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Start-up Spotlight: FarmAfield
Your banker may say he or she is your farm partner, but in truth, when you get a bank loan, the financial risk falls almost exclusively on you.
Mitch Minarick is bringing a different model to farm capitalization. His start-up, FarmAfield, is pairing investors with farmers looking to grow their business or to spread risk. Investors own real farm assets, such as livestock, through production contracts with the farmers or ranchers.
FarmAfield launched last year in cattle feeding, matching investors with mostly midsize feedlots. It started with feedlots because that business is already attuned to outside investors. In the near future, it will move into other types of farming, including ranching, row crops, and specialty ventures such as organics or industrial hemp.
Minarick, who grew up on a diversified farm in Nebraska, developed the idea while he was an ag engineering graduate student at the University of Illinois. “I thought about the risk farmers face, particularly young farmers, in trying to grow a specialized farm today,” he says. “Often, the only solution has been to take an off-farm job or maybe move off the farm all together.”
He thinks there’s a better way – FarmAfield.
Many investors are looking for investment diversifications, Minarick says, particularly if they offer returns that exceed bank deposits or perform differently than the stock market. In the first year of operation, FarmAfield investors have averaged an attractive 7% ROI.
“We bring trust and transparency to investors,” he says. “Some of them may not be highly familiar with agriculture, so we provide the understanding of the investment opportunity.”
FarmAfield vets farm opportunities for investors. Some established farmers with cash may also become investors, Minarick adds.
The company makes money from investors through a 1% procurement fee and a modest percentage fee on net proceeds.
“If you are a young farmer who has a great idea for expanding but you lack the capital, we can put your idea in front of investors,” he says.
Then, the onus is on you to do a good job. “If your production is good, you’ll attract more investors,” he says.
Minarick especially sees his online business as a way to help young farmers get a toehold with another source of capital.
“I think about a farmer who would like to have 100 cows alongside a crop operation, but that producer only has the capital for 20 head initially. We could help find an investor partner to buy the other 80 and launch the business at full scale. Then they could grow into ownership of 100 head over time.”
There is enough interest in organic farm production to imagine that it will be an early adopter of the FarmAfield model, thinks Minarick. “If you switch to organic, the cost and the risk are all on the farmer,” he says. “This is a way to share the risk through an investor.”
Potential investors could be consumers who are particularly interested in being closer to food production. “There’s something fun for them in having ownership in real farm assets,” Minarick says. “As the farmer, you’re catering to market demands, and you have a partner to share the risks.”
Soon, he adds, FarmAfield will enable additional marketing opportunities by allowing producers to sell beef or other products directly to their farm partners.
Farmers are encouraged to go to the “Producers” link on the company’s website where they can describe their farm or farm idea and join a waitlist. FarmAfield will review the application for marketplace fit and then provide the standardized contracts and online software needed to list the opportunity for investor evaluation.
Investors can also create an account to enable them to browse the marketplace for opportunities.
About the Company
Headquarters: Lincoln, Nebraska
Founder: Mitch Minarick
Background: FarmAfield brings investors and farmers together; investors can actually take ownership in real farm assets.
Funding: A National Science Foundation small business grant; a grant from the state of Nebraska; private funding. The company is open to additional funding opportunities.