Allison Kopf
Greenhouse growers know that finding funding for new projects can be difficult, especially for newer facilities that don’t have an operating history. Also, many of the funding options available to outdoor farming operations aren’t currently offered to greenhouse growers. But in her presentation at the 2021 GROW Executive Summit, “The Changing Landscape of Capital Management: Financing and Fundraising,” Allison Kopf said there are many good things going on in the finance world that can be applied to the greenhouse growing industry. “We just have to learn them,” said Kopf, the founder of Artemis, a cultivation management platform in the horticulture industry that is now part of iUNU.
When Is Venture Capital Right For You While some growers have had access to reliable lenders for years, others don’t. A challenge for the latter is that traditional lenders often don’t know what’s happening within the four walls of a greenhouse. It’s easier for lenders to equate things to what occurs in manufacturing facilities, but it’s not quite the same as what occurs in a greenhouse. It is also difficult for newer facilities to come up with the operating history that lenders often ask for before they will open their checkbooks. Additionally, while adding new technology to an operation helps lower the risk of investment from a lender’s viewpoint, purchasing equipment can be an expensive proposition for the grower.
“The purpose of embedded fintech is to find where technology can be layered to decrease risk.
Kopf said her company frequently asks growers how they obtain capital for expansions. Some say they are funded by venture capital, which has its own challenges. One of those is that venture capital comes with scale expectations, where [a business] must grow and grow. But if you’re only operating one facility, you don’t need venture capital. Grants are another solid source of capital if a grower is looking to obtain $30,000 to $50,000, which might be a good amount for research and development for a new variety. But if a grower is planning to spend $100 million on a new facility, [grants] aren’t the right option.
Kopf added that project and equipment finance are excellent ways to finance infrastructure. “And if you lower your rates and your monthly payment, ultimately, that’s good for your business,” she said.
An emerging model that has entered the financing world recently is financial technology (fintech). Lenders are pairing with technology companies to offer clients better capital by using technology. If you install technology on the farm, you can reduce the risk and therefore reduce the lending risk. “The purpose of embedded fintech is to find where technology can be layered to decrease risk,” Kopf said. “If you put [all processes] into one system, it gives you a picture of what’s happening in the field. So that problem you had in the beginning — where lenders don’t know what’s happening within the four walls — is alleviated.” Kopf recommended a few options for growers to explore for funding.
