May 21, 2019

AppHarvest secures $82 million to build eastern Kentucky greenhouse

AppHarvest said May 21 it has closed an $82 million deal with Equilibrium Capital to build the company’s 60-acre greenhouse in Morehead, Kentucky. In addition, ValueAct Spring Fund has led the company’s Series A, with existing investor Revolution’s Rise of the Rest Seed Fund also participating.

Construction will begin immediately on the company’s first controlled-environment agriculture facility in Appalachia with its opening planned for 2020.

Among the investments:

• In an $82 million all-cash deal, Equilibrium Capital’s Controlled Environment Foods Fund will provide funding for the construction of AppHarvest’s 2,762,063-square-foot greenhouse.

• ValueAct Capital Founder and CEO Jeffrey W. Ubben has joined AppHarvest’s board of directors alongside ValueAct Spring Fund leading a Series A financing round for the company. The amount of the Series A financing will not be disclosed.

• Revolution’s Rise of the Rest Seed Fund, led by AOL Co-founder Steve Case and best-selling author J.D. Vance, has made a follow-on investment in AppHarvest as part of the Series A, adding to its initial seed funding.

AppHarvest’s first controlled-environment agriculture facility will be built in Morehead, Kentucky, and create 285 full-time permanent jobs, as well as 100 construction jobs. The facility will grow tomatoes and cucumbers to be distributed to America’s top grocers by distribution partner Mastronardi Produce.

As a Benefit Corporation, AppHarvest aims to solve four distinct problems:

America needs to farm more sustainably: Controlled-environment agriculture technology will allow AppHarvest to grow non-GMO, pesticide-free produce year-round using 90% less water than traditional farming. The facility’s water needs will be met entirely by a 10-acre retention pond combined with sophisticated circular irrigation systems. These growing techniques have been perfected by farmers in the Netherlands, which uses AgTech to realize incredibly high yields. The Netherlands is the world’s second-largest exporter of agricultural products, despite a land mass roughly similar in size to Eastern Kentucky.

America needs a homegrown food supply: The United States relies increasingly on imports, settling for produce that is picked prior to being ripe then ages up to a week on a truck before briefly sitting in grocery bins because of its shortened shelf life. AppHarvest’s location places it within a day’s drive of 70% of the U.S. population, reducing diesel use in transportation by 80% compared to foreign imports trucked to the east coast.

America needs better access to nutritious food: Just 1 in 10 adults eat enough fruits and vegetables, according to the U.S. Centers for Disease Control and Prevention. Hunger-relief non-profit Feeding America also estimates 12.9% of Americans struggle with food insecurity, or the lack of access, at times, to enough nutritionally adequate food. Children are worse off nationwide with 17.5% of kids dealing with food insecurity. By providing fresher, cost-competitive produce, AppHarvest will encourage Americans to eat more fruits and vegetables.

America needs to invest in Appalachia and create jobs: The coal industry, which long served as Appalachia’s dominant industry, has seen employment fall to its lowest levels since 1898, as 50,000 miners have lost their jobs since the decline of coal. Throughout Appalachia, one in four residents live in poverty. In Morehead, Kentucky, where AppHarvest’s first controlled-environment agriculture facility will be built, the U.S. Census Bureau estimates 23.7% of residents live in poverty compared to just 12.3% nationally. In partnership with regional universities and colleges, AppHarvest plans to include educational upskilling initiatives for its employees.

AppHarvest Founder and CEO Jonathan Webb: “We’re building a Farming Now movement using proven technology to grow more fresh food with far less resources. Eastern Kentucky is mobilizing to lead the real food revolution and become the AgTech capital of America. This is Farming Now.”

Equilibrium Chairman Dave Chen: “We see a tremendous opportunity for the future of controlled-environment foods. Farming is undergoing a profound shift to a capital and production infrastructure intensive model to meet the demands of consumers, retailers and food processors for more reliable, year-round, fresher, and sustainable foods.”

ValueAct Capital Founder and CEO Jeffrey W. Ubben: “AppHarvest is among the breakout ideas that is needed today. It envisions a fundamental change in how America farms. Its goal to establish Appalachia as a hub for AgTech technology and expertise also has far-reaching positive implications for jobs and education in the region and beyond. We look forward to working with the company as it pursues these exciting environmental and social goals.”

Revolution’s Rise of the Rest Seed Fund Managing Partner J.D. Vance: “AppHarvest has a unique and exciting model to provide cost-effective produce through sustainable farming methods. At the same time, we’re hopeful the company will be a boon to the region’s workers and communities. We’re very proud to have been supportive of the AppHarvest mission, and we’re excited to partner with them in the years ahead.”

The property that is the site of the AppHarvest greenhouse project in Morehead, Kentucky. Photo: Equilibrium Capital