Middle Eastern food start-up raises $ 60 million in funding

An Abu Dhabi-based agricultural technology start-up said it had secured $ 60 million in funding to expand its operations in the Middle East, but said it was an upward task to try 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 climate of the Middle East makes countries in the region heavily dependent on food imports, and the Covid-19 pandemic last year posed risks to food security.

“Our pilot in the desert … has shown very promising results – the potential for local production throughout the year at a very high quality and a very good cost structure,” CEO and co-founder Sky Kurtz told Capital Connection on Monday. On CNBC. The start-up will use the capital to build its beachfront in Saudi Arabia, he added.

It also has plans to expand its product portfolio.

The company has raised $ 50 million in Islamic bonds, also known as sukuk, which are debt instruments that comply with Shariah law. Kurtz said it was “fairly new”, given that the region does not have a significant risk debt market.

The show was led by Shuaa Capital and responds to Pure Harvest’s long-term needs for an “aggressive capex program,” as well as its rapid growth, Kurtz said.

Separately, Sancta Capital conducted a fundraising round in January, raising another $ 10 million, with the participation of new and existing investors.

Despite its success in raising capital, Kurtz said Pure Harvest got less funding compared to agricultural technology companies in the US and Asia. That’s because the risk market in the Middle East is less developed, he said.

It is “maturing rapidly,” but it is “still a relatively nascent market,” he said.

Kurtz acknowledged that he raised $ 200 million in capital in stage A of the A series is “extremely large” both regionally and globally.

“However, in an industry like ours – it is extremely capital intensive – we are still relatively underfunded,” he said.

He pointed to businesses such as the US vertical farm Plenty, which raised more than $ 500 million, according to Crunchbase.

“Many of these companies have provided much more capital than we have, but of course our market need is great,” Kurtz said. “We basically import 80% to 90% of the fresh fruit and vegetables from this region.”

He added that Pure Harvest capital was obtained from all over the world and “we had to fight” for it, because attracting venture capital in the Middle East is more difficult.

“However, I think this is changing rapidly and we are obviously very grateful to the partners we have,” he said.