AgFunder is a niche Reg D platform offering highly curated investments in startups in and around Agriculture ("AgTech"). In addition to individual companies, AgFunder also offers a managed fund offering exposure across multiple companies.
- Unique niche
- Emphasis on due diligence and curation of investments
- Basic info about open/past investments easy to browse without registering (including webinars)
- Social impact of certain offerings (eg non-GMO, sustainability, water conservation) may appeal to some investors
- Open only to accredited investors
- Relatively high minimums among similar Reg D platforms ($10,000)
- Startup investments are inherently risky and highly illiquid
- Small number of open investments (typical of niche platforms)
Agriculture was one of the first American industries to be transformed by technology (in 1850, almost half of American workers had jobs in agriculture, but by 1980 that number was under 4 percent, and by 2008 had fallen again to under 2%). So it's perhaps not surprising to find one of the first sector-specific crowdfunding platforms (outside of real estate) within Agriculture, a $6T global industry.
AgFunder takes a curatorial approach, emphasizing that "of the 1,500+ companies we’ve reviewed in this space, less than 2% have been selected for listing."
Types of investments AgFunder offers
All of the companies raising money on AgFunder are AgTech startups, ranging from early-stage through to late-stage. From the AgFunder FAQ for companies raising money:
In addition to individual company investments, AgFunder also offers a managed fund, but the minimum investment is steep at $100,000.
What do you get when investing with AgFunder?
Details vary by investment, but AgFunder offers debt, equity, and convertible notes. In most cases, investors are actually investing in a special-purpose vehicle (SPV) which in turn holds the actual underlying securities (and simplifying the raising company's cap table).
AgFunder fee structure
Exact terms may vary by investment, but for investments offered via the syndicate model, backers pay a 2% annual management fee, as well as 20% in carried interest.
Potential returns and cashflow
Investments via AgFunder are high-risk investments in startups. Most of the investments have no explicit expectation of payments, dividends, or other cash flow. Most startup investments lose some or all of their value. While some investors achieve excellent returns from startup investing, that is a rare outcome and requires substantial diversification over time combined with very careful investment selection.
Breadth of offerings on AgFunder
As of this writing, AgFunder has raised $34M for 16 companies. They list 3 open investments (with one closing soon. While you'll need to register to review full details, it's nice that AgFunder displays summary info about all current (and past) investments, including the amount raised.
Regulatory framework and due diligence expectations
AgFunder offers investments using SEC Reg D, and currently only offer access to accredited investors. AgFunder is not a registered broker-dealer, and does not list any affiliation with one on their website.
AgFunder emphasizes their role in curating and selecting investments, indicating fewer than 2% of the 1,500+ companies that have applied to date were ultimately listed. While that should not be a substitute for your own due diligence before making any investment, it is a different approach than some other platforms offering similar investments, and which function more like marketplaces.