Aerofarms Vertical Farming: Transforming the Future of Agriculture

"Explore how Aerofarms is revolutionizing farming through vertical cultivation, addressing key issues like talent acquisition, funding, CO2 emissions, and crop diversity. Recommendations include expanding operations in the USA and Asia-Pacific, focusing on developing sustainable business models for future growth."

• Aerofarms
• Vertical Farming
• Agriculture
• Sustainability
• Future

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1. B B BARNA Management School Consulting Team AEROFARMS VERTICAL FARMING: THE FUTURE OF FARMING Presented by: Alexander Diaz, Betsy Jimenez, Loren Medrano & Nathalie Duarte Key Issue + Recommendation Analysis Strategy Implementation Financials Risks January 2020

2. B AGENDA Context Key Issue + Recommendation Analysis Strategy Implementation Financials Risks Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

3. B CONTEXT P E S T E L Tension between China and USA 35% of food is imported Organic product Organic product Minimize usage of natural resources Block of international funding Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

4. B Key Issue + Recommendation What should Aerofarms do to transform vertical farming into the future of crops cultivation? Talent Acquisition Capital Funding Co2 Crop Diversity emissions Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

5. B Key Issue + Recommendation What should Aerofarms do to transform vertical farming into the future of crops cultivation? Talent Acquisition Capital Funding Co2 Crop Diversity emissions Recommendation: Maintain Greens & Develop new crops in USA and Expand to Asia/ Pacific with greens Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

6. B Objectives: Develop a sustainable business model Ensure proper capital funding for future growth Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

7. B ANALYSIS Strength Challenges 95% less water Zero pesticides Data analytic Proprietary substrate Capital needs Talent development Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

8. B ANALYSIS Opportunities Challenges Crop variety Growth outside USA Expert critics for CO2 emissions Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

9. B ANALYSIS Competitors Traditional Hydroponic Aquaponic Consumer Aeroponic Sustainable - Less waters Organic Freshness - Distance Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

10. B B BARNA Management School Consulting Team Strategy STRATEGY Key Issue + Recommendation Analysis Implementation Financials Risks

11. B ALTERNATIVES Strengthen core business in greens cultivations. Develop high calorie product portfolio. Maintain Greens & Develop new crops in USA and Expand to Asia/ Pacific with greens Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

12. B ALTERNATIVE SELECTED Strengthen core business in greens cultivations. Develop high calorie product portfolio. Maintain Greens & Develop new crops in USA and Expand to Asia/ Pacific with greens Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

13. B CRITERIA AVALIABILITY OF FUNDING SUSTAINABILITY PROFITABILITY GROWTH OPPORTUNITY CONSUMER CENTRIC IMPLEMENTATION TIME Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

14. B DECISION MATRIX Availability of funding Sustainability Profitability Growth Opportunity Consumer centric Implementation Time Strengthen core business in greens cultivations. Develop high calorie product portfolio. Develop new crops in USA and expand to Asia/Pacific with greens Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

15. B DECISION MATRIX Availability of funding Sustainability Profitability Growth Opportunity Consumer centric Implementation Time Strengthen core business in greens cultivations. Develop high calorie product portfolio. Develop new crops in USA and expand to Asia/Pacific with greens Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

16. B B BARNA Management School Consulting Team RECOMMENDATION Develop new crops in USA and expand to Asia/ Pacific with greens Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

17. B WHY IS THIS YOUR BEST OPTION? SUCCESS! Protein rich food will bring more consumers. Addresses CO2 challenges. New farms in Asia with partners will bring fresh venture capital. Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

18. B B BARNA Management School Consulting Team ACTION PLAN Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

19. B How we are going to develop new crops in USA and expand greens to Asia/Pacific? Define and develop a high calorie product to start expanding current portfolio. Understand real consumer needs and align them to Aerofarms value proposition. Guarantee sustainability in climate change and talent recruitment areas. WHAT Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

20. B 1. Define and develop a high calorie product to start expanding current portfolio Consumers start to appreaciate sustainability and healthy choices. Aerofarms portfolio is only about greens. Higher population in other countries. WHY Phase 1 (2020) 1. Introduce new products such as beans: white, red and black in USA. 2. Expand current green portfolio in Asia/Pacific. Phase 2 (2021) 1. Introduce beans in Asia/Pacific. HOW Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

21. B 1. Define and develop a high calorie product to start expanding current portfolio Consumers start to appreaciate sustainability and healthy choices. Aerofarms portfolio is only about greens. Higher population in other countries. KEY TAKEAWAY We are going to introduce beans in USA operations and strengthen greens in Asia/Pacific. WHY Phase 1 (2020) 1. Introduce new products such as beans: white, red and black in USA. 2. Expand current green portfolio in Asia/Pacific. Phase 2 (2021) 1. Introduce beans in Asia/Pacific. HOW Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

22. B 2. Understand real consumer needs and align them to Aerofarms value proposition. WHY Not all consumers know what Aerofarms does. They seek for organic things 1. Develop an educational campaign where they can know complete portfolio and all benefits it has for human being. Digital channels. 2. Open pop-up stores where consumers can see Aerofarms process in actual farms. 3. Develop a new product (only seeds of their favorite green) for consumers with same technology powered by Dell. Tracking by mobile app. HOW Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

23. B 2. Understand real consumer needs and align them to Aerofarms value proposition. WHY Not all consumers know what Aerofarms does. They seek for organic things 1. Develop an educational campaign where they can know complete portfolio and all benefits it has for human being. 2. Open pop-up stores where consumers can see Aerofarms process in actual farms. 3. Develop a new product (only seeds of their favorite green) for consumers with same technology powered by Dell. Tracking by mobile app. KEY TAKEAWAY We want consumers be part of this movement. HOW Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

24. B 3. Guarantee sustainability CLIMATE CHANGE WHY Vertical farms generated 10x more carbon footprint than traditional farmers due to the use of LED lightning. 1. Find solar energy partnership. Starting pilot in China. 2. Stablish a plan-tree action. 100 KVs = 1 tree. 3. Reforest most critical zones of actual markets. 4. Include consumer to be part of this experience. Each tree will have the name of who cultivate it. 5. Invite them through online channels (email + app). HOW Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

25. B 3. Guarantee sustainability CLIMATE CHANGE Vertical farms generated 10x more carbon footprint than traditional farmers due to the use of LED lightning. WHY KEY TAKEAWAY 1. Find solar energy partnership. Starting pilot in China. 2. Stablish a plan-tree action. 100 KVs = 1 tree. 3. Reforest most critical zones of actual markets. 4. Include consumer to be part of this experience. Each tree will have the name of who cultivate it. 5. Invite them through online channels (email + app). We need to give back to the community. 100 kvs = 1 plant tree. Looking for solar energy partnership. HOW Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

26. B B BARNA Management School Consulting Team FINANCIALS Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

27. B FINANCIALS OVERVIEW US$ 238 MILLION FROM VENTURE FUNDING AND GRANT BY JULY 2019 USA VENTURE CAPITAL RESTRICTION DUE TO GOVERNMENT POLICIES USA AGRICULTURAL DEPARTMENT INCENTIVES AND GRANT FOR VERTICAL FARMING OPPORTUNITIES / DEVELOPMENT Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

28. B FINANCIALS ASSUMPTIONS AEROFARMS (AF) IS MARKET LEADER FOR AEROPONICS TECHNOLOGY AF REVENUE YTD08 2019 US$ 50 MILLIONS VERTICAL FARMING INDUSTRY HAS 20% MARKET MARGIN (1.2x REVENUE) NET PROFIT OF 2019 1.5% OF REVENUE Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

29. B FINANCIALS ASSUMPTIONS Revenue US$ MILLIONS) ACHIEVE REVENUE OF 140 us$ MILLIONS by 2023 AF CAGR OF 13.3% OF REVENUE 120 91 75 50 ACHIEVE NET PROFIT OF 2.5% by 2023 YTD08 2019 FY 2019 2020 2021 NET PROFIT 2.5% 2.5% 2.5% 2.5% 2.0% 2.0% 1.5% 1.5% 1.5% 1.5% Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

30. B INVESTMENT PLAN Investment Plan Budget (Capital Funding) 100US$ Millions Acquisition of New Buildings 40US$ Millions Adapting Bulding to New Technologies 10US$ Millions R&D of New Crops 25US$ Millions Consumer Initiatives 2US$ Millions PoP Up Stores 2US$ Millions Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

31. B B BARNA Management School Consulting Team RISKS Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

32. B RISKS CONTIGENCY PLAN. RISK MITIGATION PLAN New USA legal framework HIGH Partnership with USA government to help local farmers with Aerofarms data. Local partnership will bring fresh venture capital. Plan to be CO2 neutral. Reforestation plan. No funding in other countries MEDIUM Climate change critics LOW Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

33. B B BARNA Management School Consulting Team Analysis KEY TAKEAWAYS Key Issue + Recommendation Strategy Implementation Financials Risks

34. B Key Issue + Recommendation What should Aerofarms do to transform vertical farming into the future of crops cultivation Talent Acquisition Capital Funding Co2 Crop Diversity emissions Recommendation: Maintain Greens & Develop new crops in USA and Expand to Asia/ Pacific with greens Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

35. B CONNECTING THE DOTS Develop a sustainable business model Ensure proper capital funding for future growth Define and develop a high calorie product to start expanding current portfolio. Understand real consumer needs and align them to Aerofarms value proposition. Guarantee sustainability in climate change and talent recruitment areas. Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

36. B B BARNA Management School Consulting Team Financials Q&A Key Issue + Recommendation Analysis Strategy Implementation Risks

37. B B BARNA Management School Consulting Team AEROFARMS VERTICAL FARMING: THE FUTURE OF FARMING Presented by: Alexander Diaz, Betsy Jimenez, Loren Medrano & Nathalie Duarte Key Issue + Recommendation Analysis Strategy Implementation Financials Risks