Speaker 1: This is Bloomberg Business Week with Carol Messer from Bloomberg Radio. Well,
Speaker 1: just yesterday the indoor agg and tech company Gotham Green's.
Speaker 1: They announced a new equity and debt capital raise some
Speaker 1: eighty seven million. So let's find out what they're up
Speaker 1: to and what their growth plans are and how the
Speaker 1: pandemic has really been impacting them. Great to be talking
Speaker 1: once again with Vage Pury. He's co founder and CE
Speaker 1: of Gotham Green's Full transparency. I've reported on them from
Speaker 1: Bloomberg TV and Bloomberg Radio audiences. I am a satisfied
Speaker 1: customer also, and Varage joins us on the phone in Brooklyn. Verage.
Speaker 1: Nice to have you back. Great to be back, Carrol.
Speaker 1: How are you. I'm doing really well. Um. I do
Speaker 1: want to talk about the the equity and debt rays
Speaker 1: in just a moment, but tell me about how you
Speaker 1: are doing and what life has been like under COVID.
Speaker 1: It's been a whirlwind year, no doubt, as it has
Speaker 1: been for many many people, if not everybody, but doing well.
Speaker 1: Keeping healthy, keeping keeping our staff are team members around
Speaker 1: the country, almost four hundred of them. Healthy and safe
Speaker 1: has been really our top priority and We've been able
Speaker 1: to keep our business fully operational, and for that, I
Speaker 1: am extremely grateful. We are fortunate to be in the
Speaker 1: food system. We are fortunate to be UM considered essential employees,
Speaker 1: and we work hard to keep our supermarket customers fresh
Speaker 1: with stock, healthy, fresh produce. What was the toughest part
Speaker 1: of staying fully operational during the pandemic, So look, we
Speaker 1: we saw the writing on the wall. Our team put
Speaker 1: a crisis management plan into place in early February, so
Speaker 1: we worked really hard to secure our supply chain, work
Speaker 1: on shifting our shift schedules around so we could enforce
Speaker 1: more social distancing, and and even sort of got on
Speaker 1: the temperature checks and things a little bit early on.
Speaker 1: So I feel incredibly fortunate that we were able to
Speaker 1: do that, and we've certainly had to modify how we
Speaker 1: run our facilities. But very early on god confirmation from
Speaker 1: the federal government UM that that we would in fact
Speaker 1: be considered an essential industry, So we informed our employees
Speaker 1: that we could stay operational, and literally the day that
Speaker 1: the pandemic was declared, we received a surge in in
Speaker 1: request from our supermarket customers to run extra trucks on
Speaker 1: the road and deliver more product. Uh, you know, since
Speaker 1: there was such a run on grocery store, So it
Speaker 1: really provided us with an opportunity to really improve our
Speaker 1: value proposition and the supply chain. You know, the supply
Speaker 1: chain is so reliant on California, the centralized production there,
Speaker 1: and we were able to really serve our customers. Well, yeah,
Speaker 1: that's pretty remarkable because you know, it's all been about
Speaker 1: supply chains. What what about what you learned during the pandemic,
Speaker 1: especially with this new you know, debt and cap you know,
Speaker 1: equity rays. I do wonder about there strategies that you
Speaker 1: were thinking about implementing. And I've seen you know, your
Speaker 1: greenhouses out there in Brooklyn. I mean it's pretty remarkable.
Speaker 1: It's very high tech. But there were strategies verage that
Speaker 1: you were thinking about putting in place, but taking your time,
Speaker 1: and all of a sudden you're like, okay, we're all
Speaker 1: in on this. Because speaking growth strategy and plan was
Speaker 1: already well in the works even prior to COVID, so
Speaker 1: in we almost doubled our capacity with new greenhouse facilities
Speaker 1: in Illinois, Maryland, Rhode Island, and Colorado. So we were
Speaker 1: able to really ramp up those facilities this year and
Speaker 1: double our growth year on year, and we already had
Speaker 1: a plan into place um to expand further further geographic
Speaker 1: market expansion within the US two. So this funding is
Speaker 1: going to enable us to do that while continuing to
Speaker 1: build operational capacity and just build our brand and continue
Speaker 1: to be a leader in this in this segment, in
Speaker 1: this category. To be fair, did you have to put
Speaker 1: some plans on hold because you were just making sure
Speaker 1: that your employees were, say, if your teams were safe,
Speaker 1: and that you were meeting all of that increased demand
Speaker 1: by your supermarket customers. Certainly we uh for for for
Speaker 1: a couple of months there in the spring. We were
Speaker 1: just focused on exactly that and didn't focus as much
Speaker 1: on on sort of the new site development and land acquisition,
Speaker 1: and so we certainly held our breath for a little bit.
Speaker 1: But then as as things stabilized a little bit in
Speaker 1: the summer, we um we we double down on those efforts.
Speaker 1: It really sounds like you guys have really been kind
Speaker 1: of in warp speed, if you will, so, tell me
Speaker 1: about the visibility you feel like you have in and
Speaker 1: how you see the year playing out as a as
Speaker 1: a CEO of someone who's running a company. How confident
Speaker 1: do you feel about the outlook given this sector that
Speaker 1: we're in, which is fresh food production. I think the
Speaker 1: outlook looks bright. I think the future is right for
Speaker 1: our company, but also for our sector as a whole.
Speaker 1: I think the pandemic has really revealed a lot of
Speaker 1: should I say, sort of risks in the supply chain, right,
Speaker 1: and our entire model is built upon decentralizing the supply
Speaker 1: chain of highly perishable fresh produce and growing it in
Speaker 1: closer proximity to large supermarket retailers and institutional food service operators.
Speaker 1: So I from the B two B side, the outlook
Speaker 1: is strong. You know, there's a lot of headwinds in
Speaker 1: the incumbent supply chain, whether it's water related issues out west,
Speaker 1: whether it's climate related issues, the wildfires, farm labor issues.
Speaker 1: So I really do think that more and more fresh
Speaker 1: produce is going to be grown indoors. And then I
Speaker 1: think from the consumer standpoint, consumers are cooking at home
Speaker 1: a lot more. Although there are obviously all of us
Speaker 1: are anxious to get back into restaurants and being out again,
Speaker 1: people are cooking more at home and they want better
Speaker 1: quality ingredients, and they care more about where their produce
Speaker 1: is grown and is it hygienic, is it clean? Is
Speaker 1: it um sustainably grown? So I do think on balance,
Speaker 1: the prospects are certainly very promising. Listen. I think that's
Speaker 1: a really important aspect of its sustainability. I mean, talking
Speaker 1: with a lot of senior executives people running companies, I mean,
Speaker 1: this is what consumers want, This is what brands need
Speaker 1: to stand for. And I do think agg is one
Speaker 1: of those areas when we talk about the climate and
Speaker 1: water usage, that's a big deal. And and I'm curious
Speaker 1: you know what you're seeing in that area, and and
Speaker 1: the role that Gotham Green's can play and all of that. Absolutely.
Speaker 1: I mean, agriculture, like you're alluding to, is a huge
Speaker 1: consumer of natural resources, right, So it's the largest consumer
Speaker 1: of land on the planet. It's the largest consumer of
Speaker 1: fresh water in the planet, so around seventy of fresh
Speaker 1: water withdrawals go towards agriculture and farming. Um. It's the
Speaker 1: largest cause of global water pollution, It contributes of global
Speaker 1: carbon emissions. You know, the list goes on. So if
Speaker 1: we're really serious about sustainability and climate change, we need
Speaker 1: to be looking at AGG, and we're seeing a lot
Speaker 1: of innovation. We're seeing a lot of investment in research
Speaker 1: and development all throughout the AGG supply chain, from the
Speaker 1: tech side to the distribution side, to actual farming techniques,
Speaker 1: the use of big data. So we play a role
Speaker 1: within that in our form of farming specifically, which is
Speaker 1: broadly known as controlled environment agriculture, allows us to farm
Speaker 1: using land a lot more efficiently. So what we can
Speaker 1: grow in one acre require thirty acres out in the field, right,
Speaker 1: So we're much more land efficient, we use less water
Speaker 1: than conventional farming, and by growing the product in much
Speaker 1: closer proximity to the marketplace, we don't have to shift
Speaker 1: the product, you know, great distances, so there's less sort
Speaker 1: of fuel consumption and associated emissions, as well as less
Speaker 1: waste um. Less fresh produce gets thrown away this way.
Speaker 1: So yeah, I mean, look, we're not sort of saving
Speaker 1: the entire agricultural system by any means, but I definitely
Speaker 1: think we're playing a role in consumers are increasingly interested
Speaker 1: and want to spend their dollars with companies that that
Speaker 1: are rooted in those kinds of values. I was going
Speaker 1: to challenge you, why not say the whole agg system farage,
Speaker 1: because you know, I remember our conversation and it's been
Speaker 1: a few years, um when you guys, you know, when
Speaker 1: I was out there in Brooklyn with you a top
Speaker 1: the whole foods. But I do wonder, you know, I
Speaker 1: think we talked about kind of bigger, broader picture that
Speaker 1: could we ultimately should we ultimately see where we are
Speaker 1: really utilizing, especially in urban spaces. Why not use our
Speaker 1: rooftops to create farming and make it much more local
Speaker 1: and accessible for everyone and fresh produce for everyone. Yes, absolutely,
Speaker 1: we've seen a surge in interest in urban farming, whether
Speaker 1: it's on a commercial scale like what we're doing, or
Speaker 1: whether just folks are doing in their communities, on their
Speaker 1: in their kitchens, on their fire escapes. Right. And you're
Speaker 1: seeing a surge of interest in farming in school classrooms
Speaker 1: and um, you know, even prior to the pandemic. Right.
Speaker 1: So I think there is this growing consumer interest in
Speaker 1: in in growing food again, which I think is fantastic.
Speaker 1: I think to do things on a commercial scale and
Speaker 1: really make a dent in the meaningful dent in the
Speaker 1: overall supply chain. Um, these types of facilities have to
Speaker 1: be considerably larger to get the economies of scale. So
Speaker 1: we've sort of graduated, if you will, from these kind
Speaker 1: of smaller rooftop greenhouses to considerably larger facilities that are
Speaker 1: just on the edges of city. So our facility in
Speaker 1: Chicago hundred and fifty thousand square feet is within the
Speaker 1: city limits, but it's just on the edge of the city.
Speaker 1: Similar in Baltimore. So, um, yeah, we we're just scaling
Speaker 1: up a lot. This is like a total addressable market
Speaker 1: just in the categories we play. Like greens around fifteen
Speaker 1: billion dollars. The current category of indoor production is maybe
Speaker 1: one per cent of that fifteen billion, So there's enormous
Speaker 1: white space. Wow, exactly. All right, So listen, you said
Speaker 1: you've doubled capacity in the past twelve months, right, and
Speaker 1: you're still opening up new greenhouses. What do you expect
Speaker 1: to double capacity in one again? Close to it. I mean,
Speaker 1: we double capacity in the last year, We've doubled our
Speaker 1: revenue this year, um increased our unit sales by and
Speaker 1: over the next year we expect to keep up that
Speaker 1: level of growth, though some of the actual capacity increases
Speaker 1: will probably common early. What's what's the biggest challenge for
Speaker 1: you as you grow. It's uh, it's it's a capital
Speaker 1: intensive business. We have to secure land sites, we have
Speaker 1: to develop our own facilities, so we're building them from scratch.
Speaker 1: It's a highly specialized type of building, right. It's not
Speaker 1: a type of real estate asset class that we can
Speaker 1: just you know, call up a broker and and find something. Right.
Speaker 1: We actually have to build it from scratch, so it
Speaker 1: takes some it takes some time to build the facilities,
Speaker 1: and uh that's you know. So I think our biggest
Speaker 1: challenges is just getting getting the capacity built test enough
Speaker 1: because the market demand is certainly there. Hey wee last question,
Speaker 1: enough money out there in uh the capital markets or
Speaker 1: private markets that you guys can continue to stay a
Speaker 1: privately owned entity. Is that the goal for some time
Speaker 1: or are you thinking about going public just quickly? That
Speaker 1: is the goal for the time being, where we don't
Speaker 1: see the need to raise money from the public markets.
Speaker 1: We have a lot of investors who have backed us
Speaker 1: from day one, and we've been able to get increasing
Speaker 1: project finance and des financing as well, which is you know,
Speaker 1: on very attractive terms. So I think for the time
Speaker 1: being we're looking at the same private but all options
Speaker 1: are on the table as we grow. Well, let's send
Speaker 1: great to check in with you and please keep us
Speaker 1: up to date you on some of your new future
Speaker 1: plans and or as things happen. I'd love to check
Speaker 1: in with you once again. Varage Puri, thank you so much.
Speaker 1: Co founder, chief executive officer of Gotham Green's joining us
Speaker 1: on the phone from Brooklyn. As I mentioned, they did
Speaker 1: UH do an eighty seven million new equity and debt
Speaker 1: capital raise that was just yesterday and talking about some
Speaker 1: of their growth plans going forward.