Growing crops in the desert may sound intriguing, but one such tech strat up company has proven that it can, and that too successfully. Pure Harvest Smart Farms grows fruits and vegetables in greenhouses in the United Arab Emirates desert, and has partnerships to do the same in Saudi Arabia and Kuwait. The Abu Dhabi-based agriculture technology start-up announced recently that it has secured $60 million in funding to expand its Middle East operations, but said it was not easy to raise capital.
The arid and harsh Middle East climate makes countries in the region heavily reliant on food imports, and the Covid-19 pandemic last year brought food security risks to light. According to the CEO and Co-founder Sky Kurtz their pilot in the desert, showed very promising results, and the potential for year-round local production at a very high quality and good cost structure. The start-up will use the capital to build its beachhead in Saudi Arabia, he added. It also has plans to expand its portfolio of produce.
The company raised $50 million via Islamic bonds, also known as sukuk, which are debt instruments that comply with Shariah law. Kurtz said it was “quite novel” given that the region doesn’t have a significant venture debt market. The issuance was led by Shuaa Capital and accommodates Pure Harvest’s longer-term needs for an “aggressive capex program” as well as its fast-growing nature, according to Kurtz. Separately, Sancta Capital led a equity fundraising round in January that raised another $10 million, with participation from new and existing investors.
Despite its success in raising capital, Kurtz said Pure Harvest has secured less funding compared to agriculture tech companies in the U.S. and Asia. That’s because the Middle East venture market is less developed, he said.
They are “maturing quickly,” but it is “still a relatively nascent market,” Kurtz said. He acknowledged that having raised $200 million in capital at Series A stage is “extremely large” both regionally and globally. “However, in an industry like ours – it’s extremely capital intensive – we are still relatively underfunded,” he said.
He pointed to businesses such as vertical farming firm Plenty in the U.S., which has raised more than $500 million, according to Crunchbase. He admits that the Arab world’s need is great since the countries import 80 to 90 per cent of the fresh fruits and vegetables in this region.