This is an interesting iteration of online capital formation.
FarmTogether is a new investment platform that has developed a new model for farmland ownership and investment while reducing barriers for access to capital and liquidity for farmers.
While I know little about farming, I know it is vital to the health of the US and it is an industry that continues to become more tech-focused and sophisticated.
In a note from the CEO of FarmTogether, Artem Milinchuk, he provided some insight into how they are packaging farmland as an asset class.
“Since 1992 farmland has averaged a yearly return of 11.98%, outperforming the stock market with less than half the risk exposure.”
But several factors beyond the control of farmers have made it difficult to obtain necessary financing, explained Milinchuk. From outdated financial institutions to challenging lending practices and high cost of entry.
“Farmland is an under-invested asset class,” he said.
FarmTogether wants to apply Fintech to address the shortcomings of Agtech and farming finance.
FarmTogether has developed a “new model for farmland ownership and investment, while reducing barriers for capital access and liquidity for farmers.”
“We’re applying the time-tested fractional ownership model of Cadre and Mosaic to lower the barrier of entry for farmland investment from over $2 million to just $25,000,” Milinchuk said. “Much like Vanguard transformed an industry with low fees, FarmTogether leverages a modern fintech stack to deliver exceptional returns for investors with below-industry fees.”
Does it sound interesting? Well, FarmTogether is getting ready to list an investment offering in a California almond farm with an expected IRR of 11% or more.
If you invest, you become a part owner of “institutional quality farmland.” The FarmTogether team handles all of the management. You may earn passive income from lease payments and then you may earn capital gains once the land is sold. In a blog post, FarmTogether draws a comparison between the S&P 500 and total returns for farmland – and the agriculture asset wins.
Online capital formation is the future of early stage and later stage investing. Milinchuk is applying the concept to a specific vertical – the farmland asset class. This is a platform to watch.
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