Pittsburgh’s robotic farm venture of the future backed by Pritzker billions
Currently, less than 1% of fresh produce is grown in hydroponic systems compared to open-field agriculture, but Mordor Intelligence predicts this segment will grow by nearly 11%, or approximately $600 million, by 2025 .
Next to the last remaining steel mill in the impoverished industrial town of Braddock, along the Monongahela River, just 9 miles from Pittsburgh’s US Steel Tower, a vertical farming venture backed by billionaire Nicholas Pritzker’s Tao Capital is in the process of to become an agri-tech innovator.
The startup, founded in 2016 as RoBotany by MBA student Austin Webb and incubated at Carnegie Mellon University, aims to disrupt the $60 billion U.S. product market. Now named the fifth most consumer-friendly sounding season, the up-and-coming company leverages cutting-edge technology, $75 million in venture capital, expanded distribution, a planned new facility in Columbus, in Ohio, and an expanded management team to score in the fast-growing vertical agricultural market. CEO Webb Confidently Projects Season 5 Could Be A $15 Million Business in Pittsburgh within five years and $500 million through geographic expansion plans, and estimates that sales will reach double-digit revenue this year and a 600% revenue increase.
“Our smart manufacturing plant improves the yield, taste and texture of vegetables, and does it with 95% less water, 95% less soil and uses no pesticides or chemicals,” Webb said. , who is 33 years old. Fifth Season’s proprietary automated system grows fresh produce indoors year-round in vertical trays, using artificial intelligence, robotics and data to control light, water and nutrients , and harvest leafy greens.
Hydroponics is growing rapidly as a food source
Currently, less than 1% of fresh produce is grown in hydroponic systems compared to open-field farming, but Mordor Intelligence predicts this segment will grow nearly 11% annually to around $600 million by 2025. and more reliable operations remove risk,” said Brian Holland, managing director of Cowen & Co. in New York. “It’s a race for scale with potentially multiple winners who can prove the business model for automatic and robotic growth,” he added. “Fifth Season is the most advanced, if not the most advanced, on the market by marrying technology and robotics to grow vegetables indoors at a lower cost.”
Fifth Season competes in a capital-intensive and highly fragmented market with over 2,000 mostly smaller operations and a handful of larger-scale players. Among the most prominent is San Francisco-based Plenty Unlimited, which recently secured $400 million in strategic funding from Walmart and plans to sell its fresh produce from its Compton plant in the retailer’s California stores. Another major rival is AeroFarms in Newark, New Jersey, which scrapped a SPAC deal to go public in October 2021 and continues to build capacity at a farm in Danville, Virginia.
“Market leadership is just a function of time and a function of capital,” Webb said.
Racing to expand its business and keep pace with competitors, Fifth Season plans to build its second indoor growing farm in 2023 and is negotiating a plot of land in Columbus, Ohio, near John Glenn Airport. Through a partnership with hummus maker Sabra in December 2021, the company also launched a new product line of co-branded salad kits to go, priced at $6-$8. Distribution of its products is expanding in March to additional Giant Eagle outlets as well as Kroger and ShopRite in 10 states and 1,000 locations, with the goal of reaching 3,000 grocery stores by 2023. During its first year of commercial operation in 2000, some 500,000 pounds of its produce was supplied to nearby restaurants and campus eateries from its 60,000 square foot grow space on a half-acre of land.
The growth spurt of the fifth season signals a new high-tech era for the former steel capital. Dozens of regional tech start-ups are emerging in Pittsburgh and the former Rust Belt as blue-collar workers transition into tech jobs and older factory towns are rebooted.
“The tech multiplier isn’t lifting all the boats, but it’s spilling into the heartland,” said Silicon Valley Congressman Ro Khanna, author of “Dignity In A Digital Age.”
“The factory workers and technicians know how to make things and have an amazing ethnic work and sense of community. They challenge the conventions of the past,” he said.
Getting ready, Fifth Season expanded its management team in January, while the number of employees is expected to increase from 80 to 100 next year. Finance and technology veteran Brian Griffiths joined the team as CFO of semiconductor company Skorpios Technologies with experience at Credit Suisse and Guggenheim Partners. Varun Khanna was hired as vice president of food products from senior positions in Chobani and Sabra. Glenn Wells joined as senior vice president of sales and previously worked at Quaker Oats, Welch’s and Dole.
Another part of its growth strategy is a planned $70 million outlay for a new Columbus vertical farm that’s three times the size of the $27 million Braddock plant, including real estate development for land , a building and equipment. The company’s highly automated farms require only 35 to 50 production workers. The Pittsburgh plant makes four million lettuces a year, while the largest plant in central Ohio is expected to produce 15 million. Fifth Season is working with economic development groups One Columbus and Jobs Ohio on the new location.
The foundation of Fifth Season’s groundbreaking activity comes from the intellectual powerhouse of Carnegie Mellon University and the Pittsburgh Technology Entrepreneurial Cluster in the fields of computing, robotics, and engineering. Webb developed a prototype during his final year of the MBA program and launched the company after graduation with co-founder Austin Lawrence, an environmental scientist and mechanical engineer he met on the campus.
A third co-founder, Webb’s brother Brac, is CTO. He designed the production software. The system was stress tested for two years at a converted steel mill on the south side of Pittsburgh before the Braddock Farm began operations in 2020.
Webb was mentored by Dave Mawhinney, executive director of CMU’s Schwartz Center for Entrepreneurship, who helped him connect with investors and role models such as serial entrepreneur Luis von Ahn, the Pittsburgh-based founder of the Nasdaq-listed edtech company Duolingo. He also introduced Grant Vandenbussche, MBA student, former Global Strategy Coordinator for General Mills, who joined the team in 2018 as Director of Business Development and is now Category Director. “The fifth season is a testament to CMU’s ability to attract highly talented young people and develop entrepreneurs through its MBA program,” Mawhinney said. “It’s all about the network.”
Fifth Season CEO Austin Webb
Even before graduating in 2017, Webb raised capital from angel investors, most of them tied to CMU. The network effect also happened when Mawhinney introduced Webb to Columbus-based venture capital firm Drive Capital, which launched the startup with $1m in 2017 and led a $35m round. in 2019 as it exited stealth mode, changed its name from RoBotany, and Drive partner Chris Olsen joined the board.
“Chris pushed us to think about the market and think bigger nationally, not just locally or regionally, and build a sustainable business and a new product line,” Vandenbussche said.
The $75 million it has raised to date from investors includes not just Pritzker’s Tao Capital Partners in San Francisco, but eight different investor groups that joined in 2021.
“Pittsburgh comes together as an ecosystem. One of the reasons it doubles down is because of its strengths in AI, machine learning, and legacy with biosciences,” said Kit Mueller, who leads community networking group RustBuilt and recently became vice president of crypto asset company Stronghold Digital Mining in Pittsburgh.
No longer reliant on steel, iron and its rivers as competitive advantages, the city is shifting from gritty industries and robotics start-ups are crowding the so-called silicon strip of old warehouses. This mid-sized city of 303,000, less than half its peak population of 677,000 in 1950, has become a tech test bed for self-driving technology from Ford-invested Argo AI and Aurora-backed by Amazon, and the technology unit of Uber acquired by Aurora. It is also an anchor for the R&D labs of Facebook, Apple, Google, Zoom and Intel.
A persistent problem facing start-ups in the Midwest is the shortage of venture capital. California, New York and Boston saw about two-thirds of the $329.9 billion in seed investment in 2021. This imbalance is starting to shift to specialized centers inland as strongholds take shape such as Pittsburgh with robotics as well as Cleveland with biotechnology and Indianapolis with SaaS.
Improved lifestyle amenities, increased opportunity, and lower cost of living are attracting millennial tech talent to indoor hubs. The Fifth Season co-founders, and many others, came to Pittsburgh to pursue entrepreneurship and stayed.
“The only ones who don’t like Pittsburgh are those who never came here and those who left but never came back,” said Lynsie Campbell, a serial founder who bounced back in New York, Los Angeles and San Francisco. but returned home as a Pittsburgh-based partner in The Fund Midwest, he is a leader in venture capital and start-ups in the city.
To learn more and to register for CNBC’s Small Business Playbook event, click here.