INSUBCONTINENT EXCLUSIVE:
Carter Malloy thinks that lucrative investments include dirt, some seeds, maintenance, and growth — literally
So, he founded Fayetteville, Arkansas-based AcreTrader, an online farmland investment platform.
AcreTrader wants to lower the barrier of
farmland ownership for people who aren&t experts in investing in the field to begin with
Malloy calls it a Robinhood for buying farmland.
AcreTrader is trying to solve the traditionally cumbersome process it takes to acquire a
Historically, Malloy said, people have to acquire a piece of land which could cost millions
Land-buyers will either have deep pockets or acquire the land from family
After that, buyers have to go to a farm broker, do due diligence, and learn how to work with the farmers who will work on the
land.
&Farmland has provided 11 to 12 percent average annual returns for nearly 30 years,& he said
&With much less volatility and price swings than other asset classes.&
The AcreTrader platform connects buyers, like individual investors,
family offices, or investment funds, to farmland that is available for purchase
AcreTrader incorporates each property it acquires under an LLC, and then users are able to buy shares of that entity
Think of shares in terms of acres, so 20 shares could be 2 acres of land.
If you want to sell the shares of your land, AcreTrader has a
marketplace for you to do that
But, since land has a long-term investment benefit, the company recommends holding ownership of land between 3 to 10 years, based on the
property.
AcreTrader vets land properties before buying them, accounting for factors like soil quality, irrigation methods, or the history
Malloy claims the platform analyzes over 100 points of data from the farms.
The startup is currently focused on buying and selling property
on the West Coast and Midwest
The farmland isn&t from the expensive rolling fields of Napa Valley, but instead &less trafficked& land, like an almond farm in Tulare,
California or a soybean plain in Kankakee, Illinois.
Once a customer purchases a vetted piece of land, AcreTrader takes care of land
maintenance so the onus isn&t on the buyer to learn how to grow a harvest or maintain the land
It does so through a team of dedicated farmland experts, who manage hundreds of millions of dollars of farmland and check in with farmers on
a weekly basis.
&It becomes a truly passive investment,& Malloy said.
AcreTrader makes money from the real estate brokerage fees when it
buys land from a seller, or in this case, a third-party farmer that pays &rent& to the company.
In December, ProducePay picked up up $190
million in debt financing for a purchase program for farmers
While the company isn&t a direct competitor of AcreTrader, it could actually operate complementary to it
ProducePay helps farmers afford the &lumpy revenues& that come with the growing season, and works as a middle man between distributors,
growers and grocers.
Along with charging farmers, the company also charges an annual management fee of 0.75% to 1% to oversee land from a
buyer.
AcreTrader today announced that it raised an oversubscribed $5 million seed round led by RZC investments, with participation from
Revel Partners .
Malloy grew up in a farming family, and he witnessed his father buy and sell land over the years
He said it led to him believing strongly in the consistency and risk-adjusted returns of farmland
As the world enters a time of economic uncertainty, Malloy belief in the slow and steady might echo with more people than ever before.
