Transforming Agriculture with AeroFarms: A Sustainable Urban Solution
Transform agriculture by developing environmentally responsible vertical farms globally, especially in urban areas. Overcome capital requirements and energy challenges through innovative products, renewable energy, and seeking funding. Benefit from megatrends favoring AeroFarms' efficient and precise farming model despite challenges like carbon emissions and talent acquisition.
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Hop into the future! From Aalto Consulting To the Board of AeroFarms Aalto University School of Business
Executive summary Mission: Transform agriculture by developing environmentally responsible farms throughout the world, especially in urban areas How to make vertical farming future of agriculture? How capital requirements and energy challenges can be combatted? What is a sustainable and profitable business model? Introduce a new innovative product and raise awareness, move to renewable energy and appeal to UN for funding Executive Summary
Agenda Analysis Alternatives Recommendation Conclusion
Agenda Analysis Alternatives Recommendation Conclusion
Trends Growing population Climate change Urbanization Increasing interest in health and sustainability Data is the oil of future Main outcome: Megatrends are in favor of AeroFarms Analysis Executive Summary Alternatives Recommendation Conclusion
Strengths More efficient than traditional farms Precise and productive Patented technology Minimized risk Comparable price with traditional lettuce Reduced transportation costs Least affected to climate change Main outcome: Efficient and precise business for growing demand Analysis Executive Summary Alternatives Recommendation Conclusion
Challenges Producing more carbon emissions than traditional farming Viability of business model Producing only salad greens Long time to realize profits Talent acquisition Hard to sell the idea to consumers Main outcome: Efficient and precise business for growing demand Analysis Executive Summary Alternatives Recommendation Conclusion
Opportunities Increase in the demand for vertical farms globally Increase consciousness of health and sustainability Need for new methods of food production Threats Threat of competition Threat of lack of international funding Main outcome: Efficient and precise business for growing demand Analysis Executive Summary Alternatives Recommendation Conclusion
Competitors 1. Among six major players in the farming market 2. 3. Competing against vertical and commercial farms Largest vertical farm company in the world with the highest revenues and production Many competitors in vertical farming have failed for various reasons such as operational costs and failure to break even 4. 5. Outperforming in cost effectiveness, usage of data analytics and funds raised Main outcome: Strong player in the vertical farming market Analysis Executive Summary Alternatives Recommendation Conclusion
Customer profile Health conscious Early adopter Worries about climate change Interested in new technologies John, 30 y.o., works in IT Innovator Urban Millennial Main outcome: Increasing interest in health, sustainability and innovations Analysis Executive Summary Alternatives Recommendation Conclusion
Agenda Analysis Alternatives Recommendation Conclusion
Criteria for evaluation 1. Raised awareness 2. Sustainable and profitable business model 3. Capital requirements fulfillment 4. Market innovation Alternatives Executive Summary Analysis Recommendation Conclusion
Alternative solutions 1st key step: Raising awareness and educating people about sustainability and purity of aeroponics products Alternatives Executive Summary Analysis Recommendation Conclusion
Alternative solutions 1st key step: Raising awareness and educating people about sustainability and purity of aeroponics products 1 2 3 Expand with current strategy Sell business to Google Hop the future Alternatives Executive Summary Analysis Recommendation Conclusion
Alternative solutions 1 2 3 Expand with current strategy Sell business to Google Hop the future Focus existing data- science business model on greens and vegetables, Gradually add berries to product offering Expand to Europe and India Introduce new product: insects Start moving to renewable energy solutions Collaborate with Google who were already interested in vertical farming Gain access to resources Build renewable energy solutions with Google Alternatives Executive Summary Analysis Recommendation Conclusion
Alternatives evaluation Expand with current strategy Hop the future Sell business to Google + + + Raised awareness Sustainable and profitable business model ? + ? Capital requirements fulfillment ? - ? + + ? Market innovation Alternatives Executive Summary Analysis Recommendation Conclusion
Alternatives evaluation Expand with current strategy Hop the future Sell business to Google + + + Raised awareness Sustainable and profitable business model ? + ? Capital requirements fulfillment ? - ? + + ? Market innovation Alternatives Executive Summary Analysis Recommendation Conclusion
Agenda Analysis Alternatives Recommendation Conclusion
Recommendation Introduce a new innovative product and raise awareness, move to renewable energy and appeal to UN for funding Step 1 Step 2 Step 3 Step 4 Gradually start moving to renewable energy solutions Educate and raise customer awareness Introduce new product: crickets Seek funding Recommendation Executive Summary Analysis Alternatives Conclusion
Recommendation: Step 1 WHAT? Educate and raise customer awareness WHY? To increase customer base HOW? 1. Develop a marketing campaign for existing products and new products 2. Issue sponsorships to universities for scientific research 3. Use research to lobby for new legislation 4. Hire advertising agency to create 50 YouTube videos informing about the purity of our products Recommendation Executive Summary Analysis Alternatives Conclusion
Recommendation: Step 2 WHAT? Introduce new product: crickets WHY? To answer the food security challenge with high-protein product HOW? 1. Buy Entocube - Finnish startup cultivating crickets 2. Develop the first department in Newark 3. Hire personnel for new department Recommendation Executive Summary Analysis Alternatives Conclusion
Recommendation: Step 3 WHAT? Gradually start moving to renewable energy solutions WHY? To become more environmental friendly by reducing CO2 emissions HOW? 1. Partner with SolarGaps that provides solar power energy solutions Recommendation Executive Summary Analysis Alternatives Conclusion
Recommendation: Step 4 WHAT? Seek funding WHY? To implement the new project and cover marketing campaign costs HOW? 1. Take advantage of the UN project about the fulfillment of the 16 sustainable goals regarding environmental protecting and global famine Recommendation Executive Summary Analysis Alternatives Conclusion
Implementation 2020 2021 2022 Marketing campaign Buy Entocube and integrate it Create the cricket department 10% 25% 40% Move to solar energy Request funding Recommendation Executive Summary Analysis Alternatives Conclusion
Risks and mitigation Risk Probability Impact Mitigation Entocube won t sell their company Renegotiate and make better offer, look for another company Low High Poor customer reaction to our education campaign Intensify the initiative for informing and educating Low Medium UN declines the appeal for funding Low Low Issue debt Recommendation Executive Summary Analysis Alternatives Conclusion
Financial Analysis Key Financial Assumptions Key Financial Assumptions The building costs per acre are going to decrease in relation to the proximity to urban areas Overhead costs are going to stay on the same level The Revenue is going to grow 15% annually Heavy investments in the first year due to acquisition Funding provided by taking debt of 20 million UN is going to provide funding for Recommendation Executive Summary Analysis Alternatives Conclusion
Financial Analysis Key costs Key costs Marketing & Awareness, Marketing & Awareness, thsd thsd USD USD Sponsorship costs will cover new research that can be used in lobbying Advertising costs are going to costs the two separate campaigns raising awareness and marketing the new product line 2500 2500 2500 200 200 200 2020 2021 2022 Sponsorship with Universities Advertising agency Recommendation Executive Summary Analysis Alternatives Conclusion
Financial Analysis Key costs Key costs Acquisition, Acquisition, thsd thsd USD USD Entocube Valuation 10 Million, taken into account separately Implementation costs will cover corporate structure and culture merging Hiring costs will cover 5 experts in the insect business 320 300 300 200 100 50 2020 2021 2022 Implementation Hiring costs Recommendation Executive Summary Analysis Alternatives Conclusion
Financial Analysis Key costs Key costs Restructuring, Restructuring, thsd thsd USD USD Restructuring costs are going to cover the changes that need to made in the existing facilities Crickets cover the growing facilities of Crickets as well as the eggs Solar power costs is going to cover the gradual movement into more sustainable energy 2500 2000 1500 1000 1000 1000 220 200 190 2020 2021 2022 Restructuring Crickets Solar power Recommendation Executive Summary Analysis Alternatives Conclusion
Financial Analysis New Revenue, New Revenue, mn mn USD USD Revenue growth 8% annually due to growing market share and high margins in crickets 76 66 58 2020 2021 2022 Recommendation Executive Summary Analysis Alternatives Conclusion
Financial Analysis Profitability, Profitability, mn mn USD USD First year initial costs of additional 5 million Acquisition funded with debt, interest for debt 3% Overhead costs are going to stay the same High margin of cricket products are going to boost the business profitable Net Profit 1.1 0.5 2020 2021 2022 -5.2 Recommendation Executive Summary Analysis Alternatives Conclusion
Agenda Analysis Alternatives Recommendation Conclusion
Conclusion Mission: Transform agriculture by developing environmentally responsible farms throughout the world, especially in urban areas How to make vertical farming future of agriculture? How capital requirements and energy challenges can be combatted? What is a sustainable and profitable business model? Introduce a new innovative product and raise awareness, move to renewable energy and appeal to UN for funding Conclusion Executive Summary Analysis Alternatives Recommendation
