At one point, vertical farming was hailed as the future of food production. Entrepreneurs like Hiroki Koga, founder of the vertical farming company Oishii, painted a utopian vision of fresh, locally grown produce flourishing in high-tech indoor environments.
In his TED talk, Koga described how his team had developed a system to grow strawberries that were “three times sweeter” than conventional ones while using solar power, AI, and robotics. He claimed vertical farming could solve agriculture’s biggest challenges, such as extreme weather, water shortages, and pesticide overuse. “Vertical farming is no longer some futuristic idea,” he told his audience, predicting that soon, this technology would become mainstream.
Investors Poured Billions into the Dream
The hype surrounding vertical farming wasn’t just talk – it was backed by billions of dollars. According to Ricky Roy of Two Bit da Vinci, the industry saw an explosion of investment between 2020 and 2023. In 2022 alone, venture capitalists poured more than $2 billion into startups promising to revolutionize agriculture. By 2023, the market had ballooned to over $5 billion.
Companies like Infarm and Bowery Farming reached unicorn status, with valuations soaring past $1 billion. Investors were eager to cash in on what seemed like an inevitable shift toward urban, tech-driven food production.
The Harsh Reality: Bankruptcies and Closures
However, fast forward to 2024, and the industry is in free fall. As Roy reports, vertical farming companies have been filing for bankruptcy one after another. Upward Farms, AeroFarms, and Planted Detroit have all shut down. Even Bowery Farming, once valued at $2.3 billion, had to slash its valuation to just $350 million and lay off employees to stay afloat.
German-based Infarm, once considered a leader in the field, exited the European market entirely. The collapse was so widespread that Roy called it “one of the biggest investment failures in recent history.”
Why Vertical Farming Is Failing
So what went wrong? According to Oliver Rotko, host of Arctic Farming, vertical farms have been making the same mistakes over and over. One of the biggest problems, he explains, was the industry’s obsession with expensive, high-tech setups.
Many startups invested in costly automation, computer vision, and robotics before they had even figured out the basics of running a profitable farm. “A fully automated farm will easily cost you more than €2,000 per square meter,” Rotko says. That means a modest 1,000-square-meter farm could require a €2 million investment just to get started – before even paying for electricity, water, and labor.
The Illusion of Efficiency
Koga argued in his TED talk that vertical farms could eventually be cheaper than conventional agriculture due to their ability to control environmental conditions and increase yields. But as Roy points out, while vertical farms can grow more produce per square foot, that doesn’t make them profitable. The costs of LED lighting, climate control, and automation are simply too high.
Traditional farms, using free sunlight and natural pollinators, remain far more cost-effective. Roy’s research found that growing a pound of lettuce in a vertical farm costs about six times more than growing it in an open field.
Scaling Too Fast, Too Soon
Another key mistake, according to Rotko, was that many startups scaled up too quickly without proving their business models. Venture capitalists pressured companies to expand at a Silicon Valley pace, expecting rapid growth similar to software startups.
But farming isn’t software. Plants take time to grow, and agricultural systems require precise optimization. Many vertical farms rushed into expansion without first streamlining their production methods, leading to inefficiencies and financial losses.
Automation Overload: A Costly Gamble
Rotko also highlights how many vertical farms wasted resources on unnecessary automation. While technology can help streamline certain tasks, many startups spent massive amounts of money on robotic systems that didn’t significantly improve productivity. “It’s like buying a self-driving lawnmower for a tiny patch of grass,” he quipped. Instead of focusing on cost-effective improvements, these companies became fixated on flashy tech that ultimately drained their resources.
The Wrong Crops for the Wrong Market
Another major issue is the choice of crops. Koga’s company, Oishii, made headlines by growing premium strawberries, but most vertical farms focused on low-value crops like lettuce and herbs. Rotko argues that this was a fatal mistake. Leafy greens are cheap and widely available, meaning vertical farms had no competitive advantage.
Meanwhile, higher-value crops like berries and tomatoes are much harder to grow indoors, making them a risky bet. “If you’re going to spend millions on a vertical farm, you need to be producing something that justifies the cost,” he explains.
The Energy Problem
Despite claims of sustainability, vertical farms are incredibly energy-intensive. Koga boasted about Oishii’s solar-powered facilities, but for most vertical farms, electricity is one of their biggest expenses. LED lighting, temperature control, and water circulation systems require constant energy input, making these farms heavily dependent on external power sources.
Roy points out that in regions with high electricity costs, vertical farming simply isn’t viable. Traditional agriculture, which relies on free sunlight, remains the more energy-efficient option.
The Harsh Reality for Investors
With high costs, low profitability, and a market flooded with unsustainable startups, it’s no surprise that investors have pulled back. Roy notes that venture capital investment in vertical farms plummeted by 90% between 2022 and 2023. Without fresh funding, many companies have been unable to stay afloat. This has led to a vicious cycle: as more vertical farms shut down, confidence in the industry continues to erode.
Is There Any Hope for Vertical Farming?
Despite its failures, some experts believe vertical farming could still play a role in the future of agriculture – if done correctly. Roy suggests that vertical farms might be viable in regions with extreme climates, such as the Middle East, where traditional farming is difficult.
Rotko argues that startups should focus on small-scale, high-value production rather than trying to replace conventional farms. And Koga, despite the industry’s struggles, remains optimistic about the potential of controlled-environment agriculture.
A Lesson in Overhype
Vertical farming was sold as a revolutionary solution to global food shortages, but the reality has been far less impressive. While the technology has potential, it’s clear that the hype far exceeded the practical results. As Roy puts it, “This was a gamble between human engineering and Mother Nature – and so far, Mother Nature is winning.” The failures of vertical farming serve as a cautionary tale about the dangers of overpromising and underdelivering in the tech-driven investment world.
Mark grew up in the heart of Texas, where tornadoes and extreme weather were a part of life. His early experiences sparked a fascination with emergency preparedness and homesteading. A father of three, Mark is dedicated to teaching families how to be self-sufficient, with a focus on food storage, DIY projects, and energy independence. His writing empowers everyday people to take small steps toward greater self-reliance without feeling overwhelmed.