#StartupsEverywhere Profile: Carter Malloy, Founder & CEO, AcreTrader
This profile is part of #StartupsEverywhere, an ongoing series highlighting startup leaders in ecosystems across the country. This interview has been edited for length, content, and clarity.
Creating Access to Investment in Farmland
AcreTrader is a Fayetteville-based equity financing mechanism that helps farmers scale their operations with the support of outside investment. After spending time working in San Francisco, Founder and CEO Carter Malloy moved back home to Arkansas to apply what he learned in equity to the farming system by creating a company that empowers both farmers and investors to buy and sell land in more efficient ways. We spoke to him about his experiences building a startup in a rural area, how he believes policymakers can incentivize investment into middle America, and his goals for AcreTrader for the future.
Tell us about your background. What led you to founding AcreTrader?
I grew up in a farming family in Arkansas, and one of the things I did with my dad was buy and sell land. Over time, I grew to love that process and I also developed a passion for agriculture. As an adult, I spent about a dozen years doing equity investing, and AcreTrader developed out of my passion for and experience working in this field. There are a lot of people that want to invest in farmland, but not many are able to because it’s a difficult process. You have to have a lot of local knowledge, expertise, and big checks. Not only do you have to make the investments, but you also have to manage a farm, and those things are just not competencies that most people have. Most want to invest in farmland because it has the potential to produce stable and consistent returns over time, and in our case, they’re able to get that while also supporting a farmer and enrolling the land in sustainability standards.
What does AcreTrader do?
Put simply, we connect farmers looking to grow their business with investment capital—we’re like an equity financing mechanism. Ultimately, our core competencies are based on sourcing, diligence, underwriting, and managing farms. We go out and find a local farmer that wants to buy more land, but maybe doesn’t have enough capital to do so. After connecting an investor with that farmer, they are able to buy additional land and grow their business. Then they can do revenue or profit sharing, or pay rent to investors.
What have your experiences been creating a startup and raising capital in a rural community?
Strangely enough, I moved from San Francisco back to Arkansas to start this business—I explicitly did not want to build a startup in San Francisco. Building in Arkansas does create some challenges. While the talent pool here is smaller, it’s also incredibly talented and values tenure so you can build more together over long periods of time. It is also definitely a cheaper place to do business in general. The bigger negative, however, comes to light in early stage capital because there are just not the same angel networks to put forth funding for businesses like ours. We were fortunate that I had a bunch of existing relationships around the technology ecosystem, so we were able to attract those early investment dollars. As we’ve grown in later stages of investing, it is becoming a thesis for some to invest in “flyover states.” There are multiple companies that attempt to go out and find businesses that are not explicitly in those larger metropolitan coastal VC ecosystems, and it is nice to see this become more popular. Some of the more traditional VC players are also intrigued by, if not actively looking to deploy capital in the middle of the country. So at this point in our business, it’s less of an issue, but in early stages, finding capital in a flyover state is much more difficult.
How do you think policymakers and the government could incentivize investment beyond traditional tech hubs and direct capital towards rural founders?
I think the definition of an accredited investor needs to be expanded, whether that be through a test or a percent threshold. Another important way I think the government can help direct capital is something that Arkansas is already doing successfully; the Arkansas Economic Development Commission’s (AEDC) program called the Equity Investment Tax Credit. The way it works is if an angel investor were to put $300,000 into an early stage business within this program, in reality, it would only be $200,000 in risk because they’re immediately getting a third back in taxes. This program is incredibly helpful and it put us on the trajectory we are on today. And it is beneficial for the state because now we have 80 people on payroll paying state income taxes, so the government gets a return on investment as well. There are a lot of households in the U.S. that have the resources to angel invest that are also hyper aware of their taxes, so if something like this were to exist on a federal level, where the government provides tax incentives for angel investors investing in early-stage businesses, it would absolutely create an additional supply of capital, especially in opportunity zones.
What has been your experience expanding AcreTrader outside the U.S.?
Most of the challenges we’ve experienced expanding into international markets have to do with those countries’ regulatory and legal environments— either their title laws are terrible, they have cultures of default, they have poor judicial systems that make it difficult to resolve disputes or they have laws limiting foreign investment in farmland. Laws restricting adversaries from owning certain types of land—like near a military base—can make sense from a national security standpoint, but they need to be narrowly tailored to avoid damaging the landowner’s ability to get the price that the market is willing to pay.
What are your goals for AcreTrader moving forward?
For us, it’s very straightforward: if we continue to create a win-win marketplace, where both the farmers and investors win, we will continue to scale the business. To put it simply, some of our ambitions are personal and professional growth, and growing the overall revenues and size of the company.
All of the information in this profile was accurate at the date and time of publication.
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