Perfecting The Indoor Strawberry: Vertical Farmer Oishii Lands $50M Series A

Vertical farming is having a moment, and Oishii is leading the way with its innovative farming techniques used to perfect the strawberry.

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The New York-based company raised $50 million in Series A funding, led by SPARX Group’s Mirai Creation Fund II , to expand its farming footprint outside of Manhattan and invest in further R&D of the strawberry and other flowering fruits, co-founder and CEO Hiroki Koga told Crunchbase News. Existing investors in the round include Sony Innovation Fund, PKSHA Technology, Social Starts and angel investors.

Koga and Brendan Somerville started the company in 2017 and have raised $55 million to date, which includes an earlier seed round, Koga said.

“In the seed stage, we were focused on R&D in growing strawberries, and we have figured out how to do it at scale, and now we want to do it at a larger scale,” Koga added. “We will build additional facilities and keep investing in R&D and our team.”

Currently, the company’s operations are in New York, but Oishii, which means “delicious” in Japanese, intends to expand domestically and internationally. It is eyeing large metropolitan areas across the United States, as well as the Middle East and Asia, he said.

Market growth

Vertical farms, also known as indoor farms or plant facilities with artificial light, help crops grow more quickly in less space. The global vertical farming market is poised to reach $12 billion by 2026, driven by higher demand for fresh fruits and vegetables, increased depletion of groundwater, and a decrease in viable farming land, according to Fortune Business Insights.

In 2020, agricultural and food technology companies raised $8.1 billion across 901 known investments, according to Crunchbase data. That is up from $5.6 billion across 1,109 deals in 2019.

Among the deals from major players and investors over the past year are:

• Bayer’s investment arm, Leaps by Bayer and Singapore-based investment firm Temasek unveiled Unfold, a new company focused on vertical farming, providing $30 million in initial funding and an agreement for certain rights to germplasm from Bayer’s vegetable portfolio.
• Berlin-based urban farming network Infarm said Thursday that it has raised $170 million in Series C funding that it will use for infrastructure, R&D and hiring.
• Plenty Unlimited secured $140 million in Series D funding led by existing investor SoftBank Vision Fund.

The concept of indoor farming was pioneered in Japan some 20 years ago, Koga said. Most indoor farming operations stick to leafy greens because they are easier to grow, but Oishii started with strawberries, a more sophisticated crop. It introduced its Omakase Berry in 2018, which is an artisanal Japanese varietal, known for its sweetness, aroma and creamy texture. It was the first time the berry was ever grown in the United States, he added.

“The technology foundation was there, it was just difficult to make it selling leafy greens with a premium on them as a viable business, which is the whole reason it took so long for vertical farming to catch on,” Koga said.

Unique approach

Meanwhile, Oishii sells via supermarkets, offering a container of between eight and 11 strawberries for $50 per package. The first customers attracted to the product were chefs, and it quickly gained attention from Manhattan foodies, helping the company realize more than 10 times revenue since going to market three years ago, Koga said.

One of the unique aspects of Oishii’s vertical farming approach is its proprietary pollination method conducted naturally with bees. Traditionally, bees don’t do well in indoor environments, which is why strawberries were thought to be difficult to grow, he said.

“We are the first vertical farmer that cracked the code for doing flowering crops and are able to pollinate using bees,” Koga added. “We came up with a proprietary way to get the bees to see that they are in a safe environment, so now they live in harmony with our farmers and robots.”

What investors have to say

Ichitaro Akita, senior vice president at SPARX Asset Management, said via email that he was first introduced to Koga from one of the company’s portfolio companies. After many conversations and a trip to New York to see the farms, Akita said he knew he had to partner with Oishii.

SPARX invests in startups that boost innovation in five areas: intelligent technology, robotics, technology that enables a hydrogen-powered society, electrification and new materials.

In Oishii, the firm found a simple business model designed for growth, led by a management team that demonstrated vision and leadership, while also having deep business connections, technological know-how and experience and insights into the vertical farming industry, according to Akita.

“Oishii’s technology sets them apart in the field,” he added. “Once we saw Oishii’s AI and robotics technology, we knew the company would innovate the vertical farming industry. Oishii is the only vertical farm startup able to produce strawberries, which fundamentally unlocks a bright, profitable future. In the long term, we believe that Oishii will play an important role in revolutionizing the $4 trillion global agriculture market through its technology.”

Feature photo courtesy of Drew Escriva, and photo of Hiroki Koga courtesy of Oishii.

Blogroll illustration: Dom Guzman