Vertical Farming Faces a Reality Check in the U.S.

After a funding boom and bust, U.S. vertical farms shift toward efficiency, discipline, and selective growth to prove they can endure

15 Dec 2025

The US vertical farming industry is pulling back from rapid expansion after years of heavy venture funding, as investors demand clearer evidence of profitability and operational discipline.

After a surge in capital that peaked in 2021, operators now face tighter financing conditions and closer scrutiny. The focus has shifted from scaling quickly to improving efficiency, strengthening balance sheets and delivering steady performance at existing facilities.

AeroFarms illustrates this change in approach. Rather than pushing to expand its footprint, the company is concentrating on stabilising operations at its flagship farm in Danville, Virginia. Management is prioritising cash flow and execution before moving ahead with plans for a second site. Recent equity funding and debt refinancing linked to the Danville facility are intended to support that strategy.

Growth remains part of the company’s plans, but it is no longer pursued at any cost. Instead, AeroFarms and its peers are signalling that expansion will follow demonstrated performance.

This stance reflects a broader shift across the sector. Industry data and reporting by the Wall Street Journal show that venture investment in vertical farming has dropped sharply since its 2021 high, with deal volumes in 2025 now only a small share of earlier levels. Several high-profile start-ups have filed for bankruptcy or ceased operations, reinforcing investor caution.

The new threshold for funding is clear. Companies must show that individual farms can generate reliable output and viable unit economics. Ambitious projections alone are no longer enough. Capital is increasingly directed toward operators that can demonstrate their technology works consistently under commercial conditions.

The impact has been uneven. Larger and better-capitalised groups with operating farms and established retail contracts have been able to refinance debt, slow expansion and extend their financial runway. Smaller or highly leveraged start-ups face harder decisions as funding options narrow.

Industry consolidation now appears likely. Mergers, asset sales and technology acquisitions could allow stronger players to absorb weaker ones, reduce duplication and improve efficiency. While disruptive in the short term, the process may leave behind a more resilient sector.

Government support for domestic food production remains a positive factor, but it is no longer sufficient on its own. For US vertical farming, the current reset represents a test of whether the industry can move beyond rapid growth and establish a durable commercial model.