A robotic farm backed by Pritzker billions is located next to the last steel mill in town.

• Although less than 1% of fresh produce is currently grown through hydroponics systems compared to open-field agriculture, Mordor Intelligence predicts that this segment will grow by nearly 11% annually to approximately $600 million by 2025. Additionally, Walmart has invested $400 million in Plenty Unlimited.
• Fifth Season, a vertical farming start-up, has received funding from billionaire Nicholas Pritzker's Tao Capital and aims to disrupt the $60 billion U.S. produce market through partnerships with Sabra, Kroger, Shoprite, and Giant Eagle.
• Silicon Valley Congressman Ro Khanna states that while the tech multiplier isn't lifting all boats, it is spreading in the heartland.

In Braddock, Pennsylvania, just nine miles from Pittsburgh's U.S. Steel Tower, a vertical farming business backed by billionaire Nicholas Pritzker's Tao Capital is emerging as an agritech innovator. Founded in 2016 as RoBotany by MBA student Austin Webb and incubated at Carnegie Mellon University, the start-up is aiming to disrupt the $60 billion U.S. produce market. Now named Fifth Season, the emerging business is leveraging advanced technology, $75 million in venture capital, increased distribution, a planned new Columbus, Ohio, facility, and an expanded management team to score in the fast-growth vertical farming market. CEO Webb confidently projects Fifth Season could be a $15 million business in Pittsburgh within five years and $500 million through geographic expansion plans, and estimates sales will hit a double-digit revenue rate this year and a 600% revenue increase. Fifth Season's automated proprietary system grows fresh produce year-round indoors in vertical trays, relying on artificial intelligence, robotics and data to control light, water and nutrients, and harvest leafy

Hydroponics is growing quickly as food source

The hydroponics segment of fresh produce is currently less than 1% of the market, but it is forecast to grow by nearly 11% annually to about $600 million by 2025. According to Brian Holland, managing director of Cowen & Co., the price of hydroponics is coming down and more reliable operations are removing the risk, creating a tremendous runway for growth. He added that it's a race to scale with multiple winners who can prove the economic model for automatic, robotic growing. Fifth Season is currently the most advanced in the market, marrying technology and robotics to grow vegetables indoors at a lower cost.

The highly competitive fresh produce market has more than 2,000 small farms and a few large-scale players. Among the largest is Plenty Unlimited, which recently secured $400 million in funding and plans to sell its produce at retailer's California stores. Another major competitor is AeroFarms, which abandoned a SPAC deal to go public in October 2021 and is expanding its capacity at a Danville, Virginia farm. According to Webb, market leadership is simply a matter of time and capital.

Fifth Season plans to construct its second indoor growing farm in 2023 and is negotiating for a land parcel in Columbus, Ohio, near the John Glenn Airport. The company has introduced a new product line of co-branded, grab ’n go salad kits, priced at $6 to $8, through a partnership with hummus maker Sabra in December 2021. Distribution of its products is being expanded this March at more Giant Eagle outlets as well as and ShopRite across 10 states and 1,000 locations, with a goal of reaching 3,000 grocery stores in 2023. In its initial year of commercial operation in 2020, some 500,000 pounds of its produce were supplied to nearby restaurants and campus dining locations from its 60,000-square foot growing space on a half-acre of land.

A new Rust Belt boom

The growth spurt of Fifth Season signifies the dawn of a new era for Pittsburgh, which was once a steel-making capital. Numerous regional tech start-ups are emerging in the area, and as blue-collar factory jobs are replaced by technical jobs, older, industrial towns are being revitalized.

Congressman Ro Khanna of Silicon Valley, who wrote "Dignity In A Digital Age," stated that while the tech multiplier doesn't benefit all boats, it is spreading in the heartland.

He stated that the factory workers and technicians possess the ability to produce items, exhibit a strong work ethic and sense of community, and are challenging traditional norms.

In January, Gearing up expanded its leadership team with the addition of finance and tech veteran Brian Griffiths as CFO, Varun Khanna as vice president of food products, and Glenn Wells as senior vice president of sales. These hires bring a wealth of experience from companies such as Skorpios Technologies, Credit Suisse, Guggenheim Partners, Chobani, Sabra, Quaker Oats, Welch's, and Dole. As a result, the company's employee count is expected to increase to 100 next year from the current 80.

Another aspect of Fifth Season's growth strategy is a planned $70 million investment in a new Columbus vertical farm that is three times larger than the $27 million Braddock plant, including real estate development for land, a building, and equipment. The company's highly automated farms only require 35 to 50 production workers. The Pittsburgh plant currently produces four million salad meals annually, while the larger central Ohio location is expected to produce 15 million. Fifth Season is collaborating with economic development groups One Columbus and Jobs Ohio on the new location.

The Carnegie Mellon connection

The intellectual power at Carnegie Mellon University and Pittsburgh's tech entrepreneurial cluster in computer science, robotics, and engineering is the foundation for Fifth Season's game-changing business. Webb developed a prototype in his last year of the MBA program and launched the business upon graduation with co-founder Austin Lawrence, an environmental scientist and mechanical engineer he met on campus.

Brac, Webb's brother, is the CTO and designed the production software. The system was stress-tested for two years in a converted steel mill on the south side of Pittsburgh before the Braddock farm started operations in 2020.

Dave Mawhinney, executive director of CMU's Schwartz Center for Entrepreneurship, mentored Webb and helped him connect with investors and role models such as Luis von Ahn, the Pittsburgh-based founder of Nasdaq-listed edtech company Duolingo. Mawhinney also introduced Grant Vandenbussche, a former General Mills global strategy coordinator, who joined the team in 2018 as a business development manager and is now chief category officer. "Fifth Season is a testament to CMU's ability to attract very talented young people and grow entrepreneurs through its MBA program," said Mawhinney. "It's all about the network."

Before graduating in 2017, Webb secured funding from angel investors, most of whom were connected to CMU. The network effect also helped Mawhinney connect Webb with Columbus-based VC firm Drive Capital, which invested $1 million in the start-up in 2017 and led a $35 million round in 2019 as the company emerged from stealth mode, changed its name from RoBotany, and Drive partner Chris Olsen joined as a board member.

Vandenbussche stated that Chris encouraged us to consider the market on a national scale rather than locally or regionally, to establish a lasting company and to develop a new product line.

Tao Capital Partners in San Francisco, along with eight other investor groups, have contributed a total of $75 million to the company.

Pittsburgh is transforming into a hub for technology and innovation. The city's strengths in AI, machine learning, and legacy with biosciences are attracting companies to invest and establish themselves in the area. With the decline of steel, iron, and river industries as competitive advantages, Pittsburgh is transitioning from gritty industries to a focus on robotics and technology start-ups. This mid-sized city of 303,000, less than half its peak population of 677,000 in 1950, has emerged as a technology testbed for self-driving technology from Ford-invested Argo AI and Amazon-backed Aurora, and Uber's technology unit acquired by Aurora. It's also an anchor for R&D labs at Facebook, Apple, Google, Zoom, and Intel.

The shortage of venture capital remains a persistent problem for Midwestern start-ups. In 2021, California, New York, and Boston accounted for approximately two-thirds of the $329.9 billion in start-up investments. However, this imbalance is beginning to shift towards specialized inland hubs, such as Pittsburgh with robotics, Cleveland with biotech, and Indianapolis with SaaS.

Inland hubs offer improved lifestyle amenities, increased opportunities, and lower costs of living, which attract millennial tech talent. The co-founders of Fifth Season and many others have chosen to stay in Pittsburgh after coming to pursue entrepreneurship.

Those who dislike Pittsburgh are either people who have never been here or those who left but didn't come back, according to Lynsie Campbell, a serial founder who has lived in New York, Los Angeles, and San Francisco before returning home as a Pittsburgh-based partner with The Fund Midwest and leading the city's venture capital and start-up scene.

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