Combination with AppHarvest closes today
A business combination between Novus Capital Corporation, a special purpose acquisition company (SPAC) focused on sustainability and social equity, and the AgTech startup, AppHarvest, will close today, at which point AppHarvest will become a public company.
Novus is led by CEO Larry Paulson and Chairman of the Board Bob Laikin, who have a combined 50+ years of experience in the technology sector. As an ESG-focused SPAC, Novus examines investment criteria that include a mix of financial and environmental factors. For example, potential company partners must have an enterprise value of $500 million to $1.5 billion and a demonstrated operational stability with growth potential, but they must also show themselves as industry leaders in sustainable problem solving.
Founded by Jonathan Webb and backed by the likes of Martha Stewart, Dave Chen and J.D. Vance, AppHarvest already has shipped its first harvest of tomatoes from its flagship farm in Morehead, Kentucky. That farm alone is expected to produce about 45 million pounds of tomatoes per year.
AppHarvest already has two additional sites under construction—a 15-acre leafy green facility in Berea, Kentucky, and a 60-acre vine crop facility in Richmond, Kentucky. AppHarvest aims to build a dozen of these indoor farms by 2025 in the Appalachia region. These high-tech facilities are designed to use 90% less water and no chemical pesticides, all while producing yields up to 30 times greater than traditional open-farm agriculture.
“AppHarvest was a great fit for us. Its technological innovations address the issue of food shortages while lessening farming’s environmental footprint and driving job growth in an underserved area,” Laikin said. “We’re proud to be able to support these important solutions.”
Novus listed an IPO on May 19, 2020, then announced a merger agreement with AppHarvest on Sept. 28. The transaction, which is expected to produce $464 million in net proceeds to AppHarvest for general corporate purposes and to facilitate future facility development, includes a $375 million PIPE, led by Fidelity, and the $30 million convertible note issued by AppHarvest to Inclusive Capital in September 2020.
Post-closing, the company will retain the name AppHarvest and list on the NASDAQ as APPH.
Earlier this month, AppHarvest shipped its first tomato crop to grocery giants such as Kroger, Publix and Walmart. The company also hired former Impossible Foods CFO and previous COO David Lee as its president.
A word with Webb
We reached out to AppHarvest founder and CEO Jonathan Webb to learn more about what drives his company and his vision for the future.
You’ve said in other interviews that you wanted to go public to give consumers ownership of this company. Why has consumer ownership been important to you?
Trust is foundational to building a brand. Consumers are more educated than ever about the products they buy—and COVID especially has given many more of them a chance to become more knowledgeable about the quality of their food and where it comes from. One of our core values at AppHarvest is radical transparency and trust. Becoming a public company gives the buyers of our produce the opportunity to invest in our company because they believe in our mission—and that’s incredibly important to us. Our goal is to redefine agriculture by improving access to fresh, nutritious, sustainably grown fruits and vegetables and to make a social impact in Appalachia while doing so.
You recently announced the company’s first harvest. What feedback have you received from grocers and consumers?
We have seen incredible demand from grocers and from consumers who want U.S.-grown and chemical, pesticide-free produce. In 2018, nearly 70 percent of all fresh vine crops sold in the U.S. were imported. Grocers are seeking a domestic, reliable food supply. So even with the 45 million pounds of tomatoes that our first indoor farm is expected to produce annually, we’re just scratching the surface for the demand that exists for sustainably grown produce.
Last year, members of the U.N. Security Council came to visit you in Kentucky. What were some of your biggest takeaways from those conversations, and how will they shape AppHarvest’s future endeavors?
U.N. studies report that the world will need at least 50 percent more food to feed the growing population by 2050. That means if we keep farming as-is, we’d need a second Planet Earth to meet those demands. We have no choice: We must produce more food with fewer resources. The majority of the world’s fresh water supply already is tied up in agriculture. AppHarvest helps to solve for multiple U.N. Sustainable Development Goals. In the end, the global demands for efficient food production are so critical that we must begin deploying.
The COVID-19 pandemic exposed some of the flaws in our current food system. How does a controlled environment like AppHarvest’s indoor farms mitigate risk to food security?
One of the major factors currently affecting traditional agriculture is climate risk from extreme weather conditions—drought, wind damage, flooding, fires. AppHarvest’s climate-controlled indoor farms can help mitigate that risk. The U.S. also has become increasingly reliant on imports of vine crops, and we saw the shortages that occurred during the pandemic related to not being able to move produce across borders. AppHarvest is creating a resilient, domestic food system that uses 90 percent less water and 100 percent recycled rainwater collected onsite. Plus, our geographic position in Central Appalachia puts us within a single day’s drive of about 70 percent of the U.S. population versus the thousands of miles and weeks of shipping required from Mexico or the Southwest.
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