Farmland marketplace CommonGround talks cash-lease insurance and going ‘back to basics’ as a company

[Disclosure: AgFunderNews’ parent company AgFunder is an investor in CommonGround.]

The $3 trillion dollar farmland real estate industry has historically lacked transparency, particularly when it comes how much that land is worth and who is willing to buy or rent it.

Since 2020, CommonGround has worked to change this through its online marketplace for farmers, landowners, hunters and brokers. Through the platform, these groups can determine the value of the land and conduct rental or sale agreements.

“We created a tool that is like Zillow – you put in your land parcel and it will tell you what it should rent for,” cofounder Noah Berkson tells AgFunderNews.

Farmers can then bid on the property, though Berkson emphasizes that it’s not necessarily a highest-bid-wins situation. “[Property owners] end up choosing who they want.”

CommonGround rebranded from its previous name, CashRent, in 2022 and went on to raise a $3 million seed round in early 2023.

Like many other agtech startups, CommonGround has felt the burn of the tough macro-economic climate and in response has gone “back to basics,” staying laser-focused on its marketplace as well as its more recently launched insurance business.

From CashRent to cash-lease insurance

In the last year, CommonGround added an insurance product to its business.

“We realized we were on the top of the funnel, meaning people come to our site with intent [to buy, sell, or lease land]. So we thought insurance would be an easy one for us to sell, because we already have a kind of captive audience,” says Berkson.

CommonGround subsequently bought a small insurance company to sell crop insurance through its platform. It has also developed a cash-lease insurance policy in partnership with market leader Hudson Insurance Group.

Cash leases are one of the most common types of leases for farmland, and are fixed agreements in which the farmer pays the landowner a pre-set amount for a period of years regardless of yield or market dynamics.

This arrangement works just fine if you’re renting at $500/acre for three years when corn is $6/bushel, says Berkson.

However, should the price of corn hover closer to $3/bushel, say, farmers may not be able to afford their rent.

“We had this idea for this private insurance product that would basically act as insurance against something like this happening,” he says. “If you buy this product ahead of time, you can get paid out if you’re underwater on the property, so you could actually end up breaking even or making money if things take a turn.”

Moving beyond venture capital

The company downsized its team several months ago in order to “get to a place that we can break even and have the opportunity to continue to run this for a lot of years.”

“It’s a challenging industry from an investor perspective,” he says of the agtech world. “When you look at a lot of the agtech investor bases, they’re inputs, future food, things like that, not necessarily a farmland marketplace.

“We realized that while the market has tightened up, instead of being dependent on continued venture capital, we wanted to get profitable so we have the ability to operate no matter the economic environment. This meant focusing solely on the things that drove immediate revenue, which were farmland leasing and selling insurance.”

Anything not able to return an immediate and quantifiable ROI was cut, he says, adding that CommonGround has as a result been able to reduce its monthly burn by almost 70%.

“We put in more money as founders of the company to make sure that everything was going to be okay. We’ve done the hard thing,” says Berkson. “That doesn’t get talked about a whole lot: going through the process of downsizing the team and figuring out how to go from being a venture company to something that’s self sustaining and can grow on its own.”