Crowdfund vs. Fund: A Breakdown of FarmTogether's Products
[Please see the Press Release for our newly launched Sustainable Farmland Fund here]
For several decades, farmland’s performance as an investment has been remarkable. Farmland has produced a positive return every year since 1991 and has proven to be one of the best stores of real value during inflationary periods; it has proven to be a solid way to diversify portfolios given its historic lack of correlation to most asset classes and offers a reliable passive income stream.
However, while institutional investors have significantly increased their investments in farmland over the past 30 years, individual investors have not had the same opportunity.
FarmTogether has set out to change this.
Unparalleled Farmland Accessibility
FarmTogether broke new ground in enabling retail investors to take advantage of U.S. farmland when we launched our first crowdfunded offering, El Nido, in 2019. For as little as $15,000, accredited investors can browse and invest in a range of diverse products, and commodities through our farmland marketplace. In 2021, this crowdfunding vehicle drove the closure of a record-breaking $22 million apple deal, Galaxy Organic Apple Orchard.
In 2020, we launched our Sole Ownership Bespoke product for those who seek sole ownership and are willing to invest a minimum of $3 million in equity per farm.
Our newest product, the FarmTogether Sustainable Farmland Fund, will offer accredited investors diversified exposure across various properties in a single allocation. The Fund is a perpetual offering, with investment minimums starting at $100,000.
FarmTogether has also made strides in providing investment vehicles for those seeking flexible tax advantages. FarmTogether partners with leading IRA custodians to enable investors to purchase farmland using retirement funds. Additionally, bespoke offerings are often eligible for a 1031 Exchange, whereby qualified investors may defer capital gains through a farmland investment.
With a mission to make farmland accessible to all investors, FarmTogether will continue to look for and identify ways to expand our products and offerings to provide a diverse range of innovative, flexible options to invest in this asset class.
Difference Between Fund and Crowdfunding
While both our Fund and crowdfunding platform offer excellent opportunities to access farmland across the United States, these investment vehicles are each designed to serve different purposes and thus, have many differences.
Let’s explore these differences and each product’s unique advantages.
For investors who prefer a pick-and-choose approach when selecting the properties, locations, and crop types to invest in, our crowdfunding products present the best option. For investors who prefer a more hands-off approach, the Fund can be the passive opportunity you’ve been looking for; when you invest in the Fund, you delegate the choice of investment properties to the FarmTogether team through a single upfront capital allocation.
It’s important to note that neither option requires a lift from investors in regards to property due diligence, nor do they require any farmland management know-how.
FarmTogether uses an extensive due diligence checklist to evaluate a farm or land for acquisition and determine whether it should be purchased. Factors used include, but are not limited to, soil composition studies, leaf analysis, water samples, necessary or desired capital improvements, title searches, local legislation, depth of the supporting farming ecosystem, cost of inputs, commodity trends, and farmworker wages. We work with experienced local due diligence providers and growers to get a hyperlocal understanding of the property and the surrounding area.
Roughly only 2% of all deals that enter our pipeline are offered on our platform.
Additionally, we partner with best-in-class operators for each of the crops we focus on. Our properties are fully managed investment opportunities that require no involvement from investors. FarmTogether Management LLC, a wholly-owned subsidiary of FarmTogether Inc., manages the investment properties on your behalf.
In choosing whether to invest in the FarmTogether Sustainable Farmland Fund or a crowdfunded farm, the primary difference is whether you want to choose the farms or delegate this to the FarmTogether team.
While crowdfund participants will have the opportunity to review a private placement memorandum and participate in a pre-launch webinar to ask questions prior to making an investment, Fund investors will not; Fund investors will typically commit capital prior to knowing which properties will be selected.
Through our Fund, participants need only make a single investment to diversify their farmland investment in terms of crops and geography. The Fund will invest heavily in permanent crops across the West Coast, targeting the following allocation:
- 50% tree nuts, 25% tree fruit, 15% citrus, 10% row crops
- 40% CA, 30% WA & Upper Midwest, 20% OR, 10% AZ & OK
For those who seek less concentration in tree nuts, for example, or fewer properties on the West Coast, the crowdfunding product provides investors with more control over where their capital is allocated.
Crowdfund investors can choose specific deals that align with their unique investment goals and risk/reward appetite. Additionally, crowdfund investors can choose the type of deals they invest in - whether it be development, turn-key, or regenerative deals.
Over time, crowdfund investors might have their own diversified portfolio of farmland holdings catered to their individual preferences; they might hold fewer properties or have a stronger concentration in select states. The choice is theirs.
Investors can invest in our crowdfunded opportunities for as little as $15,000. Our Sustainable Farmland Fund requires a larger upfront capital allocation of $100,000.
Farmland investments are illiquid assets. Farmland is intended to be held for longer periods of time to reap long-term benefits, such as crop maturity or soil health conservation, and therefore investors are less likely to sell early.
Thus, FarmTogether intends that investments in both our crowdfunding and Fund offerings are structured as long-term holds in order to reach full value potential.
Multiple Options, Passive Income
Regardless of the investment vehicle, each of FarmTogether’s diverse products is intended to enable innovative access to and passive income in farmland.
- Innovative Fintech: Through our award-winning platform, investors have a single portal to browse investments, review offering materials, and seamlessly and securely sign legal documents.
- High-Quality Deal Sourcing: With an unwavering commitment to our disciplined and conservative investment philosophy, we offer high-quality farmland investment opportunities.
- Commitment to Sustainability: As part of our commitment to sustainability, each property’s operations will be verified sustainable through outcomes-based evidence and third-party audits. 100% of FarmTogether’s acres under management are currently Leading Harvest Certified.
- Diverse Opportunities: Because every investor has unique needs, FarmTogether offers a diverse range of investment opportunities to fit a broad spectrum of risk/reward appetites. We specialize in and manage both row crops and permanent crops throughout the United States.
Whether you’re interested in curating your farmland portfolio through our crowdfunding platform, are seeking broad exposure through a single investment in our Sustainable Farmland Fund, desire sole ownership with our Sole Ownership Bespoke product, or would like to defer capital gains through an investment in farmland via a 1031 Exchange, FarmTogether has the products to suit your unique needs.
Disclaimer: FarmTogether is not a registered broker-dealer, investment adviser or investment manager. FarmTogether does not provide tax, legal or investment advice. This material has been prepared for informational and educational purposes only. You should consult your own tax, legal and investment advisors before engaging in any transaction.