Real Estate Crowdfunding: Overview

By Vendula Macháčková, CrowdFunding Beat Guest Contributor,

The Real Estate crowdfunding industry (alternatively referred to as Property Crowdfunding) is moving quickly as awareness increases around the globe and favorable legislation is proposed and pushed forward. We put together a high level overview of recent activity including our thoughts, insights, and opinions and we encourage groups to reach out that would like to learn how we can assist them with their own initiatives.


 Industry Direction – like any sector that heats up, there is an abundance of misinformation, hype, and a sense of urgency in many cases. While early movers like (raised a $31 million Series A, lead by Renren, right around the time we spoke initially) and (raised a $9 million Series A, lead by Canaan Partners at the end of March) are disrupting the market and creating awareness for an efficient online offering/transaction model. They are ultimately what we call intermediary platforms, bringing investors and third party issuers together and there are many shortcomings in terms of the quality of the deals they have access to (it depends how many firms are willing to post deals and give a commission to the platform and then how many of those deals are good quality). That being said, these companies are doing a great job to help pioneer an emerging industry and while their exposure may be more impressive to some than the actual dollars transacted, they are young companies and that will likely change.

More established firms with existing investor networks and access to high quality investment offerings are entering the space or exploring how to enter. The common goal is to grow their institutional and accredited investor networks by leveraging the online model, and create efficiencies in their business via process automation (when possible). There won’t be one big winner in “Real Estate Crowdfunding”, the industry will remain fragmented but the ability for solicitation is game-changer for firms with strong track records.

US Regulation – a lot of people refer to crowdfunding only in the context of non-accredited investors but in our opinion any syndication is technically crowdfunding. For the non-accredited investors to benefit from the new legislation, accredited investors need to adopt the model. Angel List ( is a great example because many high profile and savvy tech investors actively use the platform. If they allow non-accredited investors in the future that would be great.

Title II – Rule 506 (b) and Rule 506 (c) are the compliance of interest to US groups. Rule 506 (c) allows for solicitation so if your legal team is OK with it, its great.

Title III – the compliance of interest to everyone with even a slight consideration to allow non-accredited investors. Many groups aren’t interested in $300 investments but many that don’t qualify for accredited status still have money i.e., $50,000 commitments. Depending on your deal sizes this may or may not be an interesting option.

Financial Transactions – all companies are different, the offerings are structured different, and how they monetize their investment opportunities are different. There is a lot of confusion whether groups need to be a broker-dealer to operate a platform and take transaction fees. Approaching your platform concept with the assistance of a securities lawyer can help determine the best methods to handle the financial transactions from the platform. Many groups are doing debt deals and not equity participation.

Depending on the structure of a deal and the company’s status with the SEC (for US based) there are different payment services available for very low transaction fees. Whether you require escrow or not presents other considerations.

International – international awareness and demand is growing. Many groups are looking at international growth by accessing investors looking for US assets. Platforms like in the Middle East are fairly well known and provide a good reference point to investors from those areas. Depending on your investor profiles (and compliance) the international aspect may or may not be of interest but it opens the possibilities.

The industry is dynamic, exciting, and disrupting an industry with more efficient processes, powerful investor tools, and the ability to leverage online exposure.

As a software provider for real estate crowdfunding platforms, we are fully entrenched in this space and hopefully we can educate others and contribute to the growth and success of many companies.

Stay tuned for more updates in the coming months!

Tags: , , ,


FortuneCrowdfunding: Women Better at Raising Money Than Men Are ...FortuneA new study has found that women are generally better than men at crowdfunding.Women are better at crowdfunding than men, shows study | The ...The IndependentWhy women join the crowd: Gender gap in bank lending, [...]

Banking Limitations Restrict Bisx Model For CrowdfundingBahamas Tribune#Banking system limitations are restricting the Bahamas International Securities Exchange's (BISX) development of crowdfunding and small business listing platforms, its chief executive has revealed. #Keith Dav [...]

Grand Forks HeraldWomen's WCHA launches crowdfunding campaign to improve leagueGrand Forks HeraldThat mindset led the WCHA to announce a crowdfunding campaign Thursday, July 20, to help fund the league's expenses and lessen the financial burden of the seven remaining schools [...]

Enterprise InnovationWomen are better when it comes to crowdfunding | IT-OnlineIT-OnlineWhile men are more likely to use seed crowdfunding than women, women are more successful in reaching their finance goal. This holds true in all sectors and...Women outperform men in seed crowdfundi [...]

Gamasutra (blog)Gamasutra: Anti Danilevski's Blog - The problems of crowdfunding ...Gamasutra (blog)The Art & Business of Making Games. Video game industry news, developer blogs, and features delivered daily.and more » [...]

CNBCAfrica.comCrowdfunding changing people's livesCNBCAfrica.comCNBC Africa's Tshepho Modiba is joined by Mosa Nyamande, Head of Operations and Technology at Khonology for a look at Crowdfunding, a method used to collect many small financial contributions by tapping into the [...]

How Women Trounce Men When Raising Seed Crowdfunding CapitalForbesMale entrepreneurs may account for the majority of business owners raising finance on crowdfunding platforms in the UK, but their female counterparts are far more likely to get the support they seek, new research shows. [...]

YourStory.comA crowdfunding portal ensuring total authenticity of cases, MeHelp lets you donate confidentlyYourStory.comIn March this year, Samiya Hafeez, a 22-year-old woman from Hyderabad, was arrested for running a fake crowdfunding campaign through which she collected almost Rs 22 [...]

The ACNC Crowdfunding Guidance Misses The Biggest Opportunity in Crowdfunding: TrustPro Bono AustraliaAs adoption of crowdfunding by the charity sector has been booming, it's promising to see the ACNC taking steps to inform charities about the potential to access new donors, in a [...]

KHOUSpace Center Houston crowdfunding to restore NASA's mission ...KHOUSpace Center Houston is now crowdfunding to restore the historic control room from the Apollo era.and more » [...]

CFB Finance


  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |