This year, like every year since 2016, World Tree is allowing investors to grow money on trees. We have good news. The company is coming back even stronger than when we designated it a Deal to Watch 12 months ago.
The concept is simple for crowdfunding investors who do not know World Tree yet. World Tree USA collects money from investors every year to plant several hundred acres of the Empress Splendor tree (Paulownia Fortunei), one of the fastest-growing trees in the world, on independently managed farms across North and Central America. After ten years, the company will cut down trees and sell them on the timber market. World Tree will then share 25% of the profits with investors, 50% with farmers, and keep the last 25% for itself.
World Tree has a triple impact: it stores carbon, mitigates climate change, provides additional revenues to farmers, and makes investors wealthier. I know it sounds magical. But that may be why World Tree always raises around Christmas.
Learning from the past
Two factors initially tempered my enthusiasm for World Tree’s investment opportunity, but the company has significantly improved since last year. In the past, there were substantial tree losses in some of its farms. To address this, World Tree now implements stricter rules for farmers, improving tree survival rates. Crucially, if a batch faces too many losses in the first two years – when trees are most vulnerable – World Tree replaces them, ensuring better returns for investors.
When we last spoke with World Tree, the company hadn’t started selling yet, and the first harvest is only expected in 2026. In the meantime, World Tree has smartly begun selling timber from third-party farmers, which mitigates investment risk. The company already has a solid network to sell future harvests, increasing the chances of selling current investors’ batches at higher prices. This progress underscores the promising nature of World Tree’s current investment round.
Better returns
Investors in this round with World Tree stand to gain between 1.375x and 4.125x on their investment, contingent on their batch’s survival rate, estimated between 25% and 75%. Based on a timber price of $4.00/board foot (bf), the initial calculation suggests potential returns. However, World Tree is presently selling timber at $5.89/bf. If this price holds, current investors could anticipate a 2x return with a 25% survival rate or a substantial 6x return if 75% of the trees survive. There’s room for optimism, considering potential improvements in tree survival rates and the possibility of selling timber above the current price of $5.89/bf over the next decade.
Comparatively, this year’s investors with World Tree are poised for better returns than last year’s batch. The acre price has decreased from $4,600 to $4,000.
All indicators for those engaging in World Tree’s current raise are positive: risks have diminished, and the investment is likely to yield superior returns.
As we say, it’s okay to be a tree hugger, but it’s even better to make a profit while doing it.
