IGS harvests climate gains that can also feed the world
“HECTIC” doesn’t really begin to describe the last month or so of
David Farquhar’s life, a man who by rights should have been enjoying his retirement.
In the span of just two weeks, the chief executive of Scotland’s Intelligent Growth Solutions (IGS) closed a £42.2 million funding round and signed a major deal with an expanding luxury resort operator, both while also hosting a stream of political and business leaders at COP26. By his reckoning, Mr Farquhar featured as a panel speaker at 17 events linked to the climate summit held earlier this month in Glasgow.
But the buzz around IGS was to be expected, given the company’s focus on technology to help feed an expanding global population while at the same time combating climate change. This compelling narrative was enough to coax Mr Farquhar away from a more relaxed pace of life and agree four years ago to take on the challenge of turning IGS into a global leader in the vertical farming industry.
Under his tenure revenues have gone from zero to £50m, and are expected to double in each of the next few years. Headcount at the Edinburgh-headquartered company has grown from 25 to more than 150 and is forecast to reach 350 within the next three years.
IGS was set up in 2013 by Sir Henry Arkroyd, who was looking to grow baby vegetables year-round at his farm in Invergowrie. He came across a concept of vertical farming that was first developed by Nasa as a way of feeding people living on the Moon.
The problems with the Nasa system, according to Mr Farquhar, were high energy costs and high labour intensity. Sir Henry hooked up with Dave Scott, an engineer from Napier University who became chief technology officer at IGS, and between them they figured out how to remove most of those expenses.
Around the same time, Mr Farquhar was heading up HR software provider Workplace, a culmination of the Aberdonian’s extended career in the field of enterprise software following nine years as a captain in the British Army. After the merger of Workplace with Us-based Workforce Software of Detroit in 2016, Mr Farquhar was set for semi-retirement as a portfolio investor and non-executive director.
“The people who had sponsored my previous business were Lloyds Development Capital based down in London,” Mr Farquhar said.
“We sold my previous business on a very high return, so I had actually retired, but one of the partners in the LDC funding team was the son of Sir Henry Aykroyd, who was our founder. [The son] got in touch and said look, we need someone to help run this business – would you be interested or available?”.
He was. Originally trained as a chef, and married to a chef as well, Mr Farquhar notes that “food runs very big” in his family, and he understands it well. The “other angle”, as he puts it, is that he is a mountaineer and thus keenly attuned to environmental concerns.
“This really excited me when I first saw it because it really sits at the nexus between feed the world and solve climate change, so that really seemed something worth coming out of retirement to try and turn into a proper business,” he said.
Others seem to agree. During the first week of COP26, IGS closed a £42.2m funding round supported by a conglomerate of new investors, including Cofra AG of Switzerland, venture capital firm Cleveland Avenue from Chicago, and Dundee’s DC Thomson. All three now rank among the company’s largest shareholders alongside existing investors Ospraie AG Science of New York and Chicago S2G Ventures.
IGS followed up in the second week of COP26 with a major deal to supply its vertical farming systems to Austrian-headquartered resort operator Therme, which has named Glasgow among eight new cities in its global expansion drive.
With that level of financial and commercial backing, Mr Farquhar concedes a public market listing could be on the horizon at some point.
“I think that’s a distinct possibility,” he said. I don’t really want to reveal our hand in public, but there is very high growth available to us, and there’s lots of capital out there looking for a home, so at one level we would be mad not to take advantage of that.”
He is keen to point out that IGS is not a vertical farmer, but rather a developer of vertical farming technology.
“We are there to supply the best possible tools to the guys growing the food around the world,” Mr Farquhar said. “We think it’s wrong to sort of colonise people’s food chain, we think it’s much better to help people to grow food that their local populations need.”
A basic system of four nine-metre-high growth towers with a total footprint of 42 sq metres, each with 50 growth trays the size of a snooker table. That comes in at a cost of about £2.5m, and covers the same space as four hectares in a field.
Mr Farquhar said the system will begin to generate cash in its first month, with the cost fully covered within two-and-a-half to four years.
IGS is working to introduce a system for leasing its systems, as farmers do with other high-value equipment.
“It’s a much faster payback than any other piece of agricultural equipment, whether you’re talking greenhouses or windfarms or anaerobic digesters or combine harvesters,” he said.