After Going Public, Indoor Farming Company Local Bounti Rings the New York Stock Exchange Bell
Most of the tech-focused indoor agriculture startups The Spoon covers have raised private funding rounds from investors as they scale up and expand. Local Bounti, a Montana-based controlled environment agriculture company, has charted a different course when it comes to raising capital.
Through a reverse merger with a special purpose acquisition company (SPAC), Local Bounti went public in November. Co-CEO Craig Hurlbert rang the opening bell at the New York Stock Exchange last week, celebrating Local Bounti’s emergence as a publicly traded company. It’s a milestone that reflects what makes the company stand out in the indoor farming space: a practical, somewhat old-school focus on business economics.
Hurlbert and his co-CEO Dr. Travis Joyner originally entered the indoor farming space as co-founders of a private equity firm seeking to invest in a controlled environment agriculture startup. But as Hurlbert and Joyner looked into existing companies, they saw an opportunity to create something unique.
“We came from the energy space, where unit economics is everything, and we thought we could bring that to the industry,” Hurlbert told The Spoon over Zoom last week. So they founded Local Bounti, aiming to build a unique CEA organization with a built-in focus on unit economics.
Local Bounti’s uses a patent-pending “stack and flow” growing system, which Hurlbert described as a hybrid of greenhouse and vertical farming. According to Hurlbert, the flexibility of the system should allow the company to expand its current catalog of eight profitable SKUs to over 30. The company estimates that its system uses 90% less land and water to grow its greens than it would take to produce the same output via conventional agriculture.
Since Local Bounti’s founding in 2018, the company has attracted some big-name investors, including Cargill and BNP Paribas. Hurlbert said that the team’s focus on unit economics helped to draw in those investors.
According to Hurlbert, Cargill also developed an interest in Local Bounti because the legacy agriculture corporation is taking note of increasing demand for environmentally friendly produce: “Cargill’s customers have been coming to them and saying, ‘We want to focus on a more sustainably grown, cleaner product that’s better for our end consumers.’ And that’s why they started looking at the CEA space.”
Cargill’s relationship with Local Bounti is three-pronged: The legacy agriculture corporation has invested on the equity side, contributed to Local Bounti’s $200 million debt facility, and helped the company to establish partnerships with its own customers.
Last year, though, Local Bounti’s leadership decided to depart from the normal capital-raising route. “We already know we have a differentiated technology. We know what our facility can do,” Hurlbert said. “It’s now time to balance the technology with capitalization so we can really get out there and make our mark.”
So Local Bounti completed a merger with Leo Holdings III Corp., a publicly-traded special purpose acquisition company, last month. Local Bounti is now trading on the New York Stock Exchange under the ticker symbol “LOCL.”
“I’m so happy for the whole team that we were able to achieve this,” Hulbert said, reflecting on ringing the opening bell at the stock exchange. “And really, the finish line to the deal is the starting line to the company. So we’ve got a weekend to celebrate, and then we’ll get out there Monday morning and really go about the disruption process.”
On the retail side, Local Bounti has partnered with Idaho-based grocery chain Albertsons to get its products to consumers. The company has placed its products in about 100 Albertsons stores throughout the Intermountain West, and hopes to expand the relationship.
The company also has big plans when it comes to brand-building. “I would encourage you to go to the grocery store, look in the produce section, and ask yourself if there’s a brand there that you connect with,” Hurlbert said. He doubts that the answer will be yes — but he thinks that Local Bounti can change that with the expertise of CMO Josh White, formerly CMO at Chobani.
When it comes to the big picture for controlled environment agriculture, Hurlbert believes it’ll only take some time and consumer education to develop a loyal base of buyers: “I think when the consumer gets complete transparency about this product — how it affects the environment, how long it’ll last in their refrigerator — they’ll never go back.”
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