Equilibrium, the company that yesterday closed the industry’s largest agriculture fund for a controlled environment at $ 1.022 billion, has opened an office in Singapore and has Dutch master producer Godfried Dol and former agricultural investor from Rabobank Asia. and John Baker. Currently, the company is trying to develop the first high-tech glass greenhouse in Singapore. And there’s more. Over the next year, Equilibrium expects several European greenhouse companies to join us.
âAs the industry grows, capital and expertise are what is needed. We’re in an excellent position to regroup and consolidate as this industry matures, âsays Dave. âIn many countries in Southeast Asia, it is about food security. In Singapore, for example, it’s all about food security: a small island nation with little agricultural space. However, if it is safety, security, consistency, quality or the ability to manage climatic volatility that is sought and whatever the order, they all contribute to the same demand for CEA installations.
David explains that he thinks there are a lot of opportunities in Asia – something that hasn’t developed at all since the industry was born in the Netherlands, and today’s greenhouse crops mostly reflect the European diet. âOr, as one politician put it, ‘We don’t eat a lot of kale here. But they eat a lot of vegetables. Bitters, different. There is a lot of room to grow and innovate and it’s exciting.
And there’s more. Also in markets where the CEA industry has matured, Equilibrium sees opportunities. Earlier Dave shared his belief that access to capital is a competitive advantage and with that in mind the company is reaching out to operators in Europe as well. âWe are setting the tone for the Dutch industry,â confirms Dave. âWhen AppHarvest went public, we joked that we had listed a farm. When this happens, the balance sheet of the family business, which supports growth, may no longer be sufficient. To date, several companies have announced their listing, often through De-SPAC (Special Purpose Acquisition Company), and have also seen a significant increase in private capital. This will happen in Northern Europe in 2021 and 2022. “
Dutch greenhouse suppliers
Over the past couple of years, private equity has made its way to Dutch greenhouse suppliers, but with a few exceptions growers have always relied primarily on Rabobank as their investment plan. âIt is also proof that many producers in the Netherlands are cooperatives, and that cooperatives are strong strategic vehicles,â says David. âAgain, before the expansion was measured at 5 or 10 hectares. What we now see in North American projects are usually extensions of 25 or 50 hectares. We surveyed the Dutch venture capital industry and asked them if they were able to meet the capital industry in construction growth in North America. Barely a year ago, they all said, without hesitation, that it was not a problem. If you asked them today, they would look at each other and say there is no workforce.
Equilibrium has, adds David, and confirms that the company is looking to work with Dutch producers. âWe have been working on long-term relationships with Dutch suppliers for a longer time, but we are their customers. This is not the case for operators. Over the next year you will see us increase our visibility by working with European operators and operators in the Netherlands who wish to expand their footprint.
It is assured that the company’s reputation as a collaborative, dedicated and domain investment firm will help it gain traction in European industry. âSalespeople know that when you commit to a project, it is fully capitalized and that they can play with safety and certainty. We always came with capital, we weren’t developers raising capital for every project – we committed capital for every project. People want to work with us because they know it. Then there is our team with Nick (Houshower), Gave, and also with Marco and Godfried. They are either industry or construction experts or in the case of our team, have taken the humility to learn and still learn. Salespeople know we’re not the company to make crazy demands. We can push hard, but nothing crazy.
So why does the company want to invest in Dutch industry? David explains that he continues to see opportunities there, despite the cooperatives. âThe Netherlands, and to some extent Israel, built these industries out of necessity. The innovation took place to solve very practical problems, and happened to develop these industries. Where it was a curiosity for the rest of the world, it was practical for the Netherlands. Under the radar the Dutch developed their expertise and dominance and while everyone was watching there wasn’t a lot of investment. 2020/2021 made visible the âAmericanizationâ of Dutch industry. And now that Silicon Valley technology and the capital industry have started to think of the industry as traditional agriculture, some funny things are happening. He explains how large operators like AppHarvest have, for example, a Chief Technology Officer. âThe continued absorption of technology platforms for productivity is a way of life. If you don’t have the money to afford a technology operation, you are at a disadvantage compared to the competition. “
Will this lead to further increase and consumption or consumption in the Dutch greenhouse industry? David adds a third option. âMore and more we are seeing small farms not eating and being too small to eat. Stranded assets, âhe said. âNot just in the Netherlands. Some of the smaller ones will have to decide: will they focus on a niche, or will proximity be their one-stop shop – something that allows them to thrive on that scale and differentiate themselves. Otherwise, a number of small installations have to question their future.