Saudi Arabian agriculture technology start-up Red Sea Farms said it raised $16 million as it closed its latest funding round, exceeding its initial target of $10m, to accelerate its growth in the kingdom and across the Middle East, as it focuses on sustainable food production in the arid region.
Investors from the US, UAE and Saudi Arabia – including Aramco entrepreneurship arm Wa'ed – participated in the oversubscribed pre-series A investment round in Red Sea Farms, the start-up said in a statement on Sunday.
“We look forward to working closely with our investors and our Red Sea Farms team to accelerate plans to roll out our technology in Saudi, the Middle East and North America,” Ryan Lefers, chief executive of Red Sea Farms, said.
Red Sea Farms uses mainly salt water to cool greenhouses and irrigate crops, reducing the fresh water and energy requirements by up to 10-fold, according to its website. Established in 2018, it mainly grows organic tomatoes in environment-controlled farms at a number of locations in Saudi Arabia, including Mishkat, Jaww and Thuwal.
Sustainable farming is a priority for countries in the region with arid climates to improve food security, with governments partnering with the private sector to develop new agricultural technologies.
Red Sea Farms received an initial $10m investment from Aramco's Wa’ed venture, the Saudi government-owned Future Investment Initiative, King Abdullah University of Science and Technology (Kaust) and the UAE-based venture capital group Global Ventures, according to the statement.
US-based AgriTech firm AppHarvest and investment firm Bonaventure contributed the remaining $6m in the funding round.
AppHarvest, an applied technology company building indoor farms in Appalachia, is listed on the Nasdaq in the US. It combines traditional agricultural techniques with cutting-edge technology including artificial intelligence and robotics in sustainable farming methods.
Potential investors are already exploring opportunities to be part of Red Sea Farms’ next round of fundraising in 2022, the company said.
Investors are increasingly seeking opportunities in sustainable projects that contribute to UN Sustainable Development Goals, as well as meet environmental, sustainability and governance (ESG) principles as countries seek to rebuild greener economies in the wake of the Covid-19 pandemic.
Red Sea Farms, set up by Mr Lefers along with Mark Tester and Derya Baran, aims to reduce the use of fresh water in farming by 85 to 90 per cent. It is based at Kaust in Thuwal, 96 kilometres north of Jeddah.
Red Sea Farms is initially using its technology to grow and sell tomatoes in Saudi Arabia, but ultimately plans to sell entire growing systems to buyers around the world, it said in June.
In 2019, the company received a $1.9m investment from the Kaust Innovation Fund and Riyadh-based Research Products Development Company.
Other governments in the region are also supporting AgriTech companies. Last year, Abu Dhabi said it will offer more than Dh110m ($30m) in financial incentives to companies in the sector looking to set up operations in the emirate as part of its Dh50 billion Ghadan 21 accelerator initiative.