We know there are people and companies with money to invest. We know there are people with passion for agricultural business that are seeking funding. Bringing the two groups together is the challenge.
AgFunder: Where the Money Grows
“By bringing investment opportunities to the investment community we’re really helping to create a new asset class for many investors who did not have access to these types of opportunities before.” Explains AgFunder CEO Rob Leclerc.
From Challenges to Opportunity
“AgFunder was born out of challenges I had raising capital for my first startup, Babbleflix, and then for SeedRock Africa Agriculture. At the time we discussed how an online investment platform could more efficiently bring together ag investors with ag opportunities, but we soon discovered that the regulations outlined by the Securities and Exchange Committee prohibited the formation of such marketplaces.” In the spring of 2012 everything changed when congress passed the JOBS Act to make it easier for small and emerging growth companies to access capital.
The Evolution of AgFunder
AgFunder was born out of the new JOBS Act legislation which started to go into effect on September 23rd, 2013. Prior to the JOBS Act issuers (the company) were required to have a substantial pre-existing relationship with the purchaser (the investor); or another way of saying this is that the Securities and Exchange Commission banned the use of general advertising or solicitation to attract investors. The consequence of this was that it limited the creation of marketplaces that could efficiently bring together buyers and seller to once place.
Beyond the Conventional
There are conventional ways to get money and for some undertakings this works. “However, it is not enough for AgFunder to serve as a marketplace.” explains AgFunder CEO Rob Leclerc who looks at finding multiple investors. “Unlike situations such as Amazon.com where a single customer might buy a single item, in the investment world you typically have a number of investors coming together to invest in a single company and so AgFunder also needs to efficiently syndicate investors.”
Welcome to the Digital Roadshow
Having found potential investors, the next step is preparing the company sourcing money for the process ahead. “For a company listed on AgFunder we will have them go through a digital roadshow.” He explains the progression. “First the company must begin by soliciting initial interest, then moving to a series of online webinars where investors can have a Q&A with the management team. This is followed by a closing period where investors must decide if they’re in or they’re out. For the closing period, all proceeds are held in escrow. If the company reaches its pre-established capital target, then the investment is executed and the investors become shareholders in the company. However, in the event that the company fails to reach its capital target, all capital is returned to the investor.”
The AgFunder Dream Team: Expertise, Credibility and Commitment
In preparing for the 2014 Olympic Games, many sports enthusiasts debate for hours on how to put together a dream team to stand on the podium for their favorite team sport. For many businesses it is a goal to cover all the major skills when talents are pooled. The team that has pulled together for AgFunder is a dream team that is ready to go for the gold at every level led by Rob Leclerc (CEO), Michael Dean (COO) and Justin Bruch (Technical Director). But even more remarkable for this team is that individually they also have exceptional experience, training and expertise. Their wide-ranging talent is the supporting wall that investors and companies can rely on. Michael Dean COO and co-founder of AgFunder has led the development of the company from its inception and is responsible for executing the business model and the development of all assets in West Africa. CEO Rob Leclerc is recognized internationally and often speaks at global conferences on agriculture, technology and capital raising. Justin Bruch is Technical Director for AgFunder. Justin is an Iowa native and 5th generation farmer with over 16 years of experience in large-scale farming in excess of 10,000 hectares. Justin has set up and managed farms on four continents, including a $30m farm for Morgan Stanley in the Ukraine. Iowa, Brazil, Africa, and the Ukraine. There are two senior advisors on the team. Adam Oliver is an equity partner at Brown & Co. and was a former Director at Black Earth Farming. He helped lead them to the largest farming IPO in history. John Simon is a former Executive VP at the Private Overseas Investment Corporation and the Former US Ambassador to the African Union. And this is merely the tip of the giant skills list this “dream team” possesses.
AgFunder Finds the Money
When the rubber hits the road, you want to be working with a company that achieves success. From small startups to mega-business AgFunder targets that success. “AgFunder was in its beta mode until early 2013 and so we’ve been showcasing some smaller opportunities in the agtech space. One of the companies we’re featuring is called TerViva, and they’re building a great platform around an alternative biofuels crop called pongamia which could be a great drop in replacement for citrus orchards which have been devastated by citrus greening disease. TerViva’s been featured in CNN Money and they have a very bright and talented team driving this forward.” The future looks bright for the company and is moving rapidly ahead. “AgFunder is currently processing nearly $1 billion in deal flow opportunities on the platform, with the largest being $100m.”
Rob highlights some dairy projects that AgFunder is working on. “We’re in advanced discussions with one group that is in the early stages of developing the largest dairy operation on Hawaii. As you may know, most dairy products in Hawaii are imported and the local food movement is really driving demand for local sourcing. We think this could be a perfect project for AgFunder because we think that local investors will really embrace this opportunity to invest something that they consume every day, but which is currently imported.”
AgFunder is making positive strides in the marketplace report the founders. “We’ve been really overwhelmed by the reception and we’re seeing a real need for this on both sides of the table. On the one side, the inherently local and rural nature of agriculture means that it is typically far removed from the centers of finance, which makes it extra difficult for Ag entrepreneurs to raise capital. On the flip side, we’ve been talking to a lot of institutional and individual investors who are interested in investing in agriculture-related opportunities but don’t know where to start and may need to be educated about the opportunities.”
Building a community of Entrepreneurs and Investors
AgFunder provides an opportunity for entrepreneurs to reach thousands of investors. However, if you think you can just list your company and come back 2 months later you are sorely mistaken. Raising capital is hard work and entrepreneurs need to leverage the marketing component of the platform to drive the message to investors.
Growing Business not Growing Frustrated
Our goal is to bring ag investors and every investable agriculture opportunity to the AgFunder platform and so that we can quickly match investors with opportunities. In doing so, we want to cut the sales process down from 12-18 months to 2 months, thereby letting companies work on their business rather than focusing their energy on resources on raising capital. We think we can become the John Deere for Agrifinance.
The Bullvine Bottom Line
When defining success, we must consistently think of agriculture in all of its aspects and especially in terms of sustainability and profitability. Bringing the right people together at the right time is what AgFunder is committed to says Rob Leclerc. “We think AgFunder can be a real game changer for wealthy farmers who want to invest in an area that they trust and understand, rather than putting their money into some hot internet stock recommended to them by their broker. In fact, we think farmers could generate great returns and embarrass some of those high paid Wall Street portfolio managers!”