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Vertical farming is a type of indoor farming, which is also known as controlled environment agriculture (CEA). Unlike traditional greenhouses, which feature a single level of plants, vertical farming involves multi-level structures that increase the total area available to grow plants within a particular land area. Some of these structures are actually old warehouses, shipping containers or other buildings, in which case artificial lighting is used. The utilization of older and out of service structures for these farms provides a net benefit to the environment as well.

Vertical farming offers greater control over the growing environment for the plants, as it enables temperature, moisture and light to be controlled. Furthermore, pests can be significantly reduced if not completely eliminated. Vertical farming also enables more produce to be grown in any given area of land, as compared to traditional farming.

The sector is relatively young but has attracted a great deal of investment. According to Pitchbook, startups in the indoor farming sector have raised $2.71 billion as of August 2021. There are already multiple publicly traded companies in this sector as well.

Vertical farming is therefore both growing as a market and also receiving large (and growing) venture capital investments. This area clearly has a strong need for rapidly increasing innovation. We have created a report that highlights 10 excellent companies as potential partners and we provide a preview of one of these companies below. 

Hydrofarm Holdings Group, Inc.

290 Canal Road

Fairless Hills

PA 19030

United States

Commercial Activity

Hydrofarm produces controlled environment agriculture (CEA) equipment and supplies, including agricultural lighting devices, indoor climate control equipment, grow light systems; heating, ventilation, and air conditioning systems; humidity and carbon dioxide monitors and controllers; water pumps, heaters, chillers, and filters; and nutrient and fertilizer delivery systems. 

Patenting Activity

We located 42 patents/applications under the name “Hydrofarm LLC” which apparently is a subsidiary of Hydrofarm. Interestingly, most of these are design patents. The company also has 8 granted utility patents and 1 patent application, a number of which relate to lighting systems for CEA farming. The most recent utility filing is from 2016. 

Partnerships

Hydrofarm has announced multiple partnerships with various companies, including Total Grow Control, Sananbio, and Argus Control Systems. The company has acquired six companies to date, including four acquisitions in 2021 alone. 

Financial Analysis

Hydrofarm has been a publicly traded company since December 2020. Its share price peaked in early 2021 but since has slid markedly. Its EBIT was negative in 2018, 2019 and for 2021 figures available to date; it was positive in 2020. Of the 7 analysts covering the stock, 6 recommend it as “strong buy” or “buy” and 1 as “hold”. 

ESG

Hydrofarm’s 2020 ESG report includes a description of its activities and future goals for sustainability, environmental protection, diversity and inclusion.

Download our full report here!