Funding Outlook: How to Approach CEA Financing in 2025
March 18, 2025 Govert Barbas of the Dutch-based Rabobank (the world’s largest food and agriculture bank) took notice that the overriding vibe during Indoor Ag-Con in Las Vegas last week was optimistic. “The message I’ve been hearing the last two days is that [controlled environment agriculture is] through the trough and we are now climbing up,” he said during a panel session at the show. “So let’s start gathering our forces and investing again.”
As managing director, sponsor coverage, for Rabobank, Barbas counts CEA as one of his key sectors. During the session “Funding Growth: Navigating Investments in CEA,” Barbas mentioned that he speaks to active and potential CEA investors on a daily basis.
Unfortunately, he said, industry optimism isn’t as widespread as those in the audience might have hoped, particularly with equity investors. “My clients didn’t get that message just yet,” he said. “Hopefully, they will soon, but we first have to show some results. Let’s get a couple of quarters of results in, and get the interest rates down, and then I’m sure the investors will come back in.”
Equity, Debt, and Strategies to Get a CEA Business Going
CEA funding options in North America have gone through tremendous upheaval in recent years, a situation that isn’t getting any calmer under the new Trump administration. The session panelists—Barbas was joined by Anton Bellot, director of agribusiness and the agri-food sector for ATB Financial in Alberta, Canada, and Jed Lynch, CFO of vertical grower 80 Acres Farms, Hamilton, Ohio—addressed some ways growers could approach financing in the current climate.
A lot depends on where you are in your journey, said Lynch, and what kind of capital you’re trying to raise. 80 Acres is a fairly late-stage business with a profitable commercial farm, he said, and so could point to positive unit economics when it recently raised $110 million of capital.
But earlier on, Lynch said, 80 Acres took whatever proof points they had to build their story and de-risk investments.
“Every step of the way, we’ve said, ‘This is what we’re raising capital for, this is what we plan to accomplish in the next 12 months, and here’s some evidence that should give you confidence that we’ll be able to do it,’” he said. “You have to lead the horse to water.”
ATB Financial’s Bellot spoke to the question of debt and when growers should take it on—and when they shouldn’t.
“When you’re early stage, if you have something that’s 100% certain to be cash-flow positive, that’s not a bad time to take debt,” he said. “We had a CEA operation up in Canada that was break-even, but then the contract with one of our bigger retailers was going to make them positive. That was a good example for taking debt rather than raising equity.
“But if you’re still in the proving-out stage, where there might be some cash burns or it might be a year or two before you end up turning a net profit—that’s a hard situation to put debt in,” he continued. “Yes, it is cheaper, but in the event that something doesn’t go to plan, debt can put up a lot of barriers and make it difficult to carry on the operations.”
On the construction side of a project, Bellot said, it’s likely you’ll have a mix of debt and equity. “For hard costs, there’s certain leverage we can take on equipment, greenhouse structures, etc. But there’s going to be some soft cost associated with that as well, and that’s where we’ll probably work with some of our partners to determine the optimal capital structure.”
The Path Forward
Bellot said he reads approximately 150 business plans per month, and he urged CEA companies to provide (1) a full picture of their management team and (2) a section covering risk management. “The risk is not zero, so just call it out,” he said. “What’s the growing risk? How are you going to handle it if disease comes to the farm? What if you can’t find the right labor?”
And then: “Brag about yourself. When you’re trying to raise capital—whether it’s equity or debt—at the end of the day, are you the right person? Or are you just the same story that the market’s been seeing?”
Lynch from 80 Acres added that perseverance is important. “You’re going to get a lot of no’s,” he said, “but you have to stay positive and energized for every conversation because you just don’t know who it’s going to resonate with.
“And I think a lot of investors are testing companies on their resolve. They know you’ll face hard times and they want to make sure they back a team that will push through that and stay passionate,” he said.