The market for locally sourced foods is growing at a tremendous rate and can be evidenced by the number of new farmer’s markets and CSA groups that come to be each year. Unfortunately, meeting the growing demand for local foods by these mechanisms faces abundant obstacles that root from the fact that it is supported by a great many producers that have heavy labor inputs and disjointed logistics. This results in costly local produce for the consumer with limited volumes at irregular consistency and variable quality.
Violet Acres is a forward thinking company with a vision to make locally grown produce more accessible for consumers in the Midwest by growing produce at a scale that it can be distributed through existing regional supply chains. This will be accomplished through the use of a controlled environment, automated, hydroponic greenhouse system. Our solution to meet the unmet demand for locally sourced produce will provide a year-round supply with highly predictable production, consistent quality, better shelf-life, and at the highest levels of food safety.
The company was formed by two agricultural engineering doctorate students from the University of Illinois with a conviction for advancing more sustainable agriculture practices through example and entrepreneurship. We believe that the hydroponic greenhouse technology provides a profitable solution that will enable increased production of high-quality food for our growing population with less impact to the environment and while enabling benefits for local economy and communities.
Our operational strategy hinges on partnerships with leaders in the industry that have decades of experience with global customers. We are working with a Dutch greenhouse builder, as the Dutch have pioneered the advancements of greenhouse technology, and to date, have the best design, construction, and support services. Further, the automated production equipment to be employed has been commercialized by a Finnish company that is owned by the largest greenhouse grower in Scandinavia and the Baltics and that has utilized the technology for more than 30 years. Thirdly, we will be located on the campus of one of the country’s largest dairy operations that is charged with a mission to educate the public about new-age, responsible farming practices; offering a unique agritourism destination within an hour from Chicago.
Our crop will consist of leafy green lettuce varieties and herbs in both a cut and living plant variety. Growing lettuces and herbs is well suited for distributed production in greenhouses across the country as this system can outperform the conventional field-based growers of the southwest. Growing lettuce with our system will use 90% less water, have no seasonal weather dependencies, and has much lower transportation costs and less handling/spoilage losses. With an automated growing system, we have the ability to support yields which exceed 50 times what can be achieved through conventional farming (on a per acre basis), while employing up to 15 people per 2.5 acre facility and having the ability to generate over $5M in annual revenue.
The cost into business for this project is approximately $9.3M. We anticipate using debt financing in the form of a guaranteed loan to comprise 80% of the required capital, leaving an equity requirement of $1.9M to be raised from outside investors. We are offering a 34% interest in our company for the needed equity, and a 30% annualized ROI paid out in 3 years on preferred stock for cash investment.
This project will be harvesting the first crop in the Winter of 2017. Growth of the business will be accomplished by expanding the first location from 2.5 acres to nearly 7 acres under roof within 7 years. This business will additionally be scaled through the development of multiple sites across the Midwest that efficiently penetrate new markets as well as through brand development and franchising