The pitch for vertical farming had all the promise of a modern venture capital dream: a new way to grow crops that would use robots and artificial intelligence to conserve water, combat food insecurity and save the environment. But after firms poured billions of dollars into these startups, pushing valuations into the stratosphere, the industry is now facing a harsh new reality: funding is drying up, profits remain elusive, and creditors are circling. From a report: AeroFarms last week became the latest, most high-profile example of the challenges facing the business, filing for bankruptcy after building a massive new facility in Virginia that drained its cash, according to court papers. Its collapse comes on the heels of lettuce grower Kalera seeking court protection in April. And in May, publicly traded AppHarvest, which operates high-tech greenhouses, received a notice of default from one of its investors, according to a regulatory filing. The company contests the default notice, but if it can’t reach an agreement with its creditors, the firm warned it could become “bankrupt or insolvent.”

“We really were in a hype cycle,” said Vonnie Estes, vice president of innovation for the International Fresh Produce Association. Venture capitalists entered the scene in a frenzy, likening these companies to software firms, and expecting comparable returns. “There was a lot of money that rushed in without really understanding that this is actually just farming.” Industry experts still say that indoor farming is a crucial piece of agriculture’s future, especially as climate change spurs more destructive wildfires and floods. Nonetheless, the ability of vertical farms to carve out meaningful market share on a national scale could be years away, they note.

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