For a company that started out as a way for two researchers from the King Abdullah University of Science and Technology, or Kaust, to apply their research, Red Sea Farms has come a long way.
Earlier this month, the Saudi Arabia-based agriculture technology start-up raised a total of $16 million from an enviable roster of investors. But ask its chief executive Ryan Lefers and he admits that it was not always easy for him and his co-founder Mark Tester to approach investors with their basic premise – to use salt water in agriculture.
“The idea that we could utilise salt water in an agriculture system is compelling. I think people were compelled by the idea, but it was also [I need to] see it to believe it [response], which is also fine and understandable,” says Mr Lefers, an agricultural scientist.
“We have had to raise our own funding to build our own facilities to show and demonstrate our technology.”
Their efforts did not go to waste and interest in their work has grown rapidly over the past year as Red Sea Farms has begun to deliver agricultural produce.
What Red Sea Farms is offering, through use of salt water to grow crops or through reducing freshwater usage in irrigation, could be invaluable for the Gulf countries that are investing heavily in food security and developing an agriculture sector in a largely arid climate. Agriculture accounts for the bulk of water use in these countries.
While farming is challenging in a hot and humid climate, recent advances in AgTech have opened new avenues of possibilities for the region.
AgTechs like Red Sea Farms are a way for these countries to reduce their reliance on food imports at a time when global food supply chain risks persist. Currently, GCC countries meet about 85 per cent of their food needs through imports, according to the consultancy Strategy&.
While food security is part of its DNA, Mr Lefers says the start-up also wants to make farming more sustainable.
For example, much of the water used for irrigation is desalinated in the region – a process that has a high energy footprint, Mr Lefers points out.
“In a region where most desalination is still powered by fossil fuels, it really begs the question if this is the right thing to do,” Mr Lefers says.
“Food, water and energy is a nexus and the idea behind the start-up is to break it, so to speak, so food is not dependent on limited fresh water or fossil fuel resources.
“And so with Red Sea farms, what we have tried to do around breaking that food, water energy nexus is to create low energy, low freshwater systems,” Mr Lefers adds.
Red Sea Farms uses mainly salt water to cool greenhouses and irrigate crops, reducing fresh water and energy requirements by up to tenfold. Mr Lefers claims that the use of fresh water could be reduced by 80 per cent to 90 per cent in greenhouses with its technology.
The company also uses passive cooling methods, such as infrared blocking films on the greenhouse surfaces to prevent them from heating up.
The company is also researching the saltwater tolerance that certain plants have, which may lead to completely skipping desalination within irrigation, Mr Lefers says.
“We can use certain types of salt water directly on the crops that were growing and then avoid the desalination. This is where we are trying to avoid using fresh water and fossil fuel energy as much as possible.”
In some cases, the use of salt water could also enhance the taste of vegetables.
“With a cherry tomato, or a snack tomato, when you irrigate with some salt water, it actually makes that snack tomato a bit sweeter … and a little bit crunchy,” Mr Lefers says.
Although commercial farming is not an area of focus for Red Sea Farms, it operates a few greenhouses where it produces 15 types of crops, including cherry tomatoes, snack cucumbers and snack peppers, among others. The start-up also does niche consulting but the focus will primarily remain on technology development, its founders say.
Mr Lefers was drawn to Saudi Arabia while looking for suitable universities to study for a doctorate. The kingdom in many ways offered an ideal environment to test out some of the challenges that the scientist had set out to address.
“When I was working as a consulting engineer, I was really driven about wanting to contribute to this global challenge of how we can feed people of the world in a way that serves them but also serves the planet.
“I thought, what better place to do my actual research than in a place where there is very limited fresh water and where that energy that's driving the desalination process is largely from fossil fuels,” he says.
After a few years at Kaust, where the co-founders met, they accumulated enough research material to build viable AgTech solutions. To team up with each other was an easy choice since they had complementary expertise: Mr Tester was an expert in plant science while Mr Lefers’ experience as an environmental scientist came in handy in developing technological solutions.
Initially, they bootstrapped their venture, with Mr Tester using his savings to get them off the ground. As they progressed, the pair received backing from Kaust and Riyadh-based Research Products Development Company.
Red Sea Farms got a further vote of confidence when the Future Investment Initiative Institute – a think tank and foundation set up as a non-profit body to support companies addressing pressing global problems – backed it up.
That opened up access to other investors and the AgTech start-up caught the eye of Saudi Aramco’s entrepreneurship arm Wa'ed, which along with Kaust, UAE-based venture capital group Global Ventures, FII Institute, US-based AgTech company AppHarvest and venture investment company Bonaventure, invested in its pre-series A funding round.
“Having the world’s largest company among your investors is a good selling point,” Mr Lefers says.
Now armed with enough cash, Mr Lefers and Mr Tester are looking to expand their reach.
The investment “is going to enable us to go [from] coast to coast in the Arabian Peninsula. So we started near Jeddah, now we've taken on operations in Riyadh and we're also putting in some operations on the east coast”, the chief executive says.
Red Sea Farms is also looking to enter the UAE and is conducting some field tests in Egypt to assess the feasibility of its technology. And the company is setting its sights in the US, a market where AgTech is booming currently.
The start-up, which is planning to go for its series A round of funding next year, is developing new technology solutions. However, these are still at an early stage, Mr Lefers says.
Q&A with Ryan Lefers, chief executive of Red Sea Farms
What skills have you learnt from setting up Red Sea Farms?
I think there are a number of skills that were learnt and enhanced. I learnt a lot about the investment world. Certainly a lot about hiring and recruitment and a lot about plant science. I think my business skills have gotten better. I like to think I am getting better at communicating to a general audience instead of a scientific audience.
What would you do differently if you have to start over?
There’s not much I would have changed, but I would have adjusted my mindset a bit. There were times I thought we might not make it but we made it. But if I had known, I would have said it is harder than you think.
Was re-education required and did both co-founders have to learn how to handle the business aspects of the venture?
We've learnt so much and I think that's something both of us actually cherish. I think both of us really enjoy learning and we enjoy these new challenges. I've developed so much over the last three and a half years through this journey of Red Sea Farms and what I've learnt and the type of conversations I'm able to have now in the business world, and in the finance world, I would have not been able to have before.
Will you list your company eventually?
We would certainly consider it. It comes down to the impact. We started Red Sea Farms for the impact to deliver our technology for the benefit of the world. If listing helps us reach that goal we would go for it. If listing will inhibit or distract it in some way then we wouldn’t. We will see how the business looks when we get to that point.
Name: Red Sea Farms
Year started: 2018
Based: Saudi Arabia
Amount raised: $18m
Investors: Kaust, the FII Institute, the Research Products Development Company, Wa'ed, Global Ventures, AppHarvest and Bonaventure