As venture capital wagers go, indoor farming has not done especially well.

Over the years, investors have plowed over $6 billion into startups in the space, most during the peak period of 2019-2023. They’ve harvested meager returns so far.

In recent quarters, large venture rounds have mostly dried up. And a few of the higher-profile upstarts, including Kentucky tomato-grower AppHarvest, have folded.

To get a sense of what’s happened to investment, we used Crunchbase data to analyze recent funding (or lack thereof) around this theme. We looked at companies focused on both indoor and vertical farming operations, growing crops like leafy greens, berries, tomatoes and fresh herbs.

The indoor farming unicorn herd

At least 14 indoor and vertical farming companies have raised $100 million or more in venture funding, and many more have attracted significant funding.

Using Crunchbase data, we curated a sample set of 22 such companies that raised funding in roughly the past four years.

Of those, a majority haven’t raised funding since 2022, and only a handful secured fresh capital this year.

Plenty of capital for Plenty

Probably the most closely watched, best-known startup in the space is South San Francisco, California-headquartered Plenty, which specializes in growing leafy greens and other produce in indoor, vertical farms. The company’s pitch is that it can grow greens and fruits using very little water, eliminate the need for pesticides, and provide fresh produce in areas like deserts or cities where climate or space constraints make traditional farming a nonstarter.

Plenty is also the best-capitalized of its cohort, having raised over $940 million between 2016 and 2022 from SoftBank and other venture backers. It got some fresh momentum last week, forming a joint venture with Abu Dhabi-based Mawarid, a subsidiary of Alpha Dhabi Holdings. The venture calls for building a network of indoor farms in the Middle East, likely starting with an indoor strawberry farm in Abu Dhabi.

Should the effort succeed, it could help position indoor farming as a more marketable proposition, particularly in places that are too dry to support traditional farms. To date, startups in the space have struggled to achieve the kind of scale and production efficiencies that would enable them to be profitable and cost-competitive with other produce options.

Some didn’t make it to market

That struggle has come with some big losses, particularly for investors in companies that are no longer around.

In this category, the best-known name is  AppHarvest, a Kentucky-based indoor tomato- and salad-growing startup that once counted Republican vice presidential nominee J.D. Vance among its board of directors.

AppHarvest, which attempted to position itself as both a sustainability-oriented agriculture play and a job-creator for its home region in Appalachia, raised over $135 million in venture funding in 2019 and 2020. A year later it went public via SPAC in an offering that initially performed well but quickly turned south.

The company filed for bankruptcy a year ago, after shares had plummeted in value. In its final annual report before the filing, AppHarvest reported a net loss of $177 million on sales of less than $15 million.

Iron Ox, a San Carlos, California-based startup developing robotics-enabled automated greenhouses, was another casualty. After raising $102 million in venture funding, the company has since ceased operations as Iron Ox, although some of its technology is currently being deployed by another agtech startup, Inevitable Tech.

An ill-suited sector for the venture model?

Although venture capitalists are no longer seeding vertical farming startups in a big way, indoor agriculture isn’t going away. For the past few years, the global market for indoor farming has been growing at a steady clip and is expected to continue to do so, per recent market research.

Moreover, the use cases haven’t lost their appeal. The vision of more sustainable, organic, in-all-season-all-year, local produce is a compelling one.

However, to bring vision to fruition is an infrastructure-heavy, expensive endeavor that has not proven compatible with the venture investor exit time frames. Even if some startups in the space do eventually produce big exits, it’ll be a longer time frame to harvest returns than initially anticipated.

Related Crunchbase Pro list:

• Indoor- And Vertical-Farming-Related Funded Companies

Illustration: Dom Guzman