2023 was the hottest year on record, and it shows no signs of cooling down anytime soon. Rising temperatures are making farming increasingly difficult in areas that were once major agricultural resources, with heat and drought severely impacting crops.
For farmers, many of whom rely on traditional methods and don't have access to high-tech greenhouses, adaptable, out-of-the-box solutions are paramount. That's where agritech companies like Riyadh, Abu Dhabi, and Delaware-based Iyris come in. Providing a lifeline to farmers and helping them weather the challenges of climate change with agricultural solutions, the startup is announcing a $16 million Series A funding round.
Speaking with TechCrunch, Chairman John Keppler said the funding gives Iris the capital to “continue to scale and grow our business, which is solving the incredibly difficult problem of growing fresh produce and increasing crop yields in the face of climate change, rising temperatures, extreme heat and drought.”
San Francisco-based climate and sustainability fund Ecosystem Integrity Fund (EIF) led the round, with participation from Global Ventures (which also invested in the company's $10 million seed round led by Aramco-affiliated Waed), Dubai Future District Fund (DFDF), Canoo Ventures, Globivest and Bona Venture Capital.
While much of the coverage on climate technology focuses on expensive, robust technologies that may be suitable for certain purposes but are difficult to deploy, Kepler said IRIS targets the low- and medium-tech world. Farmers in the sector use protected agricultural methods such as polythene covers, acrylic, shade nets and screens to reduce the environmental impact on large-scale crop production. These methods include fields and tunnels that aim to limit ecological damage, but are more accessible, practical and can be used on a wide scale, Kepler explained.
Advancing commercial agriculture in the world's hot climates
Iris was born out of an innovation developed at Saudi Arabia's King Abdullah University of Science and Technology (KAUST). Co-founded in 2018 by CEO Ryan Leffers, an agricultural engineering expert, botanist Mark Tester, and Dheri Baran, the company (formerly Red Sea Farms) initially grew and sold tomatoes in Middle Eastern countries using heat-rejection technology, then commercialized the technology and sold it to other farmers.
Iris's flagship technology, called Second Sky, involves adding an additive to polyethylene manufacturing that blocks near-infrared radiation and significantly reduces heat while allowing photosynthetically active radiation (light that plants need for photosynthesis) to pass through. Keppler explained that if you compare a conventional polyethylene roof to one coated with the additive, you'll notice a significant temperature difference due to the additive's heat-blocking properties.
LR: Deriya Baran, Ryan Leffers, Mark Tester.
This means farmers can reduce cooling costs, water usage and electricity consumption to manage crop growing conditions on their farms. As a result, they can plant seeds earlier and extend the growing season, leading to higher yields and healthier plants (which use energy to grow and produce fruit, rather than growing more leaves for transpiration). The six-year-old startup claims that its proprietary technology (which includes resistant plant genes) can reduce energy and water consumption by up to 90%.
“We've seen dramatic increases in yields in parallel tests,” commented Kepler, the investor-turned-board chairman, “and in fact, according to our customers, who are the world's largest growers, these are some of the few innovations we've seen in this space for the better part of the last 30 to 40 years — this technology makes it easier and more profitable to grow crops in challenging conditions.”
IRIS began in the country near KAUST and has since expanded rapidly to the UAE, Egypt and Morocco. These regions, dominated by desert agriculture, are ideal for testing and proving the effectiveness of the technology because of the harsh growing conditions for crops. But as climate change intensifies, similar challenges arise globally, leading to the adoption of IRIS' technology in regions such as the United States, Portugal, Spain and Mexico. Kepler said large fresh produce producers in these regions are looking to mitigate new climate challenges and adopt solutions that have been proven in harsher climates.
Ensuring food security in the GCC countries and other arid regions
Second Sky attracts growers in some dry areas because it reduces input costs and, most importantly, extends the growing season, he added. Farmers and growers who use Second Sky can demand higher prices and earn more because they can continue to produce when their competitors can't. Kepler claims that as a result, the purchase of Second Sky products pays for itself in less than a year.
“This means that the farmers we serve have a regular replacement cycle for products that typically have a three- to five-year lifespan, depending on region and application. This replacement cycle provides a continuous revenue stream for the suppliers of these materials,” he explained. “We sell our products to farmers through local distributors and provide the additives to manufacturers and distributors who incorporate it into their products. Our products are expensive, but the benefits farmers derive translate into a payback period within the first year of the crop cycle.”
The Aramco-backed climate technology works with two main customer groups: large international growers who operate farms globally, and smaller growers and farmers they reach through manufacturing and distribution partners. The company sells SecondSky's polycarbonate, polyethylene, netting, and soon-to-be-launched shade screens to customers in 11 countries, including Turkey and the UK. The company's customers include Silal, Armando Alvarez Group and Criado & Lopez.
Kepler argues that there is limited competition in the horticulture industry at the moment. Companies such as US-based AppHarvest and AeroFarms have filed for bankruptcy repeatedly in recent years despite raising hundreds of millions of dollars, showing how difficult it is to run a vertical farming business. One of the reasons Iris has stayed in business is because it has used its technology in-house to prove its effectiveness, ultimately building trust with other growers, he noted.
“There have been a lot of large-scale, commercialized attempts at innovative agriculture, and sometimes those solutions are spot on. But we argue that it's often more effective to provide a drop-in solution into existing agricultural infrastructure, using existing supply chains,” says Kepler, the former founder and CEO of wood pellet manufacturer Enviva until its recent bankruptcy. “That way farmers don't have to change their behavior; they can keep doing what they do best: growing crops in their specific regions. Our goal is to make it a little easier for farmers, extending their growing season and increasing their profitability in the process.”
Kepler said Iris, which serves a global market with more than $6 billion in annual recurring sales for greenhouse coverings, gained more customers and sold more product (or made more revenue) in the first quarter of 2024 than in all of 2023. He added that the company also aims to grow other metrics, including the total number of hectares covered by Second Sky, the geographic area it serves (expanding to countries including India and China) and the number of square metres of product installed for customers.