Vertical farming startup cinches $134M for designer fruit, defying agtech winter

Oishii, an indoor vertical grower of organic strawberries and tomatoes using Japanese-rooted farming methods, has closed a $134 million equity up round led by Japanese telecommunications company NTT.

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The Series B, which is far larger than Oishii’s $50 million Series A in 2019, defies the VC pullback from vertical farming and includes participation from prominent foodtech investors like Bloom8.

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New Jersey-based Oishii, which is not yet profitable, sells designer strawberries at multiple Whole Foods Markets locations at a significant premium to conventionally grown berries. A tray of its “Koyo” berries, which is around 4.2 ounces, costs about $10. For that price, you could get well over a pound of conventional strawberries.

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Selling luxury produce could be a sweet spot for an industry struggling to compete with cheaper, conventional leafy greens growers. Since 2021, Oishii’s revenue has grown 10x, according to co-founder and CEO Hiroki Koga.

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Investors have cooled on indoor farms since 2022, largely due to the challenges of scaling operations, matching commercial retail prices, and funding capital-intensive facilities. Indoor farming startups raked in $2.96 billion in 2021. By 2023, total VC deal value had fallen by over 90% to $294 million, according to PitchBook data.

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The high-profile bankruptcies in 2023 of Infarm and AeroFarms further cast a chill over fundraising for the sector.

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To grow strawberries at commercial scale, Oishii needed to figure out how to incorporate bees into indoor farms for pollination, a challenge that growers of leafy greens didn’t have to confront.

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One of Oishii’s facilities is currently profitable, Koga said. Oishii will use the funding injection to exponentially expand its geographical presence. The company’s store footprint grew 3x since the beginning of 2023, Koga said.

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Oishii has also quintupled its headcount since 2021 to a total of 208 employees, defying another industry trend. High-profile firms Bowery Farms and Plenty have both made layoffs in roughly the last year.

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“Ultimately, most investors agree that agriculture has to change and that vertical farming will play a big role,” Koga said. “The biggest question they have is, who is going to be the winner?”

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Reference: https://pitchbook.com/news/articles/vertical-farms-startup-oishii-134m-agtech-round