Vertical farming startup Oishii raises $50M to grow strawberries

Dive Brief:

  • Manhattan-based vertical farming startup Oishii has raised $50 million in a Series A round led by SPARX Group’s Mirai Creation Fund II, which includes Toyota Motor Corp. among its founders. The startup claims to have a proprietary approach to pollinating strawberries indoors using bees inspired by traditional Japanese farming methods.
  • The new funds will be used to build vertical strawberry farms in new markets while expanding Oishii’s flagship Manhattan farm. The company will also invest in further R&D, developing new strawberry varietals as well as other types of produce, including tomatoes, melons and peppers
  • While vertical farming is not new, most operations focus on producing leafy greens and herbs. Oishii is one of the first vertical farming startups to dig into indoor strawberry cultivation alongside fellow vertical farming startup Plenty.

Dive Insight:

Indoor farming has attracted venture capital investors’ attention recently due to its ability to bring fresh produce to major metropolitan areas year-round while using fewer resources than conventional field farming in some cases. What makes Oishii unique, however, is its focus on cultivating strawberries indoors. The fruit has been particularly challenging to raise inside due to its longer cultivation cycle and complex pollination process compared to leafy greens and herbs.

Oishii first hit the market in 2018 with its Omakase Berry, a Japanese varietal known for sweetness, aroma and a creamy texture. It claims that it was the first to produce the berry in the U.S. To achieve indoor strawberry cultivation, Oishii said it taps traditional Japanese growing practices and AI-enabled automation, and uses bees to handle pollination. The startup hasn’t shared many details about how this process works, but it appears to be the only vertical farming operation that enlists insects.

Consumers are craving strawberries more than ever, according to Rabobank’s US Strawberry Market Update 2021. Shipments of strawberries to the U.S. increased roughly 4% year-over-year during 2020 for conventionally grown berries, while organic strawberries saw an 11% jump. The 2020 crop was affected by some weather-related events; this makes indoor cultivation, where operators control the weather around the clock, an attractive option for growing the berry. 

The number of strawberry acres planted in California increased 3% in 2020, as well, reaching the highest level on record since 2015, according to the Rabobank report, while Florida acres planted were up 5%. These figures are particularly impressive considering the devastating impact of COVID-19 on consumer purchasing patterns, the availability of on-farm labor during the strawberry harvest, and supply chain hang-ups. This past April, major strawberry producer Driscoll’s reported a 20% drop in sales thanks to the pandemic.

Oishii has some stiff competition on its heels. Driscoll’s recently teamed up with vertical farming startup Plenty to explore indoor strawberry cultivation. Plenty is applying Driscoll’s proprietary genetics and berry expertise to its indoor farming technology. Some of the goals of the partnership include perfecting a consistent flavor, texture, and size for the berries while mitigating the impact of weather.

Indoor farming startups are still getting plenty of attention from investors even if they aren’t growing berries. BrightFarms raised $100 million in October 2020. It offers branded packaged salads and sells through a variety of major grocers including Walmart, Kroger, and Ahold Delhaize’s banners. 

Revol Greens scooped up $68 million in funding for expansion while Kentucky-based high-tech greenhouse operator AppHarvest recently went public through a SPAC financing. The latter counts Martha Stewart and former Impossible Foods CFO David Lee as board members. Ikea-backed AeroFarms has also raised over $200 million in venture funding for its New Jersey-based aquaponics operation.

Bayer is also getting in on the indoor farming game through its investment arm in partnership with Singapore-based global investment firm Temasek. The duo are forming a new venture called Unfold that will back startups in vertical farming. This includes creating new seeds and agronomics tailored to indoor growing operations.

 

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