AeroFarms LLC - Cultivating a Brighter Future
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AeroFarms LLC - Cultivating a Brighter Future Presenting to: Ed Harwood, David Rosenberg, and Marc Oshima, Co-founders of AeroFarms LLC Presented by: Nanyang Consulting 2019 Agenda 1 2 3 4 5 6 7 8 Problems Recommendations Analysis
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AeroFarms LLC - Cultivating a Brighter Future Presenting to: Ed Harwood, David Rosenberg, and Marc Oshima, Co-founders of AeroFarms LLC
Presented by: Nanyang Consulting 2019<br>
Presented by: Nanyang Consulting 2019<br>
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Agenda 1
2
3
4
5
6
7
8 Problems
Recommendations
Analysis
Alternatives
Implementation
Financials
Contingency
Conclusion 2<br>
2
3
4
5
6
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8 Problems
Recommendations
Analysis
Alternatives
Implementation
Financials
Contingency
Conclusion 2<br>
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Problem statement: AeroFarms faces risks of financial sustenance amidst growing concerns of consumer resistance and economic threats 3 How will Aerofarms overcome financial viability issues and growth barriers to attain its goal of 25 farms by 2022?<br>
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Recommendations: AeroFarms can combine existing competencies with strategies to achieve goal of 25 farms by 2022 4 AeroFarms can achieve growth, social impact, and technological innovation with the given strategies<br>
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External analysis: Aerofarms operates in a competitive environment with huge potential for technological and economic advancements Demand for vertical farming is increasing
Consumers are becoming increasingly conscious of health and sustainability
Solving problems of food security, urbanization, population
Urban Farming and Food Security Act
Program Area Priority – potential for grants
Partnerships with eateries and organizations 5 Opportunity Trade tensions between China and USA
Legislations restricting internal funding and capital movement
Competition – from substitutable farming Threat<br>
Consumers are becoming increasingly conscious of health and sustainability
Solving problems of food security, urbanization, population
Urban Farming and Food Security Act
Program Area Priority – potential for grants
Partnerships with eateries and organizations 5 Opportunity Trade tensions between China and USA
Legislations restricting internal funding and capital movement
Competition – from substitutable farming Threat<br>
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Internal analysis: AeroFarms exhibits a unique business model which is capital intensive and requires reinforcement 6 Strength Producing more carbon emission – use of LED lighting
High Capital expenditure
Limited crop varieties – no high-calorie grains
Long time to realise profits
Lack of right talent
Consumer Stigma – lack of USDA-certified organic seal Weakness Aeroponics technology is not affected by climate change
Presence in urban areas – shorter product to market cycle
Data repository and analytics
Patented technology and processes
Ability to experiment with techniques using data
Worlds largest vertical farm facility
Localization – with talent and farms<br>
High Capital expenditure
Limited crop varieties – no high-calorie grains
Long time to realise profits
Lack of right talent
Consumer Stigma – lack of USDA-certified organic seal Weakness Aeroponics technology is not affected by climate change
Presence in urban areas – shorter product to market cycle
Data repository and analytics
Patented technology and processes
Ability to experiment with techniques using data
Worlds largest vertical farm facility
Localization – with talent and farms<br>
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Brand value analysis :Competitive farming methods have an advantage over Aeroponic farming across dimensions 7 High Low Relativity Expenditure Range of crops Profitability Market Value Aeroponic Aquaponic Hydroponic<br>
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Strategic alternatives have been considered on the basis of our analysis 8 Positive growth prospects Current Portfolio sustenance Diversification Financial sustainability strategy Growth hacking Global Community strategy Terrace cultivation practices Farmers initiative in US<br>
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AeroFarms to advertise a new brand and purpose – ‘Cultivating Sustenance Together’
Effective growth hacking marketing to overcome current customer stigma
Building a customer ecosystem to build customer base 9 What Need to quickly grow and acquire customers
Overcome customer stigma
Effective usage of available data Why Implementation (1/3): Growth Hacking to build customer trust<br>
Effective growth hacking marketing to overcome current customer stigma
Building a customer ecosystem to build customer base 9 What Need to quickly grow and acquire customers
Overcome customer stigma
Effective usage of available data Why Implementation (1/3): Growth Hacking to build customer trust<br>
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Implementation (1/3): Growth Hacking to build customer trust 10 Advertise Acquire Use Retain Referral Paid (Influencers, keywords) Owned (websites, forums) Blockchain transparency, website and mobile app Customer feedback and ratings Recipe books, Mobile application Growth hacking will build a customer ecosystem that will ensure long-term engagement of the customer with AeroFarms<br>
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Paid advertising with Influencers and Google AdWords
Build mobile application and website
Initiate Blockchain pipeline- traceability of products 11 Technology and Infrastructure Implementation (1/3): Growth Hacking to build customer trust Customer service teams – customer engagement and feedback (social proof)
Application development team – integration of blockchain traceability with App
Creatives team – development of recipe books
Operations team – collaboration with Diet App (Healthify) HR and Operations<br>
Build mobile application and website
Initiate Blockchain pipeline- traceability of products 11 Technology and Infrastructure Implementation (1/3): Growth Hacking to build customer trust Customer service teams – customer engagement and feedback (social proof)
Application development team – integration of blockchain traceability with App
Creatives team – development of recipe books
Operations team – collaboration with Diet App (Healthify) HR and Operations<br>
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Implementation (2/3): Financial Sustainability Strategy Multiple channels of capital raising
Ensuring profitability for future growth 12 What Obtain sufficient funding to pursue growth strategy in the long run
Cost effectiveness can be further improved to make the business model profitable and sustainable Why<br>
Ensuring profitability for future growth 12 What Obtain sufficient funding to pursue growth strategy in the long run
Cost effectiveness can be further improved to make the business model profitable and sustainable Why<br>
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Implementation (2/3): Financial Sustainability Strategy 13 Pitch to venture capitals/ PE firms (Temasek) through different channels (e.g. Bangkok Sasin Business Plan Competition)
Apply for sustainability fund from World Bank 500 million - Sustainable Development Fund’, Shell Sustainability fund) Short-term (1-3 years) Issue AeroFarms Green bonds
Financial institutions to support sustainability, e.g. Blackstone group Medium-term (4-6 years) Long-term (7-10 years) Initiate IPO project on Nasdaq Stock Exchange
Hire sponsors and agencies, including investment bank JP Morgan, Accounting firm PwC, and Lawyer firm<br>
Apply for sustainability fund from World Bank 500 million - Sustainable Development Fund’, Shell Sustainability fund) Short-term (1-3 years) Issue AeroFarms Green bonds
Financial institutions to support sustainability, e.g. Blackstone group Medium-term (4-6 years) Long-term (7-10 years) Initiate IPO project on Nasdaq Stock Exchange
Hire sponsors and agencies, including investment bank JP Morgan, Accounting firm PwC, and Lawyer firm<br>
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Seek alternative LED suppliers with higher efficiency LEDs
Launch ‘community growing ‘ programs to address the high real estate expense 14 Technology and Infrastructure Establish a squad team consisting team members from finance, data science, operations departments
Launch Energy Efficiency Program to improve the process efficiency with technology and reduce energy cost
Design KPIs to track cost reduction efforts HR and Operations Implementation (2/3): Financial Sustainability Strategy – tackling cost effectiveness<br>
Launch ‘community growing ‘ programs to address the high real estate expense 14 Technology and Infrastructure Establish a squad team consisting team members from finance, data science, operations departments
Launch Energy Efficiency Program to improve the process efficiency with technology and reduce energy cost
Design KPIs to track cost reduction efforts HR and Operations Implementation (2/3): Financial Sustainability Strategy – tackling cost effectiveness<br>
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Implementation (3/3): Global Community strategy Expansion internationally and create global sustainable network
Create awareness - social project set up 15 What Interconnect operations and grow globally
Maximize social impact economically
Attract student talent Why<br>
Create awareness - social project set up 15 What Interconnect operations and grow globally
Maximize social impact economically
Attract student talent Why<br>
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Nanyang Technological university – research project and grants
Cross collaboration of engineering (PhD) and Business student
Organize ‘Ripple effect’ conference (roadshow for IPO) – hosted by Nanyang 16 Research and Development Set up Singapore local office
Partner with Johnson Controls – smart building investment
Investment in Real-estate – Tuas Link (Business parks)
Marketing campaigns - super markets and hawker Centres
Students involving in social projects collaborating with NGOs in developing countries (e.g. Ninos en Xela in Guatemala) HR and Operations Implementation (3/3): Global Community strategy<br>
Cross collaboration of engineering (PhD) and Business student
Organize ‘Ripple effect’ conference (roadshow for IPO) – hosted by Nanyang 16 Research and Development Set up Singapore local office
Partner with Johnson Controls – smart building investment
Investment in Real-estate – Tuas Link (Business parks)
Marketing campaigns - super markets and hawker Centres
Students involving in social projects collaborating with NGOs in developing countries (e.g. Ninos en Xela in Guatemala) HR and Operations Implementation (3/3): Global Community strategy<br>
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Timeline for implementation of Growth Hacking strategy 17<br>
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Timeline for implementation of Financial sustainability strategy 18<br>
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Timeline for implementation of Global Community strategy 19<br>
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KPIs: Following KPIs are designed to track and monitor the implementation process. Growth hacking strategy:
1. Increase in customer base
2. Net promoter indicator (% of promoters - % of detractors)
Financial sustainability strategy:
1. PE ratio through capital raising
2. Cost reduction rate
World community strategy:
1. Number of households with AeroFarms in bew markets
2. Number of partnered NGOs 20 KPI Growth hacking strategy:
1. 20% in Y1-Y3, 15% in Y4-Y5
2. 70%
Financial sustainability strategy:
1. More than 30X
2. 50% (progressively achieved in 5 years)
World community strategy:
1. 10,000 (progressively achieved in year 5)
2. 50 per year Target<br>
1. Increase in customer base
2. Net promoter indicator (% of promoters - % of detractors)
Financial sustainability strategy:
1. PE ratio through capital raising
2. Cost reduction rate
World community strategy:
1. Number of households with AeroFarms in bew markets
2. Number of partnered NGOs 20 KPI Growth hacking strategy:
1. 20% in Y1-Y3, 15% in Y4-Y5
2. 70%
Financial sustainability strategy:
1. More than 30X
2. 50% (progressively achieved in 5 years)
World community strategy:
1. 10,000 (progressively achieved in year 5)
2. 50 per year Target<br>
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Financial analysis: Proposed strategies will enable AeroFarms to grow revenue by 73% by 2024. 21 1. New revenue stream of subscription
2. Revenue grow 73% in 5 years Key highlights<br>
2. Revenue grow 73% in 5 years Key highlights<br>
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Financial analysis: Incremental implementation cost is associated with suggested strategies 22 Key highlights Incremental cost associated with strategies
Cost saving efforts through
21 million net income will be achieved<br>
Cost saving efforts through
21 million net income will be achieved<br>
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Financial analysis: Multiple channels of capital raising will enable AeroFarms with sufficient capital of USD 1,710 million in 10 years. 23 1. Diversified capital raising channels
2. Phased capital raising approaches, which are suitable for the current business situation of AeroFarms
3. Raise USD 1,710 million in total in 10 years Key highlights<br>
2. Phased capital raising approaches, which are suitable for the current business situation of AeroFarms
3. Raise USD 1,710 million in total in 10 years Key highlights<br>
24
Contingency plan: Mitigating controls will address anticipated risks of the strategies Growth hacking strategy:
1. Customer acquisition resistance
2. Delay in app development and Blockchain
Financial sustainability strategy:
1. Failure to obtain WB funding
World community strategy:
1. Resistance to onboard by local communities
2. Failure to acquire student talent 24 Risks Growth hacking strategy:
1. Utilise learnings from campaigns and adapt
2. Market with influencers and supermarkets to create awareness
Financial sustainability strategy:
1. Alternative options of funding
World community strategy:
1. Focus on real estate partnerships
2. Invest on technology to reduce manual effort Mitigation<br>
1. Customer acquisition resistance
2. Delay in app development and Blockchain
Financial sustainability strategy:
1. Failure to obtain WB funding
World community strategy:
1. Resistance to onboard by local communities
2. Failure to acquire student talent 24 Risks Growth hacking strategy:
1. Utilise learnings from campaigns and adapt
2. Market with influencers and supermarkets to create awareness
Financial sustainability strategy:
1. Alternative options of funding
World community strategy:
1. Focus on real estate partnerships
2. Invest on technology to reduce manual effort Mitigation<br>
25
Conclusion: AeroFarms can combine existing competencies with suggested strategies to achieve growth and social impact 25 AeroFarms can achieve growth, social impact, and technological innovation with the given strategies<br>
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THANK YOU FOR YOUR ATTENTION We now welcome any questions you may have. 2019<br>
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Appendix 2019<br>
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Financial analysis: Key assumptions have been made to facilitate the revenue projection for next 5 years 28<br>