Equilibrium Capital has closed its second fund dedicated to indoor agriculture. The Controlled Environment Foods Fund II (CEFF II) raised a total of $1.02 billion, exceeding its original goal of $500 million.
Speaking in a company blog post, Equilibrium CEO David Chen said that the fundraising for CEFF II reflects a broader shift where larger institutional investors are concerned. “Investors and retailers are increasingly looking for more sustainable and less volatile ways to invest in and scale agriculture. The fund is reflecting the magnitude of the opportunity and the growing importance of CEA in our food system,” he said.
CEFF II will invest between $10 million and $125 million per deal, mostly in high-tech greenhouses and indoor farms as well as “other CEA segments of alternative proteins and aquaculture.” The fund is focused largely on North America: the United States, Mexico, and Canada.
Equilibrium’s current assets are mostly in lettuce and tomatoes, which are two of the most popular produce types when it comes to indoor ag. However, Chang name-dropped berries in blog post, saying that Equilibrium will be “dramatically expanding” its presence in the berry family in the future. The statement reflects the larger development for indoor ag where more companies are either currently growing or planning to grow berries. Chang also mentioned peppers, cucumbers, mushrooms, and herbs.
The new fund follows the original CEFF, which closed at $336 million in April 2019 and includes well-known CEA companies like AppHarvest, Revol Greens, and Little Leaf Farms. All of those companies focus on raising crops in high-tech greenhouses, as opposed to the massive vertical farm setups a la AeroFarms or Plenty. Whether CEFF II will invest in more vertical farms remains to be seen. Chang said there were “niche applications” for the technology, though he was not specific about what those applications are. Currently, most vertical farming operations only grow leafy greens and herbs at the kinds of volumes that can supply grocery stores and restaurants. Debate persists as to whether this particular indoor ag format can produce more crops in an environmentally and economically sustainable way.
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