Dive Brief:

• BrightFarms, the high-tech greenhouse operator that supplies produce to a range of retailers, raised $55 million in Series D financing in a round led by Cox Enterprises.

• The produce grower and distributor said it plans to use the money to expand its network of greenhouse farms beyond its current facilities in Pennsylvania, Virginia and Illinois. A new one is opening this summer in Ohio. BrightFarms, which launched in 2011, provides packaged salad greens to retailers such as Walmart, Kroger and Ahold Delhaize.

• Separately, Brooklyn, New York-based Gotham Greens announced it raised $29 million in a Series C financing round led by existing investors. The company, founded in 2008, said it will expand its footprint, add employees, widen distribution and enhance its R&D capabilities. Gotham Greens currently owns and operates four hydroponic crop production facilities in New York and Chicago, with more under development.

Dive Insight:

Investors are drawn to hydroponic growing operations like BrightFarms and Gotham Greens because they can supply retailers year-round with locally produced items grown in efficient and sustainable ways. As BrightFarms has noted, the model enables the company to quickly and efficiently eliminate time, distance and costs from the food supply chain.

Besides profitability and sustainability, indoor farming brings other on-trend assets. Shoppers increasingly want to know where their food comes from, and they are aware of the risk of E. coli and other contamination — such as the recent outbreak linked to romaine lettuce grown in fields. Locally grown produce from indoor greenhouses can go a long way toward responding to both of those concerns. Another key factor behind its success is that consumers are often willing to pay more for it.

Vertical farming, as the field is often called, has been a money pit for startups, which have struggled with high energy and labor costs and shaky go-to-market strategies. Companies are improving the science and their business models, enabling operations such as BrightFarms and Gotham Greens to become significant suppliers in the high-growth fresh produce space. These latest investments represent another vote of confidence for the growing field.

Success breeds competition, and these two firms are far from only ones out there. Dallas-based Eden Green Technology now supplies produce to Walmart stores, while Plenty, based in San Francisco, has ambitious plans to expand across the country. Many other startups are growing with an eye on high-density metropolitan markets.

As indoor greenhouse firms further develop, they are likely to add to their current lineup of salad greens, tomatoes, herbs and other fresh items. This will enable retailers that are already expanding their fruit and vegetable offerings to meet consumer demand by enhancing their locally grown produce selection. They also will be able to offer more branded produce items, which are a growing segment. According to Nielsen, the dollar share of branded produce jumped 7.7% from 2012 to 2016 and comprised 38.5% of total produce sales.

It's hard to see any downside for retailers arranging for indoor greenhouses to supply them with fresher, locally grown and branded produce as long as the costs are reasonable and the quality stays high. Featuring them could draw new customers and bolster loyalty among existing ones eager for innovative takes on fresh produce.