Is the future of fresh produce in a small flat in Paris rather than the global conglomerates that dominate traditional agriculture? 

Innovation in food production is vital, as experts predict needing 50% increase to feed the world’s population by 2050. Food and agriculture startups raised $20 billion in 2019, a 250% increase over the last five years — and that was before COVID-19 increased demand for locally sourced food, especially in cities, and reduced the number of workers available to harvest farm crops. 

Vertical farming, the most common form of urban agriculture, produces 70% more crop while using 90% less water. This method uses a nutrient-rich water solution instead of soil to hydroponically grow plants stacked vertically in place with tightly controlled climate and light. 

Flats and apartment complexes are perfect spots for vertical farms, since the lack of soil all but eliminates the risk of building damage from the weight of the plants. It’s efficient, too: the growing process used by Bowery Farming, a vertical farming startup based in New York City, is 100 times more productive than traditional farming in terms of the calories generated by its plants. 

The global vertical farming market was already valued at more than $2 billion in 2018 and projected to hit $20 billion by 2026. For cities like Dubai, where more than 80% of food is imported and the climate makes traditional farms expensive or impossible, vertical farming could well be the future of food. Agricola, a vertical farming startup based in Paris, expanded to Dubai last year for precisely this reason. 

Even the most ardent supporters of urban agriculture don’t expect vertical farms to replace traditional ones. There is, however, a clear niche that these innovative farming strategies can fill in densely populated areas with little arable land, coupled with the elimination of the externalities that come with the use of pesticides and the opportunity to experiment with new hybrids. 

The vertical farms managed by Urban Green Fate (UGF) Farms in Mumbai, for instance, also grow ultra-nutrient-dense microgreens that customers can continue growing at home with minimal upkeep. This is why the startups in the space have valuations exceeding their fundraising — Agricola, which has raised $39 million, is valued at $100-150 million — and why public companies may be eyeing acquisitions in the medium-to-long term. 

The upfront costs to launch a vertical farm are significant, requiring interested investors to commit large amounts of capital. Google Ventures and SoftBank’s Vision Fund have made investments of $200 million and $90 million, respectively, in individual urban farming companies. The time horizon for a return is also longer than other industries; New York-based AeroFarms took eight years to become profitable and is now valued at $500 million. 

But as interest from established food and agriculture giants trickles in — Ocado, the U.K. online supermarket, announced an initial investment last year — it is only a matter of time before companies like Monsanto consider the potential payoff from investing a portion of their $1 billion R&D budget in this marketplace.