By Irene Tordera, An innovation is said disruptive when it “helps create a new market and value network, and eventually disrupts an existing market and value network (over a few years or decades), displacing an earlier technology”.
Crowdinvesting has been evolving in a way that could well be that of a potential disrupting innovation for many markets. And real estate may be the first one.
Real estate crowdfunding is the crowdfunding application that has the highest growth rate in this new market, as Crowd Valley also reported in its Crowdfunding Market Report. The first actors operating crowdinvesting models in this market were startups, with almost no previous experience in the real estate sector. In just a couple of years they’ve undergone an incredible growth, catching the attention of professional investors and of course established real estate companies too. Among the latter, some have seen real estate crowdfunding as an innovation that could create a disruptive change in the sector. Therefore decided to turn the threat into an opportunity and jump on it.
Established real estate players are entering the real estate crowdinvesting market equipped with far more resources, larger networks and stronger reputations than the operating startups. This may pose a threat to the young incumbents, which may see “part of their crowd stolen” by more established brands. For instance, it may be that the the new entrants attract with their crowdinvesting services more institutional investors and wealthy individuals – with whom they already have solid relationships – , leaving real estate crowdfunding startups to deal only with retail investors. On the other hand, it could be that incumbent companies with lighter structure and less overhead are able to adapt quicker to market changes – and crowdfunding is constantly evolving -, keeping their time advantage on the new entrants. As young technology companies they may also be more attractive to wealthy investors in their 30s- 40s, than big old companies.
Like other crowdfunding markets, also the real estate one is still taking shape: many companies are entering the market and many will also get out at some point, but differently from other sectors, here established companies too are looking to integrate crowdfunding in their operations, thus intensifying the competition. However, being a large corporation with plenty of resources may not necessarily translate into a competitive advantage, especially in a new market like crowdfunding, where everything is evolving very fast.
About the author – Irene Tordera
Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives.
During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.
About Crowd Valley
Bringing capital raising and investing truly online requires new tools. From the first announcement of an offer of shares, to investor accreditation, to the execution of deal documents, through to the delivery of money and shares, each step requires new components.
Our aim is to provide the full-suite infrastructure of products and services for this new, democratic financial market to those looking to create more effective and transparent financial models.
The global investment market is incredibly diverse. From billion-dollar IPOs to early-stage seed financing, the requirements for companies and investors are extremely broad. But the JOBS Act, new service providers, and new technologies are pushing the investment community online.
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