BrightFarms, a hydroponic grower, has backing from Clean Feet Investors, NGEN Partners and Emil Capital Partners. They contract directly with supermarkets in building urban greenhouses that can supply fresh, local produce year round.
The BrightFarms greenhouses, built at or near their partnering supermarkets, eliminate time, distance and cost from the produce supply chain. In early research, they had learned that supermarkets want produce grown specifically for them, as the current supply chain is subpar, however, most grocery stores can’t finance large CAPEX projects and build farms.
They believe they found the solution by locating greenhouses on the roofs of grocery stores. This way, energy lost from the refrigeration or food preparation areas of the stores can be harnessed by the greenhouses and used to power the hydroponic operation that in turn stocks their produce aisles. Since the hydroponic system doesn’t need soil, the farms are lightweight and perfect for rooftops.
They offer veggies that are a week younger than those typically on shelves and sell them at a comparable price. So far, the company works with produce varieties that are currently subject to long and complex supply chains, and two of the biggest opportunities are lettuces and tomatoes, according to BrightFarms CEO Paul Lightfoot. Lettuces in supermarkets are nearly 100% from California or Arizona and tomatoes are largely from Mexico and Canada, he says.
“Supermarket tomatoes often taste bad and go bad quickly,” Lightfoot says. “It’s an easy sell for us – we harvest the produce when it’s ripe and deliver it to the supermarket that same day. When we demonstrate the produce that we are selling, it’s an ‘aha’ moment for them.”
For their business model, they sign a long-term fixed price contract guaranteeing volumes of revenue with large regional and national supermarket chains. This Produce Purchase Agreement (PPA) is then used to attract project financing to construct greenhouse farms on behalf of clients. Clean Feet Investors provided BrightFarms with a $3M project equity facility in April; which is believed to be the first institutional project finance capital for a company focused on commercial urban agriculture.
Their first project in Bucks County, Pennsylvania cost $2 million to build and now yields 500,000 pounds of produce per year.
In 2012, they announced a greenhouse project that would span 100,000 square feet of rooftop in Sunset Park, Brooklyn. It will be the largest rooftop farm in the United States, and possibly the world. It’s estimated that the farm will capture 1.8 million gallons of storm water, thereby reducing run-off into local rivers. They are also planning a 100,000 square feet hydroponic greenhouse in downtown Kansas City. Prior to this, BrightFarms has partnered with Best Yet Market chain in New York as well as McCaffrey’s Market in Bucks County, Pennsylvania.