Lessons from vertical farming bankruptcies, layoffs, and closures in 2023

An Excerpt from the Vertical Farms Daily article

Focus on the fundamentals
The winners in this space will need to focus on establishing and optimizing unit economics, both at the plant level as well as at the facility/farm level, before they can scale up. We at Eden Green (and some of the colleagues I mentioned), have taken the time needed to develop and test product-market fit. We strongly encourage new entrants in the CEA space to do the same. The other big "fundamental" is the unsexy part: operational consistency. Some of our competitors have been dinged for dodgy or incomplete SOPs, poor training combined with high turnover, and food safety and environmental controls not being up to par, much less at high standards. Lastly, I suspect you will see overall burn rates come back down to reality, too.

As an industry, we need to hone in on strategic, intentional resource allocation only into those operational or R&D efforts that have a high probability of return.

For the investment community, this focus on fundamentals is actually a sigh of relief. The valuations are lower, but it's a sign that the CEA industry is healing from a valuation bubble pop and that rational thinking and "optimistic realism" are back.

There is endless pressure to deliver big returns in a short amount of time, but our collective work to transform CEA and vertical farming is a marathon, not a sprint. As GT Thompson, the chair of the House Agriculture Committee, remarked recently, "CEA will definitely supplement, even if it doesn't supplant, all conventional farming." We tend to agree with that overall sentiment. But the only way that happens is if we take a long view of things.

Read the full article here

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