Bayer AG’s impact investment arm, Leaps by Bayer, and Singapore state-owned investment company Temasek have formed a new 50:50 venture Unfold to develop seeds for indoor vertical farming.
Unfold has raised $30 million in its initial funding round, and entered a deal for rights to seed genetics, or germplasm, from Bayer’s vegetable portfolio, Bayer said in a press release Wednesday. The startup will target improving productivity and flavor, the statement said.
While the company will initially be equally owned by Leaps by Bayer and Temasek, Unfold may seek investments from other companies ahead, Juergen Eckhardt, head of Leaps by Bayer, said in response to emailed questions from DealStreetAsia.
Unfold CEO John Purcell said via email the decision to form a separate entity, rather than keep the seed development operations within Bayer, was aimed at fully focusing on the vertical farming market, which is rapidly changing as new technologies for lighting and harvesting systems develop. Unfold plans to have operations in both California and Singapore.
Eckhardt said sustainable agriculture was one of the 10 areas his fund was targeting.
“The investment in Unfold is a great example of a transformative, creative approach to developing agricultural products that meet the needs of consumers, farmers and the planet by increasing access to fresh fruits and vegetables, supporting sustainable growth, hyperlocal production and addressing food security challenges faced by growing urban populations,” Eckhardt said in the statement.
The vertical farming market is estimated to reach $7.3 billion by 2025, up from $2.9 billion this year, growing at a compound annual growth rate (CAGR) of 20.2 per cent, according to a report from MarketsandMarkets. In the Asia-Pacific, the vertical-farming market is expected to reach $2.9 billion by 2025, growth at 23.2 per cent CAGR, the report said.
The sector has seen increased interest in the wake of the COVID-19 pandemic, which has disrupted food supply chains and production globally. Within land-starved Singapore, the government was already pursuing a “30 by 30” policy of having the city-state produce 30 per cent of its own food by 2030, up from around 10 per cent currently. That policy got an extra boost in the wake of recent disruptions.
John Vaske, head of agribusiness at Temasek, said investments in companies such as Unfold were aimed at supporting sustainable production.
“The global food challenges we increasingly face require us to rethink traditional farming practices. We need to ensure secure farm-to-fork supply chains in urban settings while we also work to reduce the overall environmental impact of farming,” Vaske said in the statement.
“Reducing food waste and improving the safety, traceability and nutritional value of food are all the more important as populations grow,” VAske added.
Purcell said the seed profiles sourced from Bayer will not include seeds for genetically modified crops (GMO), as those are more useful for conventional farming, while modern breeding techniques, such as gene editing, are better suited for vertical farms’ environments.
In 2018, Temasek acquired a 3.6 per cent stake in Bayer for around 3 billion euros, funds the German pharmaceutical player used toward its takeover of seed producer Monsanto. That deal brought Temasek’s stake in Bayer to around 4 per cent.
Editor’s note: This article has been updated with additional comments from Unfold CEO John Purcell and Juergen Eckhardt, head of Leaps by Bayer.