A migrant worker passes rows of tomato plants growing in a smart greenhouse at Pure Harvest Smart Farms in Nahil, UAE, on May 20, 2020.
Christopher Pike | Bloomberg | Getty Images
An Abu Dhabi-based agricultural technology company announced it had secured $ 60 million in funding to expand its operations in the Middle East, but said it has been an upward task to try to raise capital.
Pure Harvest Smart Farms grows fruits and vegetables in greenhouses in the UAE desert and has partnerships to do the same in Saudi Arabia and Kuwait.
The harsh climate in the Middle East makes countries in the region highly dependent on food imports, and last year’s Covid-19 pandemic highlighted food security risks.
“Our pilot in the desert … showed very promising results: the potential for local production throughout the year with a very high quality and a very good cost structure,” he told Capital Connection on Monday. of CNBC, CEO and co-founder Sky Kurtz. The start-up will use the capital to build the beach head in Saudi Arabia, he added.
It also plans to expand its product portfolio.
The company raised $ 50 million through Islamic bonds, also known as sukuk, which are debt instruments that comply with Shariah law. Kurtz said it was “fairly new” since the region does not have a significant risk debt market.
The issue was led by Shuaa Capital and fits Pure Harvest’s long-term needs for an “aggressive capex program,” as well as its fast-growing character, Kurtz said.
Separately, Sancta Capital led a round of equity fundraising in January that raised another $ 10 million, with the participation of new and existing investors.
“Relatively underfunded”
Despite its success in raising capital, Kurtz said Pure Harvest has garnered less funding compared to agricultural technology companies in the US and Asia. He said the risk market in the Middle East is less developed.
“They’re maturing fast,” but “it’s still a relatively nascent market,” he said.
Kurtz acknowledged that having raised $ 200 million in capital in the Serie A stage is “extremely large” both regionally and globally.
“However, in an industry like ours, which requires extremely high capital, we are still relatively underfunded,” he said.
He pointed to companies such as the vertical agricultural firm Plenty in the United States, which has raised more than $ 500 million, according to Crunchbase.
“A lot of these companies have gotten a lot more capital than we have, but it’s true that our market need is great,” Kurtz said. “We basically import 80% to 90% of the fresh fruits and vegetables from this region.”
He added that Pure Harvest’s capital has been obtained from all over the world and that “we have had to fight” for it as it is more difficult to attract venture capital to the Middle East.
“However, I think that is changing quickly and obviously we are very grateful to the partners we have,” he said.