Between roughly 2018 and 2022, vertical farming was one of the hottest categories in climate-tech investing. Startups like AeroFarms, Bowery, Plenty, and Infarm raised hundreds of millions of dollars on the promise that they could grow leafy greens — and eventually much more — indoors, without soil, under LED lights, using vastly less land and water than conventional agriculture. The pitch was seductive: hyper-local food production, pesticide-free, resilient to weather and climate. By 2023, the industry was in trouble. High-profile failures exposed the gap between promise and economics. But the underlying forces that make vertical farming compelling have not gone away.
How Vertical Farming Works
A vertical farm is, in essence, a controlled-environment agricultural system. Plants are grown in stacked layers, typically using hydroponics (nutrient-rich water), aeroponics (nutrient mist), or aquaponics (fish-integrated). LEDs tuned to specific spectra replace sunlight. Climate — temperature, humidity, CO₂ concentration — is precisely managed. Automation reduces labour.
The claimed advantages are real in controlled conditions: yields per square metre can be 10-100 times higher than field farming, depending on the crop. Water use can be 90-95% lower. No pesticides are needed. Food can be grown in or near cities, cutting supply chains and transport emissions. And production is predictable, unaffected by season or weather.
The disadvantages are equally real. Energy is the dominant cost — LEDs and climate control consume enormous amounts of electricity, and in most places that electricity comes partly from fossil fuels, which undermines the environmental case. Capital costs are high: building a large automated vertical farm costs tens or hundreds of millions of dollars. Labour costs can be high despite automation. And the range of crops that work economically is narrow — mostly leafy greens, herbs, microgreens, and (for some) strawberries.
The Casualties
When venture capital tightened and energy costs spiked, the industry’s weaknesses were exposed.
AppHarvest (which focused on high-tech greenhouses, not strictly vertical farms, but shared the controlled-environment thesis) filed for Chapter 11 bankruptcy in July 2023, listing debts over $340 million. Its massive greenhouses in Kentucky proved too expensive to build and operate, and its revenue could not cover the costs.
Kalera, an indoor-farming company backed by significant capital, filed for bankruptcy in April 2023 after going public via a SPAC, citing high costs and operational inefficiencies.
Infarm, a Berlin-based company that had raised over $600 million and operated modular indoor farms in supermarkets and warehouses across Europe and North America, underwent multiple rounds of layoffs, pulled out of several markets including the UK and the Netherlands, and in 2024 announced it was ceasing operations entirely, citing an inability to reach profitability.
These failures were not marginal. They reflected a systematic overestimation of the speed at which costs could come down and revenues could scale up. The venture model’s appetite for growth over profitability, while capital was cheap, met a harsh reality: farming has thin margins, and even high-tech farming cannot escape that.
The Survivors and Adaptors
Not everyone collapsed. Several companies have adapted, and a few lessons are becoming clear.
Plenty
Plenty, backed by SoftBank, Jeff Bezos, and Walmart, pivoted from leafy greens to strawberries, which have higher value and stronger consumer demand. It opened a large strawberry farm in Compton, California, and secured a partnership with Driscoll’s, the world’s largest berry company. The theory is that strawberries, which are high-value, delicate, and seasonal in field production, are a better economic fit than commodity greens. Plenty is also expanding its leafy-greens operations, but strawberries represent a strategic bet on a higher-margin category.
Bowery Farming
Bowery, which raised over $700 million, has focused on operational efficiency and built large, automated farms on the U.S. East Coast. It has expanded its product range and secured distribution in thousands of grocery stores. It remains private, and its financials are not disclosed, but it has survived the correction where others failed.
Small-Scale Specialists
A quieter trend is the emergence of smaller, profitable indoor farms focused on specialised markets: premium herbs for restaurants, microgreens, and cannabis (where the energy cost is justified by the crop’s value). These operations are too small to attract venture capital, but they are viable businesses. They represent a more realistic near-term model: vertical farming for high-value niches.
The Economics, Honestly Assessed
The core economic problem is that staple calories — wheat, rice, maize, potatoes — cannot be grown economically indoors and probably never will be. Sunlight is free; LEDs are not. Land in rural areas is cheap; real estate in cities is expensive. Even for leafy greens, vertical farms compete with field agriculture in California’s Central Valley, where land, water, and sun are abundant for much of the year, and with greenhouse production in Mexico and Canada.
The economic case improves in specific contexts: desert regions where water is scarce and field farming is impossible or wasteful; far-northern communities where fresh produce is expensive and unreliable; densely populated island nations that import almost all their food; and premium market segments that can support a price premium.
The Environmental Promise — and the Asterisk
Vertical farming’s environmental case depends on the energy source. If the electricity powering the LEDs comes from fossil fuels, the carbon footprint per kilogram of produce can be higher than field-grown and transported alternatives. If it comes from renewables, the picture improves dramatically. The industry’s future is therefore tied to the decarbonisation of the grid.
What Comes Next
The industry will not disappear. The trend toward local, resilient, climate-controlled food production is real and important. But the venture-capital model — raise hundreds of millions, build big, grow fast — has been proven wrong for farming, at least at this stage. The survivors will be those who master the unit economics, grow at a sustainable pace, match crops to markets carefully, and, ideally, locate where energy is cheap and clean.
The Energy Math, in Watts
The energy intensity of vertical farming can be stated precisely. For leafy greens grown under LED lighting, the electricity consumption ranges from roughly 5 to 15 kilowatt-hours per kilogram of harvested produce, depending on crop, lighting, and system design. For strawberries, the numbers are generally higher. By comparison, field-grown lettuce in California’s Central Valley uses essentially zero artificial light and mostly gravity-fed or pumped irrigation. The gap is large: vertical farming’s primary input — electricity — costs something that nature provides for free. This is why, for staple calories, the economics are prohibitive and likely to remain so. The technology’s viability depends on either very cheap renewable electricity, a very high-value crop, or a market that values the non-energy benefits enough to pay a premium.
The Premium-Market Strategy
The survivors in vertical farming share a common thread: they target premium segments. Restaurant-quality microgreens, pesticide-free baby spinach sold at a premium to health-conscious consumers, and specialty herbs command prices that field agriculture cannot easily match. The cannabis industry, where high value per gram and indoor production are already the norm, absorbed many indoor-agriculture technologies naturally. The economic lesson is that vertical farming works best not as a replacement for the field but as a supplement for high-value niches that value freshness, locality, or purity above price.
Technology-Forward Crops
Beyond leafy greens and strawberries, researchers are pushing into new crops. Tomatoes, peppers, cucumbers, and eventually soft fruits are plausible candidates for controlled-environment production because they have high value and perishability, making local production attractive. Staple grains — wheat, rice, maize, soy — are not on any realistic roadmap for indoor production because the calories-to-cost ratio is hopeless. The future of vertical farming is not to feed the world but to feed the premium end of it. That is a legitimate business but a different and more modest ambition than the sweeping claims that characterised the boom.
Automation, AI, and the Labour Picture
Automation is the main lever for reducing operating costs in vertical farms. Seeding, transplanting, harvesting, and packaging — all laborious in traditional farming — can be automated in a controlled environment where everything is standardised. Computer vision systems monitor plant health and disease. Predictive models adjust light, nutrients, and climate. The most advanced farms operate with minimal human intervention, which reduces labour cost and human-introduced contamination. The integration of AI and robotics into agriculture is one of the more promising long-term trends, and vertical farms, with their controlled physical environment, are natural laboratories for it.
The Long-Term Vision: Food Resilience
Despite the correction, vertical farming retains a genuine strategic rationale. Climate change, water scarcity, and the fragility of long-distance food supply chains all create pressure for local, controlled production. In deserts, far-north communities, and island nations where fresh produce is expensive and unreliable, indoor farming can be the difference between a diverse diet and dependence on imported shelf-stable food. The industry’s challenge is to serve these genuine needs economically, rather than to chase the fantasy of replacing field agriculture. The companies that focus on resilience, premium quality, and specific geographies are the ones most likely to persist and slowly expand. The revolution was oversold; the useful niche is real.
Conclusion
Vertical farming is not a failure. It is a technology that works, is improving, and has a real role in a climate-disrupted world. But it is a niche, not a revolution — at least for now. The industry correction of 2023-2024 cleared out overcapitalised, overhyped players and left behind a leaner, more focused sector. The lesson is not that indoor farming is impossible; it is that farming, even high-tech farming, obeys the same laws as all agriculture: margins matter, energy costs matter, and you cannot outspend the sun.
