Two years after surviving bankruptcy proceedings, AeroFarms risks going out of business after the US-based vertical-farming company’s main backer decided against further investment.
AeroFarms filed a WARN notice with the Department of Workforce Development and Advancement in Virginia earlier in December saying the company plans to close its Ringgold indoor vertical farm in Danville. As a result, 173 jobs would be terminated.
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In September 2023, the New Jersey-headquartered company said it had exited Chapter 11 bankruptcy proceedings entered in June that year. AeroFarms had received approval from a bankruptcy court in Delaware for an “asset purchase agreement” with existing investors Grosvenor Food & AgTech and Doha Venture Capital.
Molly Montgomery, a partner at agri-food investor Grosvenor Food & AgTech, became acting CEO and executive chair of AeroFarms’ board of directors.
In the WARN notice in Virginia this month, AeroFarms said its largest investor – unnamed – had unexpectedly “decided to withdraw any further financial investment”.
AeroFarms added the company has since been “diligently attempting to negotiate an extension with the investor or to secure other funding from their other current investors, potential new investors, and financial institutions”.
The notice continued: “Efforts to obtain additional capital have failed and they [AeroFarms] have come to the conclusion that they cannot continue operations until they are able to obtain new funding from other sources.”
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By GlobalDataJust Food asked AeroFarms for comment on whether the company is on the verge of going out of business given the nature of the WARN notice but had not received a response at the time of writing.
Vertical farming, or controlled-environment agriculture, is a capital-intensive industry mainly revolving around leafy greens and herbs. Most companies are early-stage start-ups that usually require external financing and many, if not most, are not generating profits. Some have gone out of business.
Daniele Benatoff, the co-founder and CEO of Italy-based Planet Farms, told Just Food earlier this year his company was profitable but mainly through diversification.
Asked to explain his own theory of why so many vertical-farming operators had fallen by the wayside, he said: “Part of the issue in this sector is it was approached as a pure technology business. But the reality is this is a complex business because it brings together three different technological innovations under one roof.
“There is a software element with pure technology…but there’s also an agronomy element and a hardware and automation element.”
Meanwhile, when AeroFarms entered Chapter 11 in June of 2023 the business said it had “faced significant industry and capital-market headwinds”.
In August this year, the company said it had raised an undisclosed amount of funds to build a new vertical-farming facility in addition to the Danville site. It said t had refinanced debt to “support” ongoing operations at that farm.
Stephan Dolezalek, a managing partner of Grosvenor Food & AgTech, said at that time: “We believe AeroFarms can play a significant role in the global fresh food supply chain, by providing nutritious greens at scale to local regions around the world.
“AeroFarms has now proven the ability to deliver the transformative benefits of vertical farming through a viable, profitable business.”
