Keith Teare shows how Infarm, a vertical farming startup, went from a vague vision to €40 million in funding by aligning its grand ambition with a concrete business model. The founders wanted to feed 9 billion people but started with tiny 2m×2m farms. Teare pushed them to calculate the warehouse space needed and structure a deal that proved the model worked.
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There is a way to escape it. So I'm going to tell you 2 of my portfolio companies. One is called Infarm, and the other is called Butterfly.ai. So Infarm is a German company in Berlin, infarm.de. It's run by 2 Israeli brothers and the wife of one of the brothers, so there's 3 founders. And what they do is they do vertical farming units. They've built this 2-meter-by-2-meter vertical farm. How much does it cost? That produces a kilo of herbs every day using 4K cameras at the plant level, hydroponics, and LED lighting. And I first met them, I think, 4 years ago in a startup competition, and the guy was on the stage doing a speech about the fact that there's going to be 9 billion people in the world to feed soon, and the world needs some transformation in agriculture to achieve that, and he presented InFarm. And I thought, wow, what a fantastic vision. And I met with him and I said, well, how are you executing against the vision? And he said, well, we've built 1 or 2 units and we're putting them into schools so that the school kitchen can— use fresh herbs in the cooking, and we're also putting them into hotels. And it's kind of a deal at a time. So I said, well, how long would it take you to feed 9 billion people if that's your go-to-market strategy? And he said, well, we're not really gonna feed 9 billion people, that's just our story. We're just gonna— And I said, well, show me your model. And the model was, not even close to the vision. There was a massive gap between the model and the vision. And I said, well, I love your vision, but I hate your model. Let's ask the real question. How could you feed 9 billion people? What would you have to do to feed 9 billion people? And he said, well, we'd have to have city farms in buildings. I said, well, how big would the city need to be to justify that? And he said, 200,000 people. So then I said, okay, how many cities in the world have 200,000 people? And I can't remember the exact number, but when you add it up, 2.7 billion people today live in cities over 200,000 people. So I said, wow, so you, you know, you actually could have a model that could feed 2.7 billion people greens, 'cause they do any greens. He said, we could. I said, okay, well, let's write that model. Go and do that model. Show me what it— how much money would it need? Now, it turns out it needs 1 million square meters of growing space. Guess how much warehouse space Amazon has? Roughly 1 million square meters around the world. So that's not a crazy number. You can do that. And so he said, okay, let's put the model together. And I did a deal with him. I said, I don't want any equity in your company, but if you raise €40 million, I want 5%, and I'll help you. We'll do the model. Unless you raise €40 million, I don't want anything. He said, well, we'll never raise €40 million. That's too big a number. He was getting grants from the European government at the time. I said, no, I think you can. I think you will. Roll the clock forward. Balderton Capital, which is the British arm of— is it Benchmark or Accel? I always forget. I think it's Benchmark— just put €25 million in as a second tranche. which now gets them to having raised €40 million, and it's 3 years later and now they've got their €40 million. The biggest insurance company in the UK called Legal General that is a massive property owner wants to build skyscrapers in 12 UK cities that are farms for the city, and they're prepared to build a fund, a property fund, to fund the buildings so that Infarm can run them and operate them. And suddenly the vision and the model are not detached anymore. Suddenly it's real. Balderton put in the €25 million, and by the way, Infarm didn't do all these seed rounds therefore. Why? Because the, because the long-term vision was so good and the short-term model was so complementary to it that there was a coherent narrative and a path to a big outcome. So I won't tell you the second company because I've realized I'm taking too much time, but I could tell you a similar story about Butterfly.ai as well, who now have Walmart with 40,000 employees as, as their customer, and started with a much smaller idea, and now it's glued together.
