Listen to this articleBelow is our recent interview with Garrott McClintock, COO at AcreTrader:
Q: Could you provide our readers with a brief introduction to AcreTrader?
A: AcreTrader is an online platform that uses some aspects of crowdfunding to enable accredited investors to invest in farmland online quickly and simply. We think United States farmland represents an attractive, long-term investment while providing significant relative capital preservation during times of economic turmoil. However, directly investing in farmland was historically difficult and unattainable for most investors. We’re here to change that.
For farmers, AcreTrader acts as a trustworthy capital partner, providing new financing options to grow their operations.
Investors earn money on their investment in two ways: annual distributions from cash rent from the farmer leasing the land as well as land appreciation over time that investors would receive upon the ultimate sale of the property. The AcreTrader team handles all aspects of farm management, from sourcing and pre-purchase diligence to leasing, property management, and eventually, disposition.
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Q: Why would investors use your platform to buy shares of farmland?
A: We often say we are “democratizing” farmland investing because absent a solution like ours, all the burden of farmland sourcing, which requires a great deal of expertise, and management would fall on investors themselves. Our team has extensive boots-on-the-ground experience with farmland, and we conduct rigorous due diligence on every farm we offer. That makes it easy for investors to participate in the positives of owning farmland while largely eliminating the work associated with it.
Some of those positives are:
– Portfolio diversification: Farmland is largely uncorrelated to other asset classes.
– Inflation hedge: No other asset shows a higher correlation to the Consumer Price Index and Producer Price Index, two widely used measures of inflation.
– Attractive long-term returns: Over the past 25 years, the average annual return of farmland has been 11-12%, according to the NCREIF.
– Low volatility: Farmland has generated positive annual returns every year for the last 30 years. Compared with other major assets, the volatility of farmland returns has been extremely low.
– Lower capital requirements: Investors can get started with minimums as low as $10,000.
Q: What were the main challenges you faced in developing this agriculture real estate platform?
A: Our platform is proprietary and was built from scratch, so of course there has been and will continue to be a herculean amount of effort put into building a secure and seamless experience for our customers.
We have also put significant effort into education. Most investors are new to farmland as an asset class, so there’s a natural learning curve and trust building process there. We believe that the best kind of customer is an educated one. Additionally, while our team handles the day-to-day responsibilities of farm management, we want to equip our investors with insight into the business of farming and the agriculture space.
On the other side, we’re working to help farmers and sellers understand investors’ interests. By transparently acquainting them with our business and transaction structures, we earn their trust as partners in their business endeavors.
Q: You’ve recently raised $12 Million in Series A funding; can you tell us something more?
A: Our lead partner in this round of fundraising was Jump Capital. Also joining our existing investors, RZC Investments and Revel Partners, is Narya Capital and Revolution’s Rise of the Rest, a fund that focuses on companies between the coasts, which is highly relevant not only to building AcreTrader, but to our industry as a whole and the customers we serve. We couldn’t be happier to have this group of partners to help us expand and accelerate our growth.
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.
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Q: What is next on the roadmap for AcreTrader?
A: Our goal is bringing better access, liquidity, and transparency to farmland transactions throughout the US. To that end, we’re expanding our team, service offerings, and accelerating our work on additional resources to help facilitate investor and farmer research and education in new and exciting ways.
Interest in farmland investing is growing exponentially right now. Our answer to that demand is online tools, data science, and marketing that bring investors and agricultural entrepreneurs into closer collaboration.
Last Updated on April 25, 2021
