworks vice president Sierra Kenkel talks latest funding raise

Springworks Farm, an organic aquaponics operation based in Lisbon, Maine, recently announced a new round of funding to fuel expansion. 

In a $22 million round raised through a combination of equity and debt, the company will add 120,000 square feet of greenhouse space as part of the company's plan to add 500,000 square feet of growing space over the next six years. When the 120,000 square feet is added, the company will be able to produce around 5 million heads of lettuce per year.

READ MORE: Inside Springworks: Building an 'Ecosystems approach'

“Regional agriculture is core to the sustainable future we want to help build,” said president and founder Trevor Kenkel, per the release. “By delivering organic greens to customers faster, we are able to cut food waste and improve quality.”

Below, Springworks vice president (and Kenkel's sister) Sierra Kenkel discusses the funding, why now is the right time to pursue financing and why hiring new labor is one of the company's main focuses. 

Produce Grower: What does this round of funding do for Springworks?

Sierra Kenkel: This really allows us to become even more dynamic in terms of being a regional component in greenhouse growing and produce offerings. Not only does it allow us to grow that kind of product, but also allows us to significantly grow the volume at which we are producing fish, as well as jobs in Maine. We're going to have about 40 new jobs coming through in the next year for this expansion. And it's going to be our largest greenhouse. 

So far, right now, in terms of growing greenhouse space, we're in about 66,000 square feet. In this one, it'll be an additional 120,000 [on top of the current space]. So we are really tripling our overall capacity on the farm. 

PG: Why was now the right time to go after new funding? 

SK: I don't think it's a surprise that the centralized production model could be improved. There is a huge opportunity to produce regionally, and cut out thousands of food miles. And then a big component is health - after COVID, it's important to get produce from point A to point B in the most sustainable way possible. And when I say sustainable, I mean less miles, trucking issues, etc. This now allows more people to have access, and affordable access, to organic and local produce. That's really important to us - we want to be able to provide a product that is full of nutrients.

PG: To get into the finance a little bit more, this capital was raised through a combination of equity and debt. Why was this path the right one when there are other options?

SK: In terms of raising money, we have found a partner in Farm Credit East who can really scale with us. Not only are they providing a debt piece, but they are providing a scalable debt piece. This round of financing is really setting ourselves up for better and smoother financing in the future. We are just starting on the expansion plan, so we needed to shift how we were raising money as opposed to in the past. Right now, we haven't necessarily gone into the VC world - this is our first step towards that. Initially, in the past, we've had angel investors and I do feel like we are able to work that way and keep our base, but also bring on new shareholders that will help us hold that base down. Inevitably, I don't think we're going to be able to continue to raise money without necessarily having a play like or looking at the VC path. 

PG: What do you make of all of the different options [for financing] and all of the investment happening in the CEA space? 

SK: From a finance perspective, they are getting a little too overly excited about what this could be. There are a lot of scary things that have happened in produce. Good stuff too, but two years ago, maybe even before that, there started to be these crazy valuations in terms of the CEA world. … There is a market out there for greenhouse grown items. But there are more and more of them coming. It's still going to be a competitive landscape no matter what.

I know everyone is chasing profitability. In order to hold up those valuations, you can only go so far before profitability does matter. It might not matter at the very beginning stages, but you have to have an output and model that's going to make sense. So these finance guys have put out all of these pro formas that make sense on paper, but don't make sense in terms of operational functionality. And that's where we have taken an important and diligent approach in scaling appropriately so that we make damn sure our technology and operations approach can match what we are trying to do on the other end. So that's why we chose this round size, that's we chose the scale in which we are growing into. It's important to be able to grow and be a business in four or five years. 

PG: How does what is happening with other companies and keeping your eye on profitability impact how you think about financing? 

SK: Definitely, ya. The biggest thing that has driven our finance approach is not how quickly, but how efficiently we can scale as a business. That's why in our first greenhouse, we went from turning on the lights ourselves, checking probes, checking different nutrient levels in the water ourselves and all of that to being able to have a control system that monitors that. So we made so many different engineering upgrades to our first house that we then transitioned to our second greenhouse and then that thing really cranked, so it's even more productive that we were able to do. And then we took that approach and didn't scale the technology that much besides making it bigger and made it into greenhouse three. That's what we've been focusing on in the last year; operation efficiency. And we feel like we've gotten to a really good place there where we have technology that works and is scalable and replicable 12 months a year. 

And we have customer support. We've had great support from Hannaford and Whole Foods since the beginning. 

PG: Why was calling out new jobs and prioritizing that in a new space important in this messaging? 

SK: I think that helps show scale. We think of the scale of how many heads of lettuce can grow in a year, but this shows the scale of a business in Lisbon, Maine. We feel like that is a pretty exciting thing to showcase because Lisbon itself has come a long way in three to four years. And we started out with five to seven employees. And now we're just shy of 50. And we put it out there because 40 employees is going to almost double our employment capacity. It's something that is really important to us - we want to find the right 40 people to come in. When scaled up to [greenhouse three], we probably had to hire 25, 30 more employees. We want to highlight that not only because it stands out for Maine and Lisbon, but we know we have our work cut out for us to find 40 folks that really love what we do.