Tech-Enabled Produce Company
Element Farms describes itself as "A produce company driven by tech."
It's targeting the $8 billion market for leafy greens. This includes produce such as spinach, kale, and arugula.
This has become an exciting growth market, with professional venture capitalists investing more than $100 million into start-ups such as Aerofarms and Gotham Greens.
Element Farms is entering this market with an innovative approach. Using patent-pending technology, the company is able to grow the most in-demand crops at scale. Its methods are efficient, sustainable, and produce 20x the yield per square foot than conventional farming.
Initially, Element Farms is focusing on producing spinach, the most in-demand leafy green in the U.S., sales of which exceed $1 billion annually.
The company’s farming technique is based on the concept of "hydroponics." This is a method of growing plants without soil.
The logic behind this method is to allow plant roots to come into direct contact with nutrient solutions, while also having access to oxygen, which is essential for proper growth.
Plants grown using hydroponics mature 25% faster and grow 30% larger than plants grown in soil. This is because plants don’t have to work as hard to obtain nutrients.
Traditionally, it's been challenging to grow spinach using this method. That's because spinach is prone to plant-related diseases. In addition, most hydroponic farmers simply don’t have the necessary tools or knowledge to grow spinach.
Element Farms is creating a solution to this challenge. Specifically, the company solves three key issues related to commercial scale indoor spinach production: inconsistency, plant disease, and high operational costs.
To solve these issues, the company is using two strategies:
The first is a lighting algorithm that combines natural sunlight in a greenhouse with high capacity LEDs. The LEDs turn on nearly instantly when the natural light dims.
The second is a precise method of supplementing carbon dioxide to the plant canopy.
These techniques help plants grow far more quickly than they would otherwise. In fact, Element Farms can harvest its spinach after just 14 days, which is half the industry standard.
In addition to creating produce more quickly, Element Farms’ techniques offer several other benefits as compared to conventional farming:
• Resource efficient: Its technology yields 20x more per square foot and uses 90% less water.
• Local and sustainable: Element’s process results in zero agricultural runoff and 30% less carbon emissions.
• Healthier and safer: Element’s produce contains higher levels of iron, zinc, and magnesium, as well as a lower risk of contamination.
To grow its produce, Element Farms rents idle space from greenhouses located in densely populated areas. The company then equips them with its specialized hardware.
Unlike conventional produce — that goes from the producer, to the brand owner, to the distributor, to retailers — Element Farms’ product goes directly from the greenhouse to the retailer. When its produce is ready for harvesting, Element packs it and delivers it to retailers within 24 hours.
Element sells its spinach to retail stores through its brand, PureSpinach. In addition, the company sells its produce wholesale and through a direct-to-consumer business (D2C).
Wholesale products are assortments of leafy greens branded as “Element Farms” and are typically sold to restaurants. Its D2C sales consist of farmers’ markets and a home delivery program.
70% of the Element Farms’ revenue comes from retail, while 20% comes from D2C, and 10% from wholesale. The company’s average margin is 35%, and energy costs account for less than 10% of product cost. That’s because, on average, 75% of the company’s yearly energy comes from renewable resources like the sun and recycled gas.
Since launching in February 2018, Element Farms has attracted 12 retail locations. In addition, the company has a pending patent on its production model which includes its mechanical parts and environmental control algorithms.
Demand for its product is currently exceeding supply, so Element Farms is raising funds so it can rent additional greenhouse space, hire more staff, and invest in equipment including grow lights and conveyors.
With its expansion, the company expects to increase its production capacity by 600%, and expand operations nationwide.
In the future, the company may also grow products including fruits and vegetables, which is a $100 billion market.
The company got its start as an R&D project at Cornell University to create a better greenhouse solution built on hydroponics. The founders are successful entrepreneurs, with specific domain experience in agriculture and hydroponics.
Daniel brings a background in horticulture and biological engineering to Element Farms.
Prior to joining the company, he was a research assistant at Cornell University’s Horticulture Department.
He was formerly a process development intern for Pacira Pharmaceuticals, specializing in testing of various drug production.
Daniel earned a Bachelor’s and Master’s degree in Biological and Environmental Engineering from Cornell.
Serdar gained extensive entrepreneurial experience working in the field of robotics.
He previously founded Quasar Mechatronics, a company developing and manufacturing industrial robots.
In addition, he was a product manager for HP, and worked for Turkcell Technology, a company focused on research and development for communication technologies.
Prior to starting Element Farms, Serdar was a fund manager for Big Red, a venture capital group.
He earned a Bachelor’s degree in Industrial Engineering from Sabanci University and an MBA from Cornell.