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> So what you paid for as an investor was a bunch of R&D research on how to replace natural and free sunlight with LEDs. (The fact that there are investor decks

> So what you paid for as an investor was a bunch of R&D research on how to replace natural and free sunlight with LEDs. (The fact that there are investor decks out there pitching that energy costs could be offset by investments in solar panels is laughably hilarious.). Some of those already existing greenhouses are using LEDs to augment natural sunlight. [0] So it doesn't seem too far fetched to me. The gamble wasn't to replace (free) sunlight with (paid) LEDs. The core idea is stacking farms on top each other, hoping the reduced land (area) requirement vs increased energy cost might pay off. Turns out land isn't that short, transportation not too expensive and energy not that cheap. [0] https://www.atlasobscura.com/articles/glowing-dutch-greenhouse-photos https://www.atlasobscura.com/articles/glowing-dutch-greenhou...

mediaman 4y ago
What's crazy is that all these variables were known ahead of time. What is the cost of real estate in rural upstate New York? It's really not that bad! (About $10k per acre, based on a brief search, for land about 280 miles away from Manhattan. A truck could make a delivery in six hours or so.) So why spend millions in capital expenditures on fancy stacked farms with high tech intense lighting, in order to cut a few tens of thousands of dollars in real estate costs? The argument was that logistics costs were high. That's kind of true if you're on the east coast, and your alternative is importing from Mexico or California. It's not true at all if you can get produce from a conventional hydroponic operation six hours away by truck. Moreover, it's not like conventional hydroponic operations didn't exist, and this was some sort of tail risk that was unexpected. The conventional hydroponic operations already existed! They've been in business for years. All the founders or investors had to do was drive a few hours to go visit them. Or pick up the phone.
- ilyt 4y ago
  > So why spend millions in capital expenditures on fancy stacked farms with high tech intense lighting, in order to cut a few tens of thousands of dollars in real estate costs? and ongoing maintenace. I'd imagine harvesting crops from flat piece of land is also cheaper than from vertical stack.
  - linsomniac 4y ago
    Have you seen what a John Deer costs?!?
    - roarcher 4y ago
      A few million, and it can farm thousands of acres. How much does one of these vertical farming facilities cost, and how much food does it produce compared to those thousands of acres? Then add the cost of replacing all the sunlight blocked out by the roof.
- quadrifoliate 4y ago
  > They've been in business for years. All the founders or investors had to do was drive a few hours to go visit them. Or pick up the phone. The aim for venture capitalists is necessarily to make risky, long-tail bets that have little chance of paying off; and that incumbents find too risky. Sure, this bubble has popped, but what success in this case might have looked like is grocery stores selling mass-produced microgreen salads (that can't be reasonably transported without bruising) which were grown upstairs. It's a reasonable criticism that VCs don't understand agriculture well enough to estimate the risk of "moonshot" style initiatives in that area. But criticizing them for "not picking up the phone and talking to existing operations" is kind of missing the point. Of course the existing operators are going to say it won't work.
  - hef19898 4y ago
    In the last decade or so, VCs have been less interested in finding the next Facebook or Apple or Google, but rather something they could sell as such. So they always seemed to fund the same kind of founder, the same great kind of vision for the future. They did so long enough to keep the lights on until an IPO, or SPAC as of late. Now that this route is basically dead, they seem to reevaluate their portfolios differently. And that might actually include the non-marketing side of the due dilligence nobody seems to have done so far.
    - quadrifoliate 4y ago
      Sure, risk profiles in a a high-interest rate environment function differently from those in a "here's some money at ~0% interest" one. And I wouldn't be surprised by ag-tech being off the table for a few years in portfolios due to the fact that it's not well understood by many VCs.
  - mediaman 4y ago
    The reason for the long-tail bets being improbable is important, though! If the reason is because it takes lots of capital, or because there are network effects (e.g., AirBnB, eBay), or because it's a winner takes all market, or some key piece of technology has to be proven out, then sure, shoot your shot, someone will get the bullseye and win the day and it'll be a cakewalk raising the next fund. But if it's improbable because nobody wants it, that's not the same thing. That's why a bet being improbable should not be the reason to invest in something. A VC may look at a bet and say, "sure, the win condition is unlikely, but lots of people will want this, so if it wins, it's worth billions." And maybe they write a check. But if another VC looks at a deal and says "it's not likely to work, and also, even in the optimistic case this is worse than existing solutions," then there is no market problem being solved. This second VC will likely be leaning more on their management fee than their carry to pay the mooring fees for their yacht. And a phone call to that farmer would have told them that while microgreens don't ship well over very long distances, they do fine in climate controlled trucks over a couple hundred miles. Part of a VC's job is to de-risk investment decisions by validating key assumptions.
- deleted 4y ago
  [deleted]
codeisawesome 4y ago
Could it be the idea is simply way ahead of its time? Nuclear fusion could result in much cheaper energy, green hydrogen could bring down transportation costs, and human population ballooning to massive levels would drive up the value of usable land… but maybe all that is 30 years out.
- imtringued 4y ago
  Elon Musk needs vertical farming on his utopian fusion powered Mars colony. Earthlings don't need it.
- yencabulator 4y ago
  In a dystopian future, hydroponics etc can also function as a hedge against soil depletion.
rasz 4y ago
Light pollution from artificial tomato lightning can be a real problem https://finanse.wp.pl/wielka-luna-nad-wroclawiem-gigantyczne-szklarnie-widac-z-kilkudziesieciu-kilometrow-6354773543823489a https://finanse.wp.pl/wielka-luna-nad-wroclawiem-gigantyczne... https://pposiechnice.pl/?page_id=1002&lang=en#poznaj-nas https://pposiechnice.pl/?page_id=1002&lang=en#poznaj-nas using artificial light 18hour/day since ~2015.
yencabulator 4y ago
As far as I understood, one of the questions asked was also can you increase the hours of light per day to get more rapid growth. Imagine plants with 22 hour grow periods vs 14.

mediaman 4y ago

What's crazy is that all these variables were known ahead of time. What is the cost of real estate in rural upstate New York? It's really not that bad! (About $10k per acre, based on a brief search, for land about 280 miles away from Manhattan. A truck could make a delivery in six hours or so.) So why spend millions in capital expenditures on fancy stacked farms with high tech intense lighting, in order to cut a few tens of thousands of dollars in real estate costs? The argument was that logistics costs were high. That's kind of true if you're on the east coast, and your alternative is importing from Mexico or California. It's not true at all if you can get produce from a conventional hydroponic operation six hours away by truck. Moreover, it's not like conventional hydroponic operations didn't exist, and this was some sort of tail risk that was unexpected. The conventional hydroponic operations already existed! They've been in business for years. All the founders or investors had to do was drive a few hours to go visit them. Or pick up the phone.

ilyt 4y ago
> So why spend millions in capital expenditures on fancy stacked farms with high tech intense lighting, in order to cut a few tens of thousands of dollars in real estate costs? and ongoing maintenace. I'd imagine harvesting crops from flat piece of land is also cheaper than from vertical stack.
- linsomniac 4y ago
  Have you seen what a John Deer costs?!?
  - roarcher 4y ago
    A few million, and it can farm thousands of acres. How much does one of these vertical farming facilities cost, and how much food does it produce compared to those thousands of acres? Then add the cost of replacing all the sunlight blocked out by the roof.
quadrifoliate 4y ago
> They've been in business for years. All the founders or investors had to do was drive a few hours to go visit them. Or pick up the phone. The aim for venture capitalists is necessarily to make risky, long-tail bets that have little chance of paying off; and that incumbents find too risky. Sure, this bubble has popped, but what success in this case might have looked like is grocery stores selling mass-produced microgreen salads (that can't be reasonably transported without bruising) which were grown upstairs. It's a reasonable criticism that VCs don't understand agriculture well enough to estimate the risk of "moonshot" style initiatives in that area. But criticizing them for "not picking up the phone and talking to existing operations" is kind of missing the point. Of course the existing operators are going to say it won't work.
- hef19898 4y ago
  In the last decade or so, VCs have been less interested in finding the next Facebook or Apple or Google, but rather something they could sell as such. So they always seemed to fund the same kind of founder, the same great kind of vision for the future. They did so long enough to keep the lights on until an IPO, or SPAC as of late. Now that this route is basically dead, they seem to reevaluate their portfolios differently. And that might actually include the non-marketing side of the due dilligence nobody seems to have done so far.
  - quadrifoliate 4y ago
    Sure, risk profiles in a a high-interest rate environment function differently from those in a "here's some money at ~0% interest" one. And I wouldn't be surprised by ag-tech being off the table for a few years in portfolios due to the fact that it's not well understood by many VCs.
- mediaman 4y ago
  The reason for the long-tail bets being improbable is important, though! If the reason is because it takes lots of capital, or because there are network effects (e.g., AirBnB, eBay), or because it's a winner takes all market, or some key piece of technology has to be proven out, then sure, shoot your shot, someone will get the bullseye and win the day and it'll be a cakewalk raising the next fund. But if it's improbable because nobody wants it, that's not the same thing. That's why a bet being improbable should not be the reason to invest in something. A VC may look at a bet and say, "sure, the win condition is unlikely, but lots of people will want this, so if it wins, it's worth billions." And maybe they write a check. But if another VC looks at a deal and says "it's not likely to work, and also, even in the optimistic case this is worse than existing solutions," then there is no market problem being solved. This second VC will likely be leaning more on their management fee than their carry to pay the mooring fees for their yacht. And a phone call to that farmer would have told them that while microgreens don't ship well over very long distances, they do fine in climate controlled trucks over a couple hundred miles. Part of a VC's job is to de-risk investment decisions by validating key assumptions.
deleted 4y ago
[deleted]

codeisawesome 4y ago

Could it be the idea is simply way ahead of its time? Nuclear fusion could result in much cheaper energy, green hydrogen could bring down transportation costs, and human population ballooning to massive levels would drive up the value of usable land… but maybe all that is 30 years out.

imtringued 4y ago
Elon Musk needs vertical farming on his utopian fusion powered Mars colony. Earthlings don't need it.
yencabulator 4y ago
In a dystopian future, hydroponics etc can also function as a hedge against soil depletion.

rasz 4y ago

Light pollution from artificial tomato lightning can be a real problem https://finanse.wp.pl/wielka-luna-nad-wroclawiem-gigantyczne-szklarnie-widac-z-kilkudziesieciu-kilometrow-6354773543823489a https://finanse.wp.pl/wielka-luna-nad-wroclawiem-gigantyczne... https://pposiechnice.pl/?page_id=1002&lang=en#poznaj-nas https://pposiechnice.pl/?page_id=1002&lang=en#poznaj-nas using artificial light 18hour/day since ~2015.

yencabulator 4y ago

As far as I understood, one of the questions asked was also can you increase the hours of light per day to get more rapid growth. Imagine plants with 22 hour grow periods vs 14.