blog post image
farmland investing

How Backstage Capital and FarmTogether are Changing Farmland Investing

We recently shared some exciting news about FarmTogether’s partnership with Backstage Capital. Backstage Capital is a leading investment firm that offers more than just access to capital. Their thesis around funding viable startup companies led by underrepresented founders—women, people of color, and LGBTQ+ people, to name a few—sets them apart as an ideal partner for the FarmTogether team.

Backstage Capital’s commitment to inclusivity and accessibility give us an unparalleled opportunity to further our mission of democratizing farmland investing. Together with Backstage Capital, FarmTogether will be able to help create a new chapter for a more inclusive industry of farmers and farmland investors.

Interested in learning more about Backstage Capital? Read on.

Who is Backstage Capital?

Backstage Capital was founded by Arian Hamilton, who currently leads the firm as a managing partner. Before founding Backstage Capital, Hamilton was immersed in the world of startups—be they fast-growth, VC-backed projects or even small projects across the country.

“I’d always worked on my own companies, tried to launch things; some did well, some didn’t. So, the more I learned about Silicon Valley and startups in general, I really felt a kinship to the founders,” Hamilton told one interviewer.

What makes Hamilton’s backstory even more unique is the fact that she was homeless when Backstage Capital began. Hamilton, who had worked within the music industry for several years, was new to the world of venture capital but knew she saw an opportunity—and a need—from the very beginning.

Throughout Hamilton’s different projects, she saw one commonality between many of them: that women, people of color, or LGBTQ+ founders had a difficult time getting financial backers to acknowledge their role as leaders. More challenging than that, they also had less access to capital than other founders.

“I decided then that I wanted to try to get more funding to underrepresented founders that I had been talking to, that I thought had a lot of potential. That led to me raising money for a very interesting group of people,” Hamilton also said.

Today, Backstage Capital has raised $20 million and has backed nearly 200 more than 170 startups, primarily those who Hamilton calls Underestimated Founders—people of color, women, and the LGBT+ community who are often passed over by other VC firms.

“We know that these founders are going to be the tech titans of tomorrow. But right now our circumstances are that we are playing catch-up from decades and centuries of being institutionally locked out,” Hamilton said during a Los Angeles Times interview. “So we ask ourselves what is in our power to tip the scales a little bit more in our favor.”

Why did Backstage Capital Choose to Work With FarmTogether?

Backstage Capital and FarmTogether share similar missions: to expand equity as well as equality to groups that are left out of financing all too often. In the case of FarmTogether, this means independent and family-owned farms across the country. Farmers across the country find themselves in dire straits following the COVID-19 pandemic. Major transportation disruptions caused widespread crop delivery issues, which in turn led to rotted crops that could not get shipped as usual. The full economic cost of the pandemic for farmers was severe: although prices went up due to sector-based inflation, farmers did not stand to make more money as a result.

David Chan, FarmTogether COO, says the move is designed to further his company’s goal of making agriculture easier to finance for marginalized farmers.

“We were drawn to Backstage Capital because of their attention to raw talent in underrepresented and underestimated communities; in many ways, this focus largely overlaps with our investment thesis for farmland,” Chan says.

Overcoming Financial Challenges for Farmers of Color

The pandemic made it even harder for smaller, socially disadvantaged, and new farmers to get started or remain in business. The industry lost nearly $619 million in sales from March to May alone. Farmers of color have been hit disproportionately hard by these economic developments. Only 0.1% of farmers of color received relief payments tied to Washington’s COVID-19 pandemic response.

To date, farmers of color in the South have lost 90% of their land during the last century. This represents $250 to $350 billion in terms of accumulated wealth, as well as income. Research indicates that much of these phenomena are due to systemic discrimination; some of which includes discriminatory lending practices.

Both private banks and the USDA’s Farm Service Agency, the government’s lending arm for farmers, have a history of discriminatory lending practices. Black farmers won two cornerstone settlements with the USDA in court, totalling more than a billion dollars in payments. These cases mark the largest payout in the history of civil rights settlements, but so far payments have only helped a small segment of affected parties.

Current stimulus efforts include financial assistance from the USDA, which is earmarked specifically to Black farm owners. Current estimates put this program at a total of $4 billion in the form of debt relief for Farm Service Agency loans. This aid will take the form of debt forgiveness for FSA loans held by farmers of color.

Providing Financial Pathways

FarmTogether’s mission is to help farmers access the capital they need in order to make their operations not only thrive, but to also make the innovative and technological transitions necessary to ensure prosperous food systems for future generations. This work also generates value for investors who seek to diversify their portfolios by way of farmland investing. All parties in the exchange derive value fairly, and are able to pave a pathway for farmers that was historically closed to many.

Backstage Capital’s partnership helps further this mission by providing a channel for further inclusion and diversity within the world of agricultural finance and farmland investing. Through this partnership, Backstage Capital investors will have exclusive investing opportunities that capture the core values of both companies.

Backstage Capital also helps FarmTogether further its efforts to democratize investing.

“FarmTogether is excited to work with Backstage Capital and take their vision one step further by sourcing properties located in or operated by underrepresented and underestimated communities,” says Hamilton.

How Backstage Capital and FarmTogether are Changing Farmland Investing

There’s much work to be done to help farmers who are women, people of color, or LGBTQ+ when it comes to financing. Farmland is already at a unique turning point in terms of opportunity versus cost. The global need for food will double by 2050, making farms more important than ever before. At the same time, however, many current and future farmers lack the access to capital required to invest in and grow their operations.

The FDA is working to remedy the discriminatory practices of the past, but even these programs are limited in terms of budget and scope. Real change has to come through both public and private investors; FarmTogether is a leader in the private space for farmers as well as accredited investors.

With Backstage Capital, FarmTogether is ready to create the farmland financing of the future. After all, the future of farming is inclusive, diverse, and dynamic. So too should the financial options made available to this industry.


--


To learn more about FarmTogether, check out our FAQ. Visit the Backstage Capital website to learn more about the firm.


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.

Sara Spaventa
PREV ARTICLE

    Questions? We’re Here to Help!