April 20, 2020

By Lynda Kiernan

Online farmland brokerage AcreTrader announced it has closed on an oversubscribed $5 million Seed round led by RZC Investments. Also participating were Revel Partners, Carter Malloy, the founder and CEO of AcreTrader, along with private capital commitments from technology, finance, and agricultural leaders. 

Farmland offers distinct advantages as an asset class, including being counter-cyclical, and the ability to offer dual-channel returns through land appreciation, and annual dividends generated from rent payments. Together, the returns realized through these two channels have averaged nearly 12 percent compounded over the past 30 years.

However, there are certain challenges and entry barriers including sizeable capital requirements, high fee structures, and the need for farm management keeping many from being able to capitalize upon these advantages.

Founded by Malloy in 2018, AcreTrader aims to remove these barriers – to increase transparency and security for investors, while also removing many of the challenges of owning land, by handling all administration duties including property management, insurance, accounting, and working with farmers and improving soil sustainability.

“Farmland has quietly been one of the best performing major asset classes over the last 30 years,” said Malloy. “Large funds and private equity groups have been rapidly moving into farmland in recent years, but it hasn’t been easily accessible to most investors. With this round of funding, we anticipate allowing even more people to invest through acretrader.com.”

The company employs a crowdfunding business model operating under the JOBS Act of 2012 that uses enterprise-class technology, proprietary software, and processes to eliminate the entry barriers faced by investors looking to capitalize on the investment benefits and opportunities gained through farmland investing.

Each parcel is subjected to deep due diligence and review prior to deciding if it should become an offering through their portal, with less than 1 percent of the total parcels under consideration being selected for investment. Once approved, AcreTrader forms an LLC for each parcel, offering shares in the entity to prospective investors. And although AcreTrader suggests its investors take a long-term approach of between three and 10 years for their holdings, the startup also has a platform through which investors can exit and sell their shares.

Currently, AcreTrader is offering shares on corn and soybean farmland in Iowa and Illinois (the Illinois land is already 100 percent subscribed), with another eight deals being recently closed. 

The capital from this round will be used by the platform to scale up to meet surging demand, to improve investor education about farmland investment, and to expand its investment offerings.

“AcreTrader’s momentum grabbed our attention, and after reviewing the market opportunity and positive customer feedback, it became clear that the company is poised to modernize land investing,” said Matt Tarver, partner, RZC Investments. “These attractive farm investment opportunities have historically been limited to larger institutional investors, and AcreTrader is breaking down those barriers to democratize the asset class.”

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