Square Roots, a tech farming startup cofounded by Elon Musk’s brother, shut down the majority of its remaining locations on Tuesday and laid off most of its staff.
Square Roots Farming
Founded in 2016 by Tobias Peggs and Kimbal Musk, Square Roots is a modern, urban farming company that uses innovative hydroponic technologies to produce fresh, locally grown food.
The company set out to transform the food system by growing fresh greens locally in cities where they will be consumed.
According to Pitchbook, as of April 2022, the “smart farm” company had secured over $90 million in total funding. Notable backers include close friends of Elon Musk.
Layoffs and Farm Closures
According to two sources, Square Roots CEO Tobias Peggs, informed employees during a Tuesday meeting that the startup would suspend production at its farms.
Impacted locations include Springfield, Ohio, Shepherdsville, Kentucky, and Kenosha, Wisconsin.
Employees at the Square Roots’ Grand Rapids location say they were informed that one of the two farms at the site had been closed down. They said the other would be retained to align with the company’s new business model.
The former worker revealed that nearly all the employees at the Grand Rapids location were laid off leaving only about 10 remaining.
Additionally, all on-site employees at the other locations were terminated.
The exact number of layoffs is unknown. The company was estimated to have around 198 employees as of June, according to PitchBook.
Earlier this year, Square Roots closed its original farm in Brooklyn. This closure resulted in the layoff of approximately 50 employees, as stated in a January press release from Square Roots.
Surprisingly, the Kenosha facility, the company’s largest, had just been open in August, 2022. And, the Kentucky location had been operational for less than three months!
The Future of Square Roots
According to ex-staffers, Peggs informed employees that the company was redirecting its focus from packaging its own product to providing increased support for business partners, such as Gordon Food Services.
Company spokespeople have indicated Square Roots is changing its business model to focus on “farming as service.”
“We’re now operating our controlled climate farms exclusively for our strategic partners — whether that’s to immediately secure the supply of high-quality crops, or to explore novel ways of profitably growing high-calorie food indoors,” the company told WDRB, a Louisville news outlet.
Vertical Farming Industry Challenges
Square Roots is certainly feeling the impact of industry challenges. Inflationary pressures have been particularly hard on an industry that until just recently was seeing tremendous investment.
According to the Fast Company article linked above, “As of the beginning of December 2022, $1.7 billion had been invested in indoor growers, more than any other part of ag tech.”
CEA hydroponic farms are expensive to own and operate. Although there are many benefits to hydroponics, building a profitable business selling low-margin produce has proven difficult.
In fact, according to a study done by Cornell in 2020, “Landed costs of field-produced lettuce from California were less than half those from CEA systems.”
That’s a big hill to climb for the hydroponics industry!
One vertical farming company that continues to expand is Vertical Harvest Farms based out of Jackson, Wyoming. I recently did a profile on it and have been watching to see how it performs in this difficult climate.
