Farmland was once the most valuable asset an American could own, and landowners would trade expensive acreage in much the same way investors trade expensive stocks. That changed with the industrial revolution of the 19th century and the technology revolution of the 20th century, both of which shifted most of the investment money elsewhere. But some companies still see value in putting investment dollars into farmland.
One of those companies is AcreTrader, an Arkansas-based platform that lets everyday investors buy shares of farmland. Since its founding in 2018, AcreTrader has helped thousands of U.S. investors, farmers, and landowners trade farm shares with the ease of buying stocks. Barron’s referred to the platform as “a Charles Schwab of acreage.”
AcreTrader aims to make farmland investing accessible to more people through better technology and data. The company’s team, led by Founder and CEO Carter Malloy, has years of experience investing in farmland. They know what many others might not know: Historically, farmland produces strong returns with low volatility.
But there have always been high barriers to entry for average investors – including the cost of purchasing land and the burden of managing farms they had no expertise with.
“It was hard to do and expensive,” Malloy told The New York Times. “There’s no Multiple Listing Service for farmland, and you need regional expertise.”
AcreTrader looked to fill the gap by letting investors buy shares of farms instead of the land itself while also giving farmers a new source of capital and expertise to expand their operations.
“For us, the goal is to democratize the asset class and bring investment to rural areas,” Malloy said.
Individual deals on AcreTrader can range from a few thousand dollars to $40,000. In return, investors get a steady and predictable asset that helps them diversify their holdings while also hedging against inflation.
Farmland in the United States has averaged a 12% annualized return over the past couple of decades, Business Insider reported, citing a 2020 analysis by asset management firm PGIM. That return compares favorably to both stock and real estate returns.
The upshot for AcreTrader is that many investors want a piece of the action. The company says its annual revenue has grown more than five-fold in only four years. Its customer base has tripled, while the amount of land going live on its platform has more than doubled. This has drawn the notice of outside investors, who have poured about $60 million into AcreTrader since its founding.
The company’s latest injection of capital came on March 15, when it raised $20 million in a Series B funding round led by Drive Capital, a Columbus, Ohio-based venture capital firm. That same day, AcreTrader also announced the launch of its AcrePro land brokerage platform, which lets agents, buyers and sellers assess, sell and purchase land.
AcreTrader plans to use capital from recent funding rounds to finalize a land mapping and analytics platform that provides farmers, landowners, and investors with greater insight and information on the value of the land.
AcreTrader also plans to expand its team, which has grown tenfold since its founding.
The leader of that team, Malloy, grew up in an Arkansas farming family. Before founding AcreTrader, he served in various investment roles, including at private investment bank Stephens Inc. He also owned a business focused on internet marketing and sustainable fuel technologies.
Malloy’s interest in sustainability extends to AcreTrader. One of its early farm investments was a corn and soybean farm in Illinois that produces clean energy with an on-site wind turbine.
Other eco-friendly investments include the following:
- A 160-acre grain farm in Minneapolis that AcreTrader transitioned to USDA-certified organic production
- A family farming operation in Nebraska that expanded its organic production by more than 800 acres with the help of AcreTrader’s team of experts
- A farming company in Washington’s Columbia River Basin that has expanded its production of organic apples and cherries by more than 1,350 acres with the help of money raised on AcreTrader’s platform