Vertical Farming’s Paradox: Growth in Demand, Decline in Investment
March 24, 2025 The 2025 AgFunder Global AgriFoodTech Investment Report presents a complicated but revealing picture for controlled environment agriculture (CEA), including vertical farming.
Despite continued consumer interest in fresh, locally grown produce, investment in novel farming systems— which includes vertical farms—fell by 53% year over year in 2024.
The paradox is clear: While the market for CEA-grown leafy greens, berries, and herbs is growing, investors are stepping back, wary of high energy costs, scalability challenges, and unproven business models.
This investment slowdown is not a death sentence; it’s a course correction. The companies that succeed will be those that control costs, embrace automation, and align their models with real-world demand.
Let’s unpack what data from the 2025 AgFunder Report means for vertical farming.
Why Is Investment in Vertical Farming Declining?
The 2025 AgFunder Report highlights several reasons for the drop in funding for novel farming systems:
- Capital markets have shifted. Investors are prioritizing profitability over expansion, meaning vertical farms must prove their unit economics before securing new funding.
- Energy costs remain a major challenge. High electricity prices continue to make CEA financially difficult in many markets, especially for energy-intensive vertical farms.
- Failed ventures have increased skepticism. Bowery Farming, once one of the largest vertical farming operations in the U.S., shut down in late 2024 due to an unsustainable cost structure.
However, this doesn’t mean investors have abandoned vertical farming altogether. Instead, they are betting on businesses that can prove sustainable growth and cost efficiency.
Companies getting funded include: 80 Acres Farms, which raised $115 million and is expanding strategically; GoodLeaf Farms, a lean, profitable operation in Canada focusing on regional expansion; and other companies that are integrating renewables and automation to lower costs.
Technology and Energy Efficiency: The Key to Survival
The 2024 Global CEA Census reinforces AgFunder’s message: Cost-cutting through automation and energy efficiency is now the primary survival strategy for vertical farms.
Top technology priorities for CEA in 2025:
- Energy efficiency investments—Solar integration and next-gen LED lighting are becoming essential.
- Robotics and automation—Reducing labor costs through AI-driven seeding, monitoring, and harvesting.
- IoT and cloud-based controls—Real-time data tracking to optimize water, nutrients, and climate.
A prime example is Empire State Greenhouses (ESG), a new 385,000-square-foot vertical farm in New York that will be fully powered by renewable energy. ESG will use a circular energy model that generates power on-site, reducing one of vertical farming’s biggest expenses. (For more on this project, see the CEAg World Industry Report: Vertical Farming.)
Consumer Demand for CEA-Grown Produce Is Still Rising
While investment in vertical farming has slowed, consumer demand for CEA-grown leafy greens is increasing.
The CEA Census confirms that leafy greens remain the most cultivated crop in indoor farms, with 268 respondents growing them.
A major player in this space is Little Leaf Farms, which continues to expand its regional supply of CEA-grown leafy greens across the U.S.. The company is benefiting from growing consumer interest in pesticide-free, locally grown lettuce, while leveraging energy-efficient growing techniques to reduce costs.
Demand for CEA-grown leafy greens rising for a few reasons:
- Shorter supply chains: CEA-grown greens don’t rely on long-haul transportation, reducing spoilage.
- Food safety concerns: More recalls in traditional leafy greens are pushing consumers toward indoor-grown alternatives.
- Taste and freshness: Indoor-grown greens often have superior texture and shelf life.
- However, the key challenge remains: Can vertical farms produce at a cost that matches market expectations?
Lessons from Past Failures: What Not to Do in 2025
Recent high-profile failures like Bowery Farming have underscored what not to do in vertical farming:
- Overengineering without cost control: Some farms built expensive, complex systems without a clear profit model.
- Scaling too fast without market fit: Many startups expanded before proving unit economics, leading to cash burn and investor pullback.
- Ignoring energy costs: Electricity prices remain one of the biggest killers of vertical farming ventures.
Contrast that with Little Leaf Farms, GoodLeaf, and 80 Acres, which all focused on efficient production and gradual expansion.
The lesson? Survival depends on a laser focus on efficiency and market demand—not just technology hype.