Farmland investing startup raises $40 million as venture capital keeps seeping out of Silicon Valley
When it was nearing 6 p.m. a week ago, I found it hard to take my eyes off the sky—the vivid pink remains of a sun that had only recently sunk behind the mountains that sit west of Fayetteville, Arkansas.
I’m on the sixth floor of what I wouldn’t call a skyrise. That being said, it’s one of the tallest buildings in the area, and the view over this city—population 93,949 by its last count—is direct.
I’m sitting with Carter Malloy, founder and CEO of AcreTrader, an online investing and fintech platform where accredited investors can scoop up land for their portfolios—predominantly farmland. It’s an alternative investment that likely isn’t what first comes to mind for an investor, but it’s considered by many to be an inflation hedge and to steer clear of the equity sector’s wild bouts of volatility.
Malloy moved to Arkansas from San Francisco in 2018, as he tells me, “to build a tech company in the middle of nowhere.”
The fintech—or agtech, or proptech, or what have you—now hosts approximately 2,000 investors and has managed the sale of more than 80 parcels of farmland. When a piece of land goes up for sale on its site, it’s typically sold in a matter of days. Investors buy the land; then farmers rent it out, using it to grow their crops.
The company just closed $40 million in Series B funding, led by London-based Anthemis Group, and joined by all of its pre-existing institutional investors, which include Jump Capital and RZC Investments, the Bentonville, Arkansas-based investment firm of Steuart and Tom Walton (Walmart founder Sam Walton’s grandchildren). The new funding comes less than a year after AcreTrader’s Series A round in March. The company declined to disclose its valuation.
The company is growing fast: its headcount now tallies about 70 employees on staff—up from some 15 about a year ago, many of whom have moved from elsewhere in the U.S.—Dallas, Seattle, Boulder, New York, and elsewhere—for the job. A small team on the fifth floor at AcreTrader is building out a product it calls AcreMaps, a geospatial analytics database for farmland that helps landowners discover, analyze and evaluate a parcel, based on history, pricing, and property features, such as how the water drains, or why certain areas may not be growing crops as effectively.
“Can you imagine going to sell your house and having no sense of what your neighbors sold their houses for… And to not even know if there was a sink in the house?” Malloy says. “There’s very little transparency, there’s very limited liquidity, and there’s very limited access.”
Venture capitalists are increasingly looking beyond Silicon Valley, New York, and even the U.S. as they hunt for investment opportunities—the number of which can’t seem to match the stride of the dollars available to deploy. The pandemic, in particular, has brought fresh attention to areas of the market—and regions of the U.S.—that are operating out of line of direct sight to the average urbanite: The trucking industry (with dedicated VC funds and more than 60 startups), supply chains (attracting $4.1 billion worth of North America and European funding in the fourth quarter of 2020), and farming (annual agtech deal value was up more than 20% in the third quarter of 2021 from the calendar year prior), to name a few.
The region of Northwest Arkansas, to which it is so commonly referred, may feel in the middle of nowhere, but it’s not for AcreTrader. It’s centrally located a three to five hour drive to farmland in the Mississippi Delta and the same distance to valuable acreage in the Midwest. It’s also close to home for Malloy and co-founder and COO Garrott McClintock, who both come from farming families. McClintock is the fifth generation of his family’s Tunica, Mississippi farm, where they grow cotton, corn, soybeans, wheat, and rice.
“Place matters,” says Anna Mason, co-managing partner of Revolution’s seed fund, Rise of the Rest, which joined both AcreTrader’s Series A and Series B rounds and has also invested in Ox, an order fulfillment startup in Bentonville. AcreTrader is “building in the backyard of its customer base and a legacy industry that it knows so well.”
AcreTrader is trying to get a foothold in financial services, a highly-regulated sector, and it faces a host of other challenges—some of which stem precisely from its location. The tech talent pool, for instance, is small in Northwest Arkansas. There’s often an acquisition cost to move employees into the area (somewhere around $5,000 a person, Malloy estimates). Capital is quickly spreading out of bigger hubs, but it’s certainly not as readily available.
But they’re closer to the land, rent is cheaper, and my hour-long parking spot, steps away from the front door to AcreTrader’s downtown office, only cost two quarters. And Malloy says the sunsets are often this beautiful. Sometimes the team will gather around this conference room, crack open a few locally-brewed beers from the mini fridge, and enjoy the view. That love of land—of a place—is what Malloy calls a “terrible addiction.”
See you tomorrow,
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