AMDP Memo Final

TO:     Clark Hansen, CEO, AMDP

FROM:     Kelly Chua, R&D, AMDP 

DATE:     July 9, 2021

SUBJECT: Investment Opportunity: Freight Farms 

As a member of the Research and Development team at Anima Mundi Development Partners (AMDP), I have identified a social enterprise in an evolving industry that we could invest in. Freight Farms provides hydroponic farming solutions in shipping containers to address the demand for fresher food and issues of food scarcity. In this memo, I will discuss the following:

• Standards for AMDP Investments
• Overview of Freight Farms 
• Freight Farms’ Market Reputation  
• My Final Recommendation 

Standards for AMDP Investments 

TRIPLE BOTTOM LINE

Instead of the standard bottom line — profit, we at AMDP consider the triple bottom line: 

• Profit: This is the standard bottom line; we consider the financial status of the company. We want to invest in a company that has growth potential. 
• People: We want to invest in a company that cares about its stakeholders — employees, consumers, suppliers, and the community. 
• Planet: Lastly, we consider companies that minimizes the negative effects to the environment and is environmentally responsible in general. (Kenton)

CORPORATE SOCIAL RESPONSIBILITY (CSR)

We also look into a company’s Corporate Social Responsibility (CSR). CSR initiatives aim to promote sustainable development by creating programs that benefit the society at large. Some examples include improving labor practices, volunteering in local charities, and reducing carbon emissions.  (You Matter)

SOCIAL ENTERPRISE

We are interested in social enterprises that conduct business with the primary goal of improving societal issues through its products, services, or business practices. (The Good Trade)

CARBON FOOTPRINT

We also consider the carbon footprint — the carbon and greenhouse gas emissions of the company. Carbon footprint is calculated by considering greenhouse gas emissions from business practices, transportation, raw materials, etc. To reduce carbon footprint, we first need to analyze what the major sources of greenhouse gases in the company are, then we try to avoid these materials or processes. One example is to reduce the use of transportation. (Albeck-Ripka)

Overview of Freight Farms 

BACKGROUND

Freight Farms manufactures and distributes container farms. Container farms contain hydroponics technology that can be utilized to plant anywhere and during any season. They connect their technology to an app where you can control the settings — lighting, water, and air. It was founded in 2010 and they have since distributed freight farms in places like Canada, the Middle East, and Sweden. They also provide resources on how local businesses can profit from this business model and how they can acquire financing. 

People

The BIPOC community’s access to fresh vegetables and fruits are limited due to systematic racism. Freight Farms is taking the first steps in making fresh food more accessible to anyone regardless of race, gender, and socio-economic status. They are publicizing resources that can help communities establish their own farms and acquire funding. They care about the community and are actively searching for ways to make crops more accessible to everyone.

Planet

According to Freight Farms, agriculture uses 70% of the world’s fresh water resources. It also pollutes other water resources with chemicals and pesticides used in farming. Through Freight Farms’ hydroponics solution, water circulates through a closed loop system. This means that plants are only given water they need and the rest is recycled. The loop system also prevents contamination of other water resources. 

Profit

Last year, Freight Farms raised $15 million in Series B funding resulting in a total funding of $28 million. Unfortunately, there aren’t publicized information regarding Freight Farms’ profits and their technology requires huge resources to develop. However, the container and vertical farm industry is certainly on the rise. Container farms can grow acres of crops in 40-foot long containers. It saves space and makes farming in urban cities possible. Moreover, hydroponics do not require pesticides, thus it appeals to health-conscious individuals who are interested in more organic goods. 

Freight Farms Reputation 

Robin Schatz, a contributor for Forbes and someone who has been following Freight Farms from the beginning, stated that the company is “growing steadily and adapting…to a changing environment.” In her article, she also cites  Heather Davis, the president and chief investment officer at Nuveen Private Markets, who was drawn to purchase her own freight farm because she regarded the company as one that is”very focused on the sustainability aspect and conversation of water.”

Vertical Farming Industry Reputation
The vertical/container farming industry is still relatively new, thus limited company-specific insights are made public. However, this industry has been studied by research institutes such as Grand View Research. According to Grand View Research’s report, the vertical farming industry is expected to grow exponentially from 2017 to 2028 as can be seen in the graph below. A major factor in this expected growth is the increasing demand for environmental-friendly production of crops because it is considered safer and healthier.  

My Recommendation

A closer inspection of finances are needed but with the trend for more vertical farming, Freight Farms is definitely a company we should consider investing in. With more investments, Freight Farms can develop new technology that can further transform farming technology. Freight Farms is currently the world’s largest container farm manufacturer. We can finance and support them to develop new technology that can keep the business competitive and make the company a leader in the industry. Vertical farming is the future and it’s important we get ahead of the trend. 

Works Cited

Albeck-Ripka, Livia. “How to Reduce Your Carbon Footprint.” The New York Times, The New York Times, www.nytimes.com/guides/year-of-living-better/how-to-reduce-your-carbon-footprint. 

Freight Farms. Freight Farms Raises $15 Million in Series B Funding Led by Ospraie Ag Science, 12 Feb. 2020, www.prnewswire.com/news-releases/freight-farms-raises-15-million-in-series-b-funding-led-by-ospraie-ag-science-301003364.html. 

The Good Trade. “What Is A Social Enterprise? A Simple Definition & 3 Examples.” The Good Trade, The Good Trade, 11 Jan. 2021, www.thegoodtrade.com/features/what-is-a-social-enterprise. 

Grand View Research. Vertical Farming Market Share Analysis Report, 2021-2028, Mar. 2021, www.grandviewresearch.com/industry-analysis/vertical-farming-market.

Kenton, Will. “Triple Bottom Line (TBL) Definition.” Investopedia, Investopedia, 6 July 2021, www.investopedia.com/terms/t/triple-bottom-line.asp. 

Schatz, Robin D. “How Freight Farms Plans To Grow Sales (And More Veggies) With Its Next-Gen Farm In A Box.” Forbes, Forbes Magazine, 26 Feb. 2019, www.forbes.com/sites/robindschatz/2019/02/26/how-freight-farms-plans-to-grow-sales-and-more-veggies-with-its-next-gen-farm-in-a-box/?sh=418d51d06d46. 

Shamritsky, Rebecca. “Agriculture Is the World's Greatest Water User & Polluter.” Freight Farms, Freight Farms, 5 Apr. 2021, www.freightfarms.com/blog/agriculture-water-usage-pollution. 

Shamritsky, Rebecca. “Our Promise for a More Inclusive Farming Future.” Freight Farms, Freight Farms, 10 Aug. 2020, www.freightfarms.com/blog/inclusivity-farming. 

You Matter. “CSR (Corporate Social Responsibility) Definition and Examples.” Youmatter, 3 Mar. 2020, youmatter.world/en/definition/csr-definition/.