Farmland crowdfunding platform AcreTrader just raised $12 million. This brings the company’s total funding since inception up to $18 million.
This Series A funding round was led by Jump Capital but also included Narya Capital, Revolution's Rise of the Rest Seed Fund, RZC Investments, and Revel Partners.
Farmland as an asset class
According to the U.S. Department of Agriculture (USDA), there are roughly 911 million acres of farmland in the country. The approximate breakdown is as follows:
- Farmers and ranchers own about 61% of the land they use, while they rent the rest from third-party landlords.
- Other operators own 8% of this land.
- Investors groups (including retired farmers) own the remaining 31% of America's farmland.
Farmland return profiles are driven by two main factors:
- Increases in farmland value over time.
- Cash rental payments from farmers or crop yields.
Farmland as an asset class has been popular amongst investors because of its low volatility, low correlation to other assets, and the fact that it can be a hedge against inflation. On top of that, farmland has produced a positive return every year since 1991, generating an average annual return of 11.5%, according to the USDA.
More on AcreTrader
While farmland has been a high performer, it hasn’t been very accessible to the average investor. That’s where AcreTrader comes in.
AcreTrader is opening up farmland investing opportunities through its crowdfunding platform. The company’s platform handles all aspects of administration and property management, from insurance and accounting to working with local farmers and improving soil sustainability. And on the other side, investors have access to fractional ownership in the farmland deals that AcreTrader sources. Right now, only accredited investors can access the deals, but that could change with the new Reg CF guidance.
AcreTrader’s traction and growth
According to its press release, within the last year AcreTrader doubled its employee count, closed two rounds of funding, increased the total funds raised on the platform by 12 times, and welcomed investors from 48 states onto its platform.
Carter Malloy, founder and CEO of AcreTrader, explained, "Over the last few months, we've consistently seen our offering sizes grow while our funding windows shrink, showcasing the fast-growing desire surrounding this resilient asset class … As a company that seeks to support and connect farmers and investors in a way that no one else is, we're humbled by this monumental growth and look forward to leveraging these new funds to continue on that trajectory."
Investment opportunities on the platform
AcreTrader says it has a thorough underwriting process that eliminates >99% of the parcels it evaluates. New farms are typically listed every 1-2 weeks.
Recent deals on the platform include cotton and soybean farms in Missouri, Mississippi, Iowa and Illinois. There was also recently an apple and cherry farm deal in Washington.
AcreTrader has another Missouri cotton and soybean deal coming soon.
The Millionacres bottom line
Interested in diversifying into farmland? Crowdfunding platforms like AcreTrader are worth a look. Expect these platforms to become more mainstream as more venture capital funding enters the arena, investors look to diversify into the asset class, and crowdfunding rules continue to evolve.
For more on AcreTrader, check out our interview with AcreTrader CEO Carter Malloy.