Gotham Greens has spent 11 years convincing grocers like Whole Foods that its locally and sustainably grown lettuces are the future of produce, but after the pandemic upended national supply chains, its sales started to surge.
“It was a real opportunity for us with our shortened supply chain to fill some of those voids,” says Cofounder and CEO Viraj Puri. “This is why we started this business. The supply chain is too long, too fragmented. By building these regional, climate-controlled greenhouses, we can produce consistently and reliably year-round.”
Its eight greenhouses, some of which are on the roofs of Whole Foods stores, today make up the largest indoor growing network in the country. But Puri is now also facing fierce competition and a suddenly hyped industry that investors have poured $1 billion into in the past three months alone. There’s even been a flashy reverse merger announced, of a greenhouse tomato grower that has yet to complete its first harvest backed by investors like Martha Stewart and J.D. Vance, that is expected to start trading before the end of the year.
Puri considered his own public listing, but decided to raise $87 million instead and keep his greenhouse network private, for now. The funding includes $42 million from investors, led by Manna Tree and joined by The Silverman Group, in addition to $45 million in debt capital. Gotham Greens’ total financing is now $130 million.
“We’ve been super capital efficient as a result of our track record of building and operating profitable greenhouse facilities,” says Puri, noting that his company is the only one in the industry that is profitable. “It’s very validating to be able to raise capital on the debt market at competitive prices from institutional lending agencies. It’s a testament to the business being credible.”
This new capital infusion will help Gotham Greens build more greenhouses at an accelerated pace. Just before the pandemic hit, Gotham Greens had opened new greenhouses in Chicago, Providence, Baltimore and Denver, which has helped it double capacity and revenue in the past 12 months.
Now with a 60% five-year average compound annual growth rate, Gotham Greens sells lettuces, pestos and salad dressings in 40 states and 2,000 stores, mostly around the New England, Mid-Atlantic, Southeast and Mountain regions. Chains include Whole Foods Market, Safeway, Target, Harris Teeter, ShopRite and Sprouts.
Each high-tech, climate-controlled greenhouse generates 35 times more heads of lettuce per acre than conventional farming. The systems use 100% renewable energy to power the greenhouses and the produce consumes 95% less water and 97% less land than conventional farming.
But when it comes to the multi-billion salad industry, Gotham Greens is relatively small. Annual output is now 35 million heads of lettuce annually, around 1% of the industry.
“It’s been incredibly motivating to now grow the business even more, which is what this capital is going to allow us to do, because we’re well on our way to being a national brand,” says Puri. “We’re the fastest growing indoor farming company in the country, but we’re still a drop in the bucket as far as the total addressable market is concerned.”