By David Drake, CrowdFunding Beat Guest Contributor,
David is the founder and chairman of Victoria Global, a corporate communications firm, LDJ Capital, a family office advisory firm, and The Soho Loft Media Group, a global financial media company. You can contact him at firstname.lastname@example.org
Just as it gained traction in mainstream real estate investing, realty crowdfunding has grown rapidly into an industry of its own. According to a report by the WSJ, funds raised by U.S. crowdfunding platforms in 2013 were in excess of $135 million. With just a handful of platforms visible in the landscape previously, the numbers have soared today to over a hundred, with nearly 70 operating from the U.S. alone.
These platforms, which offer different services to their clients, have created a niche for themselves and are experiencing phenomenal growth levels.Platforms Making Landmark GrowthFundrise, a DC-based real estate firm, is an example of a platform that has registered phenomenal growth levels in the industry. Founded in 2010 by the Miller brothers, this pioneer firm has been a pacesetter in the industry by offering unique solutions for both accredited and non-accredited investors.While the firm is actively involved in connecting high profile investors to high profile deals across the nation, it is also committed to ensuring that average investors are connected to worthwhile deals in their localities. In essence, it is a marketplace for both the elite and the masses seeking to invest in high-yielding real estate opportunities.
This way, the big investors benefit from a well-diversified portfolio spread across properties throughout the country while locals get to invest in projects in their communities.The vision to foster local investment in creative urban development as one of its major area of operation was birthed when the founders observed a disconnection between the projects that were executed by institutional groups in a community and the unique needs of the particular community. This motivated them to pursue state exemptions which allowed participation from non-accredited investors as contained in Regulation A of the SEC laws.Real estate crowdfunding platforms offer different forms of services to their clients.
While some offer only debt-based services, others specialize in equity deals. Still, there are some that offer a mix of both debt and equity crowdfunding services. Fundrise falls into the latter category as it offers both a hybrid of mezzanine debt and preferred equity to investors.The range of investment for a project offering on Fundrise is a minimum of $100 and an average of $10,000. The platform offers returns of between 10-12% on investment.A recent infographic released by the firm reveals the following statistics:
$54 Billion from 373 Companies in Assets Under Management
Fundrise has 373 registered companies with total assets under management that stand at $54 billion as of September 2014. Interpreting this figure in relation to the GDP of a country, it is greater than that of DR Congo , the fourth most populated country in Africa.
For those conversant with jets, it is the value of 931 G6 Jets. In relation to gold, it is worth 1,188 tons. Finally, for the tech guys, it can be equated to 60% of the value of Amazon, 65% of Sony, 90% of Ebay, 720% of Linkedin, 540% of Best Buy and 300% of Adobe.
41 States Reached
Fundrise has helped 373 registered real estate companies under its platform raise funds to execute projects in 41 states in the U.S. (representing 82% of all states) that include the top 10 metropolises: New York, Los Angeles, Chicago, Dallas, Houston, Washington, Philadelphia, Miami, Atlanta, and Boston.
The size of the land developed by these companies is estimated at 1.24 billion square feet or 44.3 miles, which is almost twice the size of Manhattan.
Better Days Still Ahead
The numbers don’t lie. The realty crowdfunding industry is expanding by leaps and bounds. With the U.S. property market currently estimated at $11 trillion, and with funds raised from platforms placed at an excess of $135 million, for realty crowdfunding platforms like Fundrise, it seems like better days are still ahead.