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Exclusive: Oishii, vertical farming startup, closes its Series B at $150 million

November 20, 2024

Hiroki Koga chose strawberries. 

Now, at some point, we all have picked up a box of strawberries in the produce aisle—but, in some sense, Koga bet his future on them. The cofounder and CEO of vertical farming startup Oishii, Koga wanted to start with strawberries. It’s a crop that’s famously hard to grow compared to, say, leafy greens like kale and arugula, which most vertical farming startups start with. Koga, who grew up in Japan, was unimpressed with American produce when he moved to the U.S.—and starting with one of the most beloved fruits, he thought, could set up Oishii for success. 

“My conclusion was: ‘Let’s start with a potentially harder crop, but a crop that you can create a difference in the quality and where you can demonstrate that quality difference,'” Koga told Fortune. “Therefore, you can command a much higher price point to the customer, so we can generate profit from the get-go.”

And it’s a higher price point, to be sure: Oishii’s strawberries (called the Koyo Berry) sell for $10 per tray, and they’re available in places like Whole Foods, FreshDirect, and Harris Teeter. (For comparison, I bought a box of non-organic Driscoll’s the other day for about five bucks.) But many of Oishii’s customers are Michelin-starred restaurants like Atomix, Esme, and Eleven Madison Park. (The strawberries aren’t organic, but are grown in pesticide-free environments.) And I will say—they do taste, well, special. They’re slightly sweeter than the strawberries of your imagination, crisper and balanced. Koga’s bet is this: If you can give people something special, the vertical farming business model can work.

Oishii has closed its Series B at $150 million, Fortune can exclusively report. Resilience Reserve, a climate-focused fund cofounded by TED head Chris Anderson and entrepreneur Rob Reid, led the round and was joined by Miyako Capital. Existing investors who participated include NTT, Bloom8, McWin Capital Partners, Mizuho Bank, and Yaskawa Electric Corporation. Oishii—named for the Japanese word for “delicious”—initially announced its Series B at $134 million in February, but continued to raise due to investor demand, the company says. 

Vertical farming is a practice with an almost impossibly long history—some argue that vertical farming’s origins can be traced as far back as the Hanging Gardens of Babylon and the Aztecs. Koga also says that vertical farming has an extensive history in Japan. 

“Vertical farming itself was commercialized in Japan before anywhere else,” he said. “The technology was commercialized by big electronics giants like Toshiba, Sharp, and Panasonic. They had LED lights, IoT sensors, and air conditioners, all the hardware that they could use to grow crops indoors without relying on sunlight…but they were all not profitable. Growing lettuce in a vertical farm is expensive, and it wasn’t cheaper than conventional products, nor was it that much better. As a business model, it just didn’t work.”

And that’s why vertical farming hasn’t gone mainstream—it’s a capital-intensive business, in which the technology, equipment, and facilities are all expensive to set up, let alone operate. But Koga believes vertical farming can become mainstream, as conventional farming costs are skyrocketing due to scarcity and expense for key inputs like weather, land, water, labor, and pesticides. Koga’s case is this: With more innovation, vertical farming can cut out most of those costs and speed up innovation with year-round R&D, because Oishii “can start experiments anytime during the year, compared to an outdoor farm, where you can only experiment once a year because of seasonality,” he said.

“Our vision is that most things you see in the produce aisle today will be replaced by vertical farm products,” Koga added. “It’s actually good for the environment and for consumers, once we get to cost parity. And it’s going to taste so much better.”

Koga knows it’s a tough business. A few weeks ago, vertical farming unicorn Bowery folded, failing where many have, well, failed. But Oishii and its investors say the company’s path to success is through its strawberries (and, increasingly, through the snacking tomatoes that the startup began rolling out in 2023).

“For me, it’s all about the strawberries,” Reid told Fortune via email. “Untold billions of dollars have poured into the vertical farming of leafy greens, which are largely unbrandable and to my palate, completely impossible to sell on a taste or quality premium. Oishii uniquely delivers strawberries and increasingly tomatoes at scale in a way that’s radically differentiated, because they are simply the tastiest products in either category in the U.S.”

And I have to be honest—I can’t tell you Reid is wrong. Whether Oishii ultimately manages to thrive where so many haven’t survived, Koga has done something clever: He’s picked a fruit that’s distinct and lovable, that captures our imaginations and makes memories in the way the best food does. 

I tried the Oishii strawberries a few weeks ago. And I’m still thinking about them. 

A Term Sheet update…I’m back from vacation and thrilled to share some exciting news. My colleague Leo Schwartz did such a stellar job holding down the fort while I was away that we’re making it official: Leo is joining the Term Sheet team! Starting now, Leo will take over Mondays, with a sharp focus on New York VC and the hard-hitting reporting he’s known for—delivered straight to the Term Sheet audience. (If you speak Spanish, say it out loud: Lunes with Leo!)

I’ll still be writing four days a week, with more time to dive deep on features, chase scoops, and develop our conference programming. New York folks, especially: Bombard Leo with a warm welcome of tips, scoops, and stories he should cover.

See you tomorrow,

Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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