Key Takeaways from Fractal’s Recent Investor Event

Fractal recently invited three farmer customers to an investor event in New York City. They had a chance to meet Fractal investors and better understand why investors buy into Fractal’s investment model.

The insights shared at the event by Rich Bronec, Adam Edwards, and Jesse Hough, grain farmers from Montana, Illinois and Nebraska, hit upon a common theme: farmers are best positioned to drive future financial success and sustainability in agriculture.

Here are key takeaways from their conversations:

1. Farmers need better financing tools to unlock their equity

Farmers have traditionally relied on leveraging their equity to grow. But with today’s high interest rates and thin margins, debt has become more expensive and eats up cash flows. 

Fractal offers farmers the ability to squeeze more capital out of their equity, so they can cashflow opportunities they couldn’t otherwise with debt. Fractal capital typically has a 1.5 – 3.0% lower annual payment than a traditional loan payment from the bank. This means farmers can unlock more owned equity and buy upwards of 66% more land – for the same cashflow impact. 

“With Fractal, I can buy 50% more land up front for the same money down and same kind of debt service as a traditional 70/30 loan. With Fractal, I can put 20% down. Since it’s I’m making interest-only payments through Fractal, it really lowers my total debt service obligation to our operation.” —  Rich Bronec

2. Fractal offers access to untapped investment Capital

While industries like real estate, manufacturing, and mining have access to equity capital to fuel growth, agriculture has traditionally relied on debt. Fractal connects skilled operators with passive investors who have aligned incentives, creating long-term partnerships that respect top-tier operators and their proven track record on the farm.

“Fractal gives us that connection with investors that we would, frankly, not be in the room with. It’s the bridge between where the money is and where it needs to be deployed.” — Rich Bronec 

3. investors recognize Farmers are best positioned to invest in farmland

Farmers are the boots on the ground in the local real estate market. They understand what’s coming up for sale and have relationships that allow them to communicate and negotiate a deal better than someone from the outside. They won’t pay top of the market and will deploy capital smartly. 

“If you want to deploy multi-millions of dollars on farmland and flip the market the wrong way, you’re going to overpay and impact your total return on investment. [Farmers] understand what can come for sale… we can negotiate probably a better deal than someone from the outside… just culturally.” — Jesse Hough

4. Investors benefit from keeping farmers in control

Investors recognize that farmers are best positioned to make operational and agronomic decisions, which ultimately lowers risk and drives returns. Fractal’s model respects farmer autonomy, and investors benefit from it. Farmers stay in control and tailor management to their land, not investor preferences. Investors are aligned on outcomes, not micromanaging agronomic decisions.

“Farmers offer investors access to farmland without the risk of flying blind. They bring local insight and relationships that outside capital doesn’t have. The investors understand the concept of empowering employees to do the right things for the business long-term, because they know the business best and are the best managers for that operation.” – Jesse Hough

5. Access to capital is a farmer’s new competitive advantage

Speed to action is a farmer’s biggest advantage when it comes to growth. Without the dry powder to act, farmers risk losing rented land to another farmer or investor who has capital in hand. With Fractal capital, you can convert strategic rental ground into owned acres – and secure land you’ve already invested in and know.

“Renting has a place, but it’s not long-term and it’s not secure. Ownership will always trump renting in our business. There’s a legacy component to it, preserving what we already farm. But there’s also the realization that we need help with capital. We need different financing tools than what we currently have that takes too much working capital, too much cash flow.” –  Rich Bronec

6. The Fractal model creates long-term investor partnerships 

Each of these farmers emphasized that returns happen over time and good management and stewardship compounds value. Neither investors nor these farmers viewed Fractal as short-term capital to fund a single deal. It’s a long-term capital flywheel that enables farmers to build their asset-base faster in a risk-managed way. 

“By getting capital into our operations and keeping working capital strong, we have the leeway to figure things out and grow in a healthy way that will deliver a good return on their investment long term. This isn’t a one or two year term investment. Our businesses basically buy and hold and make the asset more valuable one way or the other over a 10 to 20 year horizon. And those returns can be tremendous and life changing.” – Jesse Hough

“The best time to invest in farmland is today and yesterday. And whether these values continue to rise, or whether they stay where they’re at or maybe decrease a little bit, farmland is still a solid long-term investment.” – Adam Edwards

About the farmers: 

Adam D. Edwards is the owner/operator of Edwards Farms a grain operation in Southern Illinois

Rich Bronec is the owner/operator of R&R Bronec Grain and Cattle, a grain and beef cattle operation in Central Montana

Jesse Hough is the president and CEO at HKO Land and Cattle Company and Hough Farms in Central Nebraska, an operation that grows corn, soybean and alfalfa.

Note this is not investment advice. The information contained should be used for informational purposes.