How to start a Vertical Farming business?

Grow to feed the world

The title says what it’s all about, how do I start my vertical farming business?
Vertical farming as an industry has been around for a few years, but there is still a need and every year new startups are created, but some fail after a few years or disappear into insignificance.

The world’s population is growing and the demand for food will be greater than ever before. This is why vertical farming has become a popular business idea in recent years. Vertical farming is a process where produce can be grown in a controlled environment so that resources are conserved and less spoilage occurs.

In this article, you will learn how to start a vertical farming business, which challenges you have to expect and what you should do before getting in production.

First the paperwork!

Depending on the country you live in or where you want to start your business, you will face different challenges. Almost everywhere, the step is the same: you have to register your business.
Depending on the country, there are different legal forms, which we will not discuss further in this article for legal reasons.
When you register your company you have to pay a fee, now the procedure varies, depending on the country an authority will contact you and you should find a tax advisor who will communicate with the authority on your behalf, this saves time and the understanding of paragraphs, but also costs money.

In many countries, the digitization of government processes is not yet as advanced, so expect to send and receive a lot of paper with government agencies. In addition, these documents are very important and some need to be kept for decades. Check with your tax advisor about the retention periods.

Money, Money, Money

Congratulations! Now you are already an entrepreneur! But the road will not be easy, because now you have to open a business account at a bank, which is necessary for accounting and to separate cost items. But also for the next step you will need a business account: the credit.

Now that you have a business account, you can perform business transactions with your company and thus seek credit from your bank. Whether and how much credit you need to start your startup depends on a number of factors, such as whether you have money saved up, already have an appropriate property to start with, or can reduce costs in advance to start your business with as little credit as possible.
Remember, a loan is never free, depending on the interest rate, you will have to pay back more money to your bank.
Therefore, in parallel, look for investors who are willing to invest in your idea. Sounds simple, but in practice it is not easy and requires contacts, which brings us to the next point.

Your network

An often underestimated and rarely taught fact in schools is that the more people you know and interact with, the higher the chances are that they can help you one day.
Therefore, build your network early. I myself underestimated this factor for a long time and only learned in my mid-20s how useful a network can be. Build a network of people who have the same interests as you and maintain contact with them. They might be able to help you find an investor or promote your business someday.
LinkedIn is THE business network of all, sign up early and build your network there. Recommended here is to actively participate in discussions so that more people become aware of you. This may take time, but it will be worth it in the long run.

Location, location, location

You always hear this with real estate consultants, but it’s just as applicable to the business world, if your startup is going to build a vertical farm and produce there, it’s important to know where it should be located and what factors you should consider:

• Local infrastructure (electricity, water, gas, roads, highway).
• Regional taxes
• Availability of personnel (employment agencies can help you with this).

Because if your farm produces something, then these products must also get to the customer. In today’s world, sustainability is very important, so it is not only worthwhile to focus on sustainability for marketing reasons, but also to use local infrastructure to save costs. Therefore, research in advance which shipping companies in the region can take over the shipping of your products and who your customers are.

Who is your customer?

As described, your produced food must arrive at the customer, but who should be your clientele? Are you more of a B2B or B2C company?
In business-to-business (B2B) you sell your products to a wholesaler or to a supermarket chain, which take the products in their assortment and sell them on. The advantage is that they want a guaranteed quantity, which is easier to calculate on a vertical farm than on a conventional farm where the weather affects the harvest. The disadvantage of the B2B model is that the retail sector is a hard place and it is difficult to get your products into supermarkets.

In the Business to Customer model (B2C), the focus of sales is directly to the consumer, the advantage is a strong customer loyalty, disadvantage is here unfortunately that the profits can fluctuate greatly, and the private customer comes from the nearest vicinity and will not order individual products. Which in turn limits your customer base if you are aiming for a larger project.

It requires a little more effort, but can be worth it: a hybrid business model (B2X), here the harvest is divided on a percentage basis, which goes to the trade, another part goes into direct sales to local customers.