The funding round – which ended in June 2022 and led by The Rise Fund, TPG’s multi-sector global impact investing strategy and Bank of America’s debt financing – will immediately support the expansion of the indoor farm of Little Leaf Farm with existing operations in Massachusetts, a new 10-acre farm in McAdoo, Penn., and land in North Carolina that will soon be developed and transformed into a fifth indoor farm for the company.
“Our current network, which includes Pennsylvania, Massachusetts, and North Carolina, can easily access half of the nation’s population. We’re focused on 55% of the U.S. population, which is primarily on the East Coast, but also moving to the Midwest as well,”Sellew told FoodNavigator-USA.
With the opening of its Pennsylvania plant, Little Leaf Farms will double the company’s current production capacity and increase retail distribution by at least 50%, from 2,500 to 3,500 stores. By 2026, the company plans to own and operate at least 100 acres of indoor greenhouses.
According to Nielsen retail sales data for December 2021, Little Leaf Farms accounted for 42% of all CEA lettuce produced in the United States. Over the past year, the company has increased its retail sales by more than 50%.
“We have a proven business model, we have the capital to grow, and now it’s all about execution,”Sellew said.
Strong unit economy
The CEA industry and space companies have attracted billions of dollars in capital in recent years, but according to Sellew, investors are becoming much more careful about where they put their money and that scrutiny will only increase. in the current economic environment.
“Investors will never back a company that is losing money. There must always be light at the end of the tunnel. 2022 is shaping up to be a much tougher economic environment than previous years and that will impact the businesses that can’t sustain the fundamentals of the business and that’s a positive unit economy,”he said.
“I wish everyone in the industry the best of luck, but companies in this funding environment that aren’t making money – it’s going to be tough. It’s a tougher funding environment in 2022 than the years previous.”
For Little Leaf Farms, the company already has a profitable business model thanks in large part to its efficient indoor farming hydroponic production for lettuce grown under glass and using captured rainwater, natural rainwater and up to 90% less water than that grown in the field. green areas and solar panels to generate electricity.
“Little Leaf Farms dramatically improves the efficiency of the leafy green growing process by significantly reducing water consumption and greenhouse gas emissions on a large scale,”commented Maya Chorengel, co-director of The Rise Fund who has also joined the board of Little Leaf Farms.
But Sellew – who spent his career in agriculture and grew up on a farm – also credits the company’s strong operational track record to its best-in-class team, many of whom are second, third and fourth generations. farmers, who oversee all aspects of the business.
“We have a team of seasoned greenhouse professionals and we made the right technological decisions from the start, because when we started there were not many proven commercial models. We have designed something unique in the world “from a high yield, high quality standpoint. It doesn’t matter how much technology you have, it ultimately comes down to the people, your culture, the day-to-day execution,”he said.
“We built Little Leaf Farms to be a sustainable business venture because we want to be here for the long haul.”
Indoor leafy vegetables: 10% market share by 2025?
In his ‘Beyond the Hype: Controlled Environment AgricultureAccording to the report, S2G Ventures projected that indoor farming could account for more than 10% of native fresh produce by 2025, which Sellew says is a conservative projection, noting that leafy greens grown by the CEA represent 2.7% of the market today.
“To say 10% is achievable, absolutely, and it’s going to be a lot higher. We have a path at Little Leaf Farms because of the huge productivity in our facility, we can also be a low cost producer without ever sacrificing the quality, “he said.
And the consumer is increasingly seeing the inherent benefit of indoor-grown produce that can last weeks longer than a head of lettuce that has traveled thousands of miles across the country to reach the store. Currently, prices for Little Leaf Farms products are comparable to organic products and in some cases lower. But as the business grows, prices will naturally come down, Sellew added.
“We have a better and fresher product than the West Coast field growers, people love it and it’s in demand with our retail customers,”he said.