In April 2016, the Guardian ran an article with the headline “Herdfunding: how the internet is raising money for farms”. It focussed on the trend of farmers turning to crowd finance instead of banks when looking to raise extra capital for their businesses.In April 2016, the Guardian ran an article with the headline “Herdfunding: how the internet is raising money for farms”. It focussed on the trend of farmers turning to crowd finance instead of banks when looking to raise extra capital for their businesses.
We decided to see if this was true and test how widespread this approach to agricultural (agribusiness) finance actually is. How much is the agricultural industry raising? Are agribusinesses really using crowd finance or was The Guardian's 'trend' a stretch with a few one-off examples?
The answer is a resounding… yes. Agribusiness activity in crowd finance is booming.
With every passing year, the agribusiness industry is raising increasing amounts of money from the crowd and the pace of that increase is fast. In the last 12 months alone, we tracked over 58,000 campaigns from all over the world that focused on agribusiness. This number also likely underestimates the true number of agribusiness campaigns due to the wide range of descriptions and keywords being applied to a new and fast-evolving sector.
Within the last 12 months on UK platforms alone there have been 236 agribusiness campaigns, which have raised a total of $12.9M, with the debt (57% of all campaigns) and charity (39%) sectors clearly leading the way. Interestingly, there was only 1 equity campaign.
So, crowd finance in the agribusiness sector is on the rise. Farmers – as small business owners and entrepreneurs – are clearly noticing the benefits of a capital raising method that avoids large, traditional forms of lending, providing a clear alternative to the banks. The other upside of raising money via crowd finance is the wave of customer support that follows pledges of investment which, in traditionally supported and cherished industry such as UK farming, can go a long way to making any business enterprise a success.
At a time when UK farming is being heavily squeezed – with cuts to subsidies also looking likely in a post-Brexit Britain – access to capital for agribusiness will be more important than ever. Therefore, the option of alternative methods of raising money, such as crowd finance, will become even more attractive.
2017 looks set to be an even better year for agribusiness in the crowd finance space. You can track the developments in this sector by using Crowdsurfer Pro. Sign up for a free trial and see what you can discover.