August 14, 2017

Fort Worth, Texas-based fintech company Harvest Returns has announced the launch of a new agriculture investment platform.

Founded in 2016 by military veterans, Chris Rawley and Austin Maness, Harvest Returns has created the equity partnership platform to enable agricultural producers and landowners to access capital from investors while still being able to maintain control over their operations.

With investment minimums as low as $5,000, potential investors are able to view the details regarding submitted and approved operations on the Harvest Returns website before selecting a private placement.

Investors have access to tax documents, receive regular updates on the progress of their investment, and realize annual distributions upon the harvesting of crops. Meanwhile, agricultural producers receive their funding (which generally ranges from $500,000 to millions) once the full amount of their deal is raised.

“By combining the benefits of agriculture with the ease of our investment platform, we are providing access to a larger pool of investors to farmland, ranchland and timberland ownership,” said Chris Rawley, CEO of Harvest Returns. “Plus, we are bringing them closer to the hard working farmers who grow their food.”

To date the platform includes agricultural investment listings in Texas, Arizona, Florida, Brazil, and Belize, however, the firm states that it does not focus on, or exclude operations from any specific geographies, but rather concentrates on a grower’s historical production success and the financial benefit of each deal. Furthermore, the firm adds that the platform answers the growing demand by consumers to know where their food comes from, and increases traceability.

“People are starting to care more and more about where their food comes from, so an investor could choose to invest in a producer in their state or region,” said COO Maness. “When they receive regular updates on that investment, they are not getting only a financial benefit, but also an emotional one that connects them more to their community.”

In the Beginning

Crowdfunding is increasingly becoming part of the investment vernacular. In 2015 the Securities and Exchange Commission (SEC) sanctioned a new form of crowdfunding that allowed startups to legally offer investors a stake in their venture through the online sale of shares.

For years, startups, entrepreneurs, and individuals used the internet to raise capital to fund projects, however, starting in mid-2016, businesses were able to sell a stake in their company through online platforms that are registered with the SEC.

This relaxation has led to the expansion and diversification of platforms available to both agricultural producers and to investors seeking out opportunities in agriculture and food.

Players

For instance, CircleUp, a crowdfunding platform that invests in emerging consumer brands, is being seen more and more as an active contributor to funding rounds for innovative food startups alongside private equity firms.

In June of this year, CircleUp was an investor, along with Advantage Capital and Rand Capital, in a $3.3 million round for savory oat company, Grainful; and was an investor along with Kellogg’s venture capital fund eighteen94; and Blu Venture Investors in innovative plant-based smoothie company Bright Greens.

And in February of last year, Back to the Roots – a millennial-focused company with a mission to reconnect consumers to the source of their food – announced a significant $5 million seed round secured through a combination of public and private equity with $3 million of the funding having been raised through CircleUp.

Meanwhile, in Australia, DomaCom, the self-labeled “fractional property investing platform” began a $410 million crowdfunding campaign in 2015 with the goal of acquiring the S. Kidman cattle empire.

The crowdfunding campaign was scheduled to be pitched to 50,000 investors in December 2015 with a minimum subscription of $2,500. Based on an average participation of $35,000 each, it is estimated that 10,000 subscribing investors would be needed to fund the offer. Despite DomaCom’s best efforts, S.Kidman was acquired by a joint venture between Australian mining magnate Gina Rinehart and China’s Shangjai CRED for A$386.5 million.

Chinese fruit farming company Dongfang Modern also recognized the potential that crowdfunding offered – taking the unusual step in August 2015 of launching an equity crowdfunding campaign in New Zealand to supplement the funds it’s raising though its Australian initial public offering (IPO).

So far crowdfunding is a nascent investment vehicle – however, as the demand by consumers to be more deeply involved and better informed about where and how their food is produced, crowdfunding platforms could become increasingly common in the years to come.

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.