In a dark and quiet facility, several acres of Bowery leafy greens are slowly rotting.
The collapse of Bowery Farming, a once high-flying vertical farming startup, was so sudden that trucks were still arriving at Bowery’s indoor farm facility in Bethlehem, Pa., to pick up produce after its nutrient and irrigation systems had been switched off for good.
Bowery’s CEO, Irving Fain, had broken the news of the shutdown to employees less than 48 hours earlier.
PitchBook spoke to multiple former employees at Bowery who explained how a lofty mission to make agriculture more sustainable was cut short by the punishing economics of food and a vulnerability to pathogens.
Fain and Bowery did not respond to PitchBook’s requests for comment.
Sowing the seeds
Founded in 2015, Bowery Farming was, according to Fain in a 2022 Bloomberg Quicktakes video, “not just reinventing farming—we’re actually reinventing the entire supply chain.”
The opportunity was alluring: Bowery has said that its indoor farms were over 100 times more productive than a square foot of traditional farmland and used 95% less water.
Bowery’s vision of a reimagined food chain captured the attention of moonshot-hunting VCs and celebrity chefs alike. Even A-listers—actor Natalie Portman, singer-songwriter Justin Timberlake and Formula One driver Lewis Hamilton—put money into Bowery. Hamilton and Portman, both vegan and vocal on environmental issues, were sold on Bowery’s promise to mitigate the climate crisis.
“Getting the opportunity to be a part of it was a no-brainer,” said Bowery adviser and investor José Andrés, chef and founder of World Central Kitchen, in the video. “Bowery is pushing the boundaries of, how do we maximize technology?”
Bowery had the feel of a buzzy, hip consumer brand: a sleek digital marketing presence and partnerships ranging from salad chain Sweetgreen to the Nature Conservancy. In its early years, the farming network had no trouble raising funding from prominent VC investors like General Catalyst, GV and Singapore sovereign wealth fund Temasek.
The peak came in 2021. Bowery made headlines with its $300 million Series C round led by Fidelity. The deal valued the indoor farms network at $2.3 billion—the highest valuation ever for an indoor farms startup.
Around the same time, Bowery took out a $150 million debt facility. With low interest rates, money was cheap, and startups like Bowery could afford to burn cash.
Bowery was spending heavily on research and development, and even acquired a strawberry-picking robotics company in early 2022. But Bowery was always running at a loss.
Its leafy greens and herbs were pesticide-free and came with the tagline, “absurdly flavorful"—but they also cost substantially more.
In 2024, Bowery’s spring mix retailed for nearly $16 per pound at Whole Foods Market—compared to $6 per pound for the Whole Foods brand. Even Bowery’s closest indoor farming competitor, Gotham Greens, was nearly $2 cheaper per pound.
At some point in its growth, the company tapped into one market that was very happy to pay Bowery’s premium: kosher food consumers.
By growing greens in a controlled environment, Bowery could prevent insects that would violate kosher standards. Kayco, the leading kosher food distributor in the US, would eventually become Bowery’s biggest retail customer by total volume, according to three former Bowery employees. Bowery developed a line of produce, Bowery Mehadrin, which adhered to strict standards and was Orthodox Union Kosher-certified.
But the closed-loop environment that was a key element to Bowery’s success would also spell its downfall.
A pathogen hits
In May 2023, a Bowery farm was hit by a pathogen: phytophthora, or plant-damaging microorganisms, which wiped out huge amounts of Bowery’s produce and spread to its other facility, according to multiple former employees.
Bowery invested heavily in modifying systems to isolate the phytophthora, by building separate irrigation systems in individual grow towers. But even then, “we couldn’t get a handle on it,” said one Bowery farmer. The company was unable to sell any of the produce that had been exposed to the phytophthora.
“When all of an indoor farm’s water systems are integrated, it makes it easy for a pathogen to spread and impossible to remove,” said PitchBook agtech analyst Alex Frederick.
Bowery’s revenue began to decline toward the end of 2023. The company was continuously trying to fundraise from VCs—it secured $94 million in October out of its Series D target of $220 million. But investors had turned sour on the indoor farming opportunity.
Fidelity marked down its position in Bowery by more than 85% in late 2023, around two years after leading the company’s mega-round. Then, credit specialist FS KKR raised doubts about Bowery’s ability to make its loan payments.
To reduce its cash burn, Bowery made several rounds of layoffs beginning in 2023. It also held off opening two new facilities, in Texas and Georgia, that had been previously announced.
But cost-cutting—a strategy that hundreds of other startups took when VC fundraising slowed down in 2022—weren’t enough to save the business.
Its depressed yield, caused by the pathogen, permanently marred the company’s relationship with grocery distributors. Bowery couldn’t get supply back up to pre-pathogen levels, so distributors weren’t receiving the volume of produce that they had ordered.
Albertsons, which sold Bowery’s packaged salads and basil in its mid-Atlantic stores, stopped placing orders with Bowery in early 2024—a huge blow to the grower, according to the three former employees.
By the end of summer 2024, Whole Foods Market had also halted its partnership with Bowery, the former employees said.
Representatives for Albertsons and Whole Foods did not comment on their distribution deals.
Sustainable indoor farming was always an ambitious goal, as scaling indoor farms requires immense capital expenditure on both energy and infrastructure.
In 2023, VC-backed vertical farm AeroFarms and Kentucky-based AppHarvest both went bankrupt.
Venture capitalists have dramatically cut back on investing in agtech, including indoor farming. In 2021, the sector’s peak, indoor farming startups raised $2.9 billion from VCs. In the first three quarters of 2024, indoor farms have raised just $329 million, according to PitchBook’s Q3 2024 AgTech Report.
For Bowery, once suppliers started cutting off their relationships, it proved impossible to bounce back, despite some employees remaining hopeful of Bowery’s recovery. Rumors swirled of merger talks that could save the company, but nothing materialized.
When Fain called an all-hands Zoom meeting with employees on Wednesday, Oct. 30, some thought it was to announce such a deal. Instead, Fain told employees that all operations would cease by Friday.
Fain had attempted to secure a “business combination” to keep Bowery alive, according to a letter sent to employees and viewed by PitchBook, but it was ultimately unsuccessful.
Over 180 farmers at Bowery’s facilities in Bethlehem and Nottingham, Md., were laid off, according to public filings, along with staff at Bowery’s corporate headquarters in New York.
Bowery sold VCs, celebrities and employees on its vision to revolutionize how farmers grow the produce the world eats.
But turning that vision into a reality proved untenable. In the end, Bowery’s collapse is a quintessential tale of VCs flooding into a space to disrupt a centuries-old industry—only to find that’s often easier said than done.
Featured image of lettuce growing in a Bowery facility in Maryland by Andrew Caballero-Reynolds/Getty Images
