EXCLUSIVE: Sea To Sky Farms Co-Founder — We Are 'Building A Resilient And Profitable Business'

Vertical farming has existed for over two decades, yet few attempts have achieved profitable commercial production at scale. Benzinga sat down with Daniel Cruz, co-founder and CFO of Sea to Sky Farms, an innovative vertical farming company, to discuss the company’s future and opportunities within this sector.

BZ: How would you describe Sea to Sky Farms in an elevator pitch?

Cruz: Sea to Sky Farms aims to be a pure-play vertical farming entity that provides exposure to food security. We’re acquiring production assets to increase capacity and grow revenues while searching for best-in-class technology for efficient operations.

We’re a vertically integrated vertical farming company with plans for a future IPO. Our goal is to be a leader in sustainable agriculture, leveraging technology to ensure food security and quality. We’re focused on building a resilient and profitable business model that can adapt to changing market conditions and consumer demands.

BZ: Can you tell us about your background in finance and how you ventured into indoor farming?

Cruz: I have been involved in mining, energy and technology. I got excited about finance as a teenager and spent the first 12 years of my career as a broker, including eight years at the head office of Canaccord Financial (Canaccord Genuity). During that time, I reviewed thousands of companies planning their IPOs or being publicly traded ventures in the early days.

Regardless of sector, financing and restructuring these companies taught me that growth requires a strong marriage of operational expertise and leadership with recent capital markets experience. Equally important, companies must have a defined commercial market and the ability to meet growing demand with a disruptive solution.

Sea to Sky's business case was built on these same criteria. I was able to validate that the opportunity in vertical farming is gaining market share in grocery stores and restaurants, normally dominated by traditional operators.

The turning point was COVID-19. Seeing supply chain vulnerabilities and dramatic statistics, such as almost half of all food production being wasted, made me realize the food system needed fixing. Nearly 90% of leafy green produce in Canada is imported, highlighting our dependency on external sources. There’s huge potential for technology to revolutionize agriculture.

We need to work together because vertical farming is not about replacing traditional farming but complementing it. With the right technology and collaboration, we can ensure a steady food supply even in adverse conditions.

BZ: What differentiates your company from other vertical farming companies?

Cruz: Our farm, acquired in 2023, has operated for almost five years, giving us substantial knowledge about vertical farming’s pros and cons. Unlike many other firms still in R&D, we have a history of commercially sold products to retailers and expect profitability this quarter as we are operating at 100% capacity. We understand the challenges and have developed strategies to overcome them, ensuring our operations are efficient and our products meet high-quality standards.

We focus on continuous improvement and innovation, incorporating customer and partner feedback to refine our processes and products. This commitment to excellence sets us apart and positions us for long-term success in the competitive vertical farming market.

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BZ: What is the current market size, and what opportunities and growth do you project for the next five to 10 years?

Cruz: The global leafy greens market alone is about $100 billion. The market for vertical farming is expected to grow substantially as technology improves and the need for sustainable agriculture becomes more urgent.

Although many people want vertical farming to produce various crops like tomatoes, cucumbers, or even strawberries, proving that we can run a profitable business with leafy greens is crucial. We're actually one of the only technologies in the world that can grow a full head of Romaine lettuce with the root on. Selling lettuce with the roots still attached ensures it remains fresh until it reaches the consumer.

One important point about the opportunity here is highlighted by a United Nations report featured in an article by Wired Magazine last year. The report states that the world’s broken food system costs about $12.7 trillion annually, roughly 10% of the global GDP.

Therefore, there is a more significant opportunity than people realize, not only in producing lettuce but in strategically locating production facilities to create economies of scale in logistics, shipping, and sustainability. This is a long way of defending the leafy green business, which has exciting potential.

Every restaurant worldwide offers Caesar salads; unfortunately, much of the lettuce used is not as nutritious as it could be. This represents a substantial opportunity to deliver nutritious products.

BZ: How do you plan to address the industry’s low profit margins, especially given the high domestic labor costs?

Cruz: We’ve spent years understanding workflow within our farm. Our system has an automated conveyor belt, reducing labor needs, and we’re focusing on profitability before heavily investing in robotics and automation.

Our growing technology has been developed in collaboration with a former Microsoft senior executive who worked on machine learning, including AI. This technology monitors the crops, optimizing nutrients, water, and lighting. We’ve spent two to three years working with our partners to evaluate AI and how we can optimize our system with various software and inputs. AI is indeed critical in the entire food supply chain, but for growing specifically, it needs to be implemented at scale to be truly valuable.

Solar panels and geothermal energy solutions are costly, but we're looking for practical ways to integrate green energy. Since sustainability is our core value, we're looking for ways to reduce our carbon footprint.

BZ: Are you looking to grow through strategic partnerships?

Cruz: We’re working with a greenhouse co-op in Canada and major retailers to diversify supply chains. I cannot mention names, but we're working with some major, world-class retailers that have noticed their weak supply chains.

These partnerships will influence where and when we build our next farms, keeping our products close to the end market. We’re also exploring opportunities to repurpose existing structures for our technology, reducing capex costs.

BZ: Your big goal is going public. Do you have a timeline for that?

Cruz: We’re watching the market closely, especially Freight Farms‘ upcoming IPO. Based on their performance and market conditions, we might explore going public in 2025, but it depends on economic factors and industry developments.

Going public is a significant milestone, and we want to ensure that we are fully prepared and that the timing is right. We are focused on building a strong and sustainable business that can thrive in the public market.

BZ: Is there anything else you'd like to add for our readers?

Cruz: People need to care about their health; it really starts on your plate. We have proven that, even as a nanocap startup, we could deliver a product to major retailers within the first two years of operation. We achieved Global GAP certification, one of the most stringent and well-known global certifications for food safety.

I believe we’re in a huge agritech boom cycle that will encompass the world, including the Middle East, and areas affected by climate change. I don’t see the Middle East having food security without technology, and I don’t see climate change making it easier for greenhouse and field crop growers. We have to embrace technology.

Regarding upcoming milestones, we are looking to partner, joint venture, or acquire a world-class technology stack that will allow us to fast-track expansion globally. We hope to complete an acquisition over the next 12 months to put us on a global scale and expand within Canada and beyond.

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Daniel Cruz photo courtesy of Sea To Sky Farms.