A migrant worker walks past rows of tomato plants growing in a smart greenhouse at Pure Harvest Smart Farms in Nahil, United Arab Emirates on May 20, 2020.
Christopher Pike | Bloomberg | Getty Images
An agricultural technology company in Abu Dhabi, which announced that it had received $ 60 million in funding to expand its operations in the Middle East, but it was an uphill task to raise capital .
Pure Harvest Smart Farms grows fruits and vegetables in greenhouses in the desert of the United Arab Emirates and has partnerships to do the same in Saudi Arabia and Kuwait.
The harsh Middle Eastern climate is making countries in the region heavily dependent on food imports, and the Covid-19 pandemic has brought food security risks to the fore.
“Our pilot in the desert … has shown very promising results – the potential for local production throughout the year through a very high quality and at a very good cost structure,” Sky Kurtz, CEO and co-founder, told CNBC on Monday said “Capital Connection”. The company will use the capital to build the beachfront in Saudi Arabia, he added.
He also plans to expand his product portfolio.
The company raised $ 50 million through Islamic bonds, also known as sukuk, which are debt instruments that comply with sharia law. According to Kurtz, this is ‘very new’ because the region does not have a major market for venture debt.
The release was led by Shuaa Capital and meets Pure Harvest’s long-term needs for an ‘aggressive capex program’ as well as its fast-growing nature, Kurtz said.
Separately, Sancta Capital led a fundraising round in January that raised another $ 10 million, with the participation of new and existing investors.
‘Relatively underfunded’
Despite his success in raising capital, Kurtz said Pure Harvest received less funding compared to agricultural technology enterprises in the US and Asia. This is because the enterprise market in the Middle East is less developed, he said.
They are rapidly becoming ‘mature’, but it is ‘still a relatively emerging market’, he said.
Kurtz admitted that he has a very large amount of $ 200 million in the Series A stage ‘live and worldwide’ very large.
“In an industry like ours – which is extremely capital intensive – we are still relatively underfunded,” he said.
He pointed to companies such as the vertical farming company Plenty in the USA, which according to Crunchbase has raised more than $ 500 million.
“Many of these companies have raised a lot more capital than us, but our market needs are huge,” Kurtz said. “We fundamentally import 80% to 90% of the fresh fruits and vegetables in this region.”
He added that Pure Harvest’s capital comes from around the world and that we had to fight for it because it is more difficult to attract venture capital to the Middle East.
“However, I think it is changing fast, and we are obviously very grateful for the partners we have,” he said.