March 5, 2019

AcreTrader has launched a first-of-its-kind technology platform that allows individual investors to own American farmland by-the-share for as little as $1,000.

“Farmland is a highly attractive alternative asset class with historically low volatility and impressive, debt-free returns,” said Carter Malloy, CEO, AcreTrader. “Unfortunately, aside from buying an entire farm and managing it, the few investment options available aren’t realistic for the majority of investors. Prior to AcreTrader, there hasn’t been an easy way to directly participate in farmland investing.”

Through its portal at AcreTrader.com, using a crowdfunding business model, and under the JOBS Act of 2012, the company 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.

The Securities and Exchange Commission (SEC) sanctioned this form of crowdfunding in 2015, allowing startups to legally offer investors a stake in their venture through the online sale of shares.

The SEC had been weighing its decision for two years prior to its sanction, as a wide field of startups in fields including food, agtech, medicine, and biotechnology awaited the all-clear.

New legal methods of raising funds is good news for businesses, but for investors there is an element of risk. Almost half of all startups fail within the first five years, and some are voicing warnings that online investment crowdfunding could be prone to fraud.

Knowing this to be the case, SEC chair Mary Jo White stated at the public meeting before the vote, that the SEC “will begin immediately to keep a watchful eye on how this market develops.” The agency will track what types of companies are using the offerings, how they adhere to regulations, and if the new crowdfunding system advances the raising of capital and protects investors.

AcreTrader identifies prospective farms, and each parcel is subjected to deep due diligence and review prior to deciding if it should become an offering through their portal. And each shareholder will receive an annual cash payment from the farmers renting the land, while their shares increase in value over time as the price of farmland rises.

Founded by company CEO Carter Malloy last year, AcreTrader aims 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.

Carter’s experience includes investing on behalf of a long/short equity fund, and serving in the role of managing director for private investment bank Stephens Inc. Working together with Carter is an experienced internal team and a board of advisors that collectively have managed billions of dollars of revenue and investments.

Since its founding the company has maintained a low-key profile while in development, but now announces the acquisition of its first property, having closed on a leveled rice and soybean farm in the Arkansas Delta this month.

AcreTrader is not the only agriculturally-focused venture to employ crowdfunding. In 2015, Australia-based DomaCom, the self-labeled “fractional property investing platform”, worked to build a $410 million crowdfunding campaign aimed at self-managed super funds for the purchase and continued domestic ownership of S. Kidman, which was eventually acquired in 2016 by Australian Outback Beef (AOB) – a joint venture between mining magnate Gina Rinehart and China’s Shangjai CRED – for A$386.5 million.

-Lynda Kiernan