Updated to reflect comments from Fquare
With websites like Kickstarter, Rally and others, crowdfunding is used for just about anything these days. Social causes, investment, making toys or making movies, you name it. If you find enough people who believe in an idea, the possibilities are now endless.
And that even extends to land now too. Crowdfunding farmland? Why not?
Fquare (pronounced F-quare) has launched its agricultural crowdfunding platform, it was announced Tuesday. In an interview with VatorNews, Charles Polanco, founder and CEO of Fquare, said that Fquare is the first model for crowdfunding land.
How does it work?
The website is designed to help farmers sell off their land by making the process easier, while also making the investment profitable for the investors.
If a farmer wants to sell his or her farmland, for whatever reason, it can be a stressful and difficult process. Fquare makes the process easier and less stressful by having the farmer sell the land to a group of investors rather than selling to another farmer. The farmer agrees to pay the investors up to 6% annual interest for up to 20 years. If the farmer can raise the funds through crowdfunding, then the farmer will become a tenant and the investors will be the landlords.
For the investors, Fquare also makes the process of leasing out land a simpler and cheaper process.
"An investor would have to have a million dollars to invest in land normally. With Fquare, they only need $50,000," Polanco said. "That is what makes the crowdfunding process so appealing."
The typical investor is accredited, and has experience in the agriculture space. While Polano would not say how many customers the website currently has, he did say that the website does attract investors both large and small.
Fquare will collect monthly rent from the farmer and distribute it to the investors. The investors are also allowed to sell shares to other investors on the Fquare secondary market. In addition, the investors will hold a yearly vote to decide if they want to keep the farmland or sell it via a real estate broker.
The company makes money like a typical real estate broker, Polanco says, by making a 5.9% commission off every sale.
While the website is currently only available on desktop, the company will be making strides toward appearing on mobile by the end of the year.
The value of farmland
New York City-based Fquare says it makes buying farmland like buying stock on the New York Stock Exchange, as each share is valued at a square yard of land. If the value of the land increases, so does the share price. Fquare proclaims that cash leases on farmland will bring in an average of 5% in net annual income for an investor that uses Fquare.
Fquare points to reasons that farmland is becoming more valuable, including increasing globalization, with new markets opening in China, Brazil, India and Poland. China, for example, is responsible for half of the soybeans exported by the United States.
And due to the increased demands, the amount of land per person is shrinking.
By 2030, farmable land will be half an acre per person, down from over an acre in 1960 and three-fourths of an acre in the year 2000.
"With more people and less land, farmland values should only increase over the long term," Polanco said in a statement.
(Image source: http://www.jaxnaturalfoods.com)