Fractal Agriculture Launches Investment Platform to Address US Farmland Financing Crisis
MINNEAPOLIS and ST. PAUL, Minn., Aug. 29, 2023 /PRNewswire/ -- Fractal, a US-based company, is launching a first-of-its-kind farmland equity financing platform to help solve a key gap in farm financing.
Over 40% of US farmland is owned by individuals 65 years and older, with an estimated 370 million acres of land expected to change hands over the next 20 years1. This generational land transfer puts tremendous pressure on farmers to access the capital needed to secure their rented acres and expand their operations in the face of increasing investor competition, higher borrowing costs, and significant climate volatility.
"Having capital ready to buy the must-have farms that come across my desk is very intensive. Many farms become available at an inopportune time," said Kyle Mehmen of MBS Family Farms, a 5th generation family farming operation in northeast Iowa. "Access to equity capital gives us the flexibility to plan for growth to support the next generation, and Fractal has become a trusted tool to help me capitalize on land opportunities when they arise to ensure that growth."
“We strongly believe farmland investment can be a force for good by aligning farmers with capital”
Unlike traditional investors that compete with farmers for land and lease it back to them, Fractal invests alongside farmers by taking passive, minority stakes in land farmers' own. Farmers receive needed capital to expand their operations, while investors access high quality farmland managed and owned by farmers to drive higher returns. Additionally, Fractal provides discounts for approved regenerative agriculture practices that enable healthier soils and support the long-term financial health of the farmland.
"We strongly believe farmland investment can be a force for good by aligning farmers with capital," shared Ben Gordon, CEO and co-founder of Fractal. "We believe farmers are best positioned to manage the land and that investors can drive the greatest impact and returns by supporting strong farm businesses. By aligning with farmers, we believe there are nearly 25 times more deals available on the market versus traditional models, allowing us to scale our returns and impact significantly."
Fractal is launching its equity financing platform to serve US row crop farmers after a successful pilot period with over $5 million in capital raised to invest alongside farmers. Fractal is backed by proven agriculture and climate investors Trailhead Capital, Serra Ventures, LLC, Groove Capital, and Virta Ventures.
Fractal is also supported by key industry partners such as UnCommon Farms, a group that helps producers across North America take control of their legacy by helping them build profitable and stable operations and positioning them for multi-generational success.
"Access to capital and competition for farmland are two top concerns for US farmers," said Matt Ronken, CEO of UnCommon Farms. "Our organization is laser-focused on helping farmers find solutions to their greatest business challenges and building a community that is second to no one in the industry. Partnering with the Fractal team is in line with our core principles of prioritizing long-term value for future farming generations."
Farmers interested in accessing new investment capital with Fractal can visit www.fractal.ag, or learn more through Fractal's upcoming educational webinar on September 13, 2023.
About Fractal
Fractal is a US-based farmland investment company that provides farmers with equity capital by investing alongside them in their farmland. Fractal drives returns by using their leading technology platform to best value land, pricing in critical economic and impact drivers such as climate change and regenerative agriculture in order to align incentives among investors. Launched in 2023, Fractal is backed by proven agriculture and climate investors Trailhead Capital, Serra Ventures, LLC, Groove Capital and Virta Ventures, with the mission of making investing in farmland an investment in a better future for farmers, investors and the planet. More information can be found at www.fractal.ag.
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1USDA, Economic Research Service. 2014 Tenure, Ownership, and Transition of Agricultural Land Survey. Washington D.C.: USDA-ERS, November 2015. Available here.