The New Norm: Real Estate Crowdfunding Platforms Turn to Wall Street

The New Norm: Real Estate Crowdfunding Platforms Turn to Wall Street We want to share what we’ve learned from attending recent real estate crowdfunding conferences. We are beginning to see a clear cut view of how crowdfunding in the real estate space is beginning to shy away from its original purpose. Funding through the “crowd” is a new reality. The trend is that Real Estate Crowdfunding (RECF) Platforms Turn to Wall Street. Crowdfunding, by definition, “is the practice of funding a project or venture by raising monetary contributions from a larger number of people, typically via the internet” – emphasis on “people”. Companies such as KickStarter and GoFundMe are perfect examples of how companies have successfully accomplished this business objective by getting projects funded through the crowd for the purpose of people wanting to work towards a similar goal. This has been the same objective the real estate sector is trying […]


Regulations Propel RECF Platforms Towards IPOs

After Lending Club’s IPO, it’s no wonder that RECF Platforms (real estate crowdfunding) are becoming more open to the idea of IPO’s. Lending Club had the largest tech IPO in 2014 valued at $5.4 Billion. In the real estate space, Ifunding has already opened shares in return for equity in their company. Based on his own experience, Ifundings CEO, William Skelly predicts that the number of platforms will decrease to three or five. Even more so, that one or more could do an IPO successfully. Skelly says that the most innovative and successful platforms will be the ones backed by larger financial institutions. Thus, lead to an access of public markets for capital. Key Takeaways of Shifting RECF Platforms As any relatively new industry blooms, consolidation is inevitable. Here are some realities to keep in mind given this transition: Real Estate Crowdfunding usually perceived as democratic, but in reality, Title III and Title […]


Investor Interest Propelling $2.5B RECF Market Valuation for 2015

There is a growing divide in the industry between those who are building their business models from a social objective and those who are building from a business objective. From a social objective, some communities are investing in projects within their neighborhoods. They are doing so in hopes of revitalizing communities and promoting gentrification. From a business objective, the best companies offer the opportunity to build wealth in real estate. This is done through innovative technology and access to real estate experts. Either way, there remains an ongoing struggle for platforms to find the best approach to provide value to investors. Furthermore, investors aren’t simply looking for a return on their money, investor’s want access to the best deals. They want to invest in a solid platform that has a proven track record and superior customer service to manage their portfolios. As a result of the real estate downturn, it is […]


What are the different types of crowdfunding?

Are you curious about crowdfunding? To start, you should know that there are four different types of crowdfunding available. While crowdfunding has only been around since 1997, it has rapidly grown and expanded over the years, as have the various forms of crowdfunding. Since the four types commonly get grouped together, it’s important to understand the differences between each type of crowdfunding. By understanding the differences, you’ll be able to better choose which is right for your goals. Depending on the goals you’ve set for yourself, will determine which form of crowdfunding is right for you. There are four distinct crowdfunding categories, which are: Donation Based Crowdfunding Rewards Based Crowdfunding Equity Crowdfunding Debt Crowdfunding Now, let’s take a look at each of these types in greater detail to gain a better understanding of them. 1. Donation Based When it comes to donation crowdfunding, donors give contributions usually a good cause, […]


Title III of the JOBS Act Creates Freedom for the Average Investor

There are many ways in which Title III of the JOBS Act creates freedom for investors. Through changes in the market, added liquidity, and behavioral transformations, the average investor has the opportunity to invest in any real estate investment. A firm’s involvement can also provide a new level of flexibility and liquidity. This will have a major impact in the market. Thus, creating an opportunity for an entirely new market of buying and selling partial ownership of real estate. Market Shift: Cause & Effect Crowdfunding has established itself and many argue it will further establish itself as the new standard. This is especially true for early startups and financing for businesses. Some estimates give Crowdfunding a potential valuation of $300 Billion of market capital. This capital influx could create major implications for the real estate industry. It will create a new investor class (unaccredited investors will begin to shift away from […]


Real Estate Compliance and Government Adjusted Regulations

Compliance, or a lack thereof, is in some cases, the root of systemic risk in financial ecosystems. Government and Intrastate Regulators continue to adjust rules. So of course, business owners follow suit and grey areas arise as a result of poor implementation. Since the birth of the Real Estate Crowdfunding industry, compliance and regulations continue to be negotiated. So for today, what is and isn’t compliant? For California alone, we will delve deeper into these topics as an Accredited Investor as well as an Investment Firm. Accreditation Thresholds Definition | The Securities and Exchange Commission identifies an Accredited Investor as someone who receives annual income in the previous, current, and expected year of approximately $200K ($300K with joint spouse). Additionally, someone with a net worth of $1MM, not including their residence is considered an accredited investor. 10% of Net Worth | An investor is eligible to invest in any amount of […]


Economies of Scale

Since the birth of the amendment to the JOBs Act on September 23, 2013, concern for investor security continues to be a trending topic in the media. As the real estate crowdfunding industry’s top influencers highlight the importance of investor security, we are slowly beginning to see an emergence of authentic platforms. The Inevitable Barriers to Entry For early adapters, platforms with previously established backgrounds in real estate investing are becoming industry leaders. More specifically, companies’ success is fueled with track records backed by operational sustainability and scalability. On the other hand, platforms without established business models are falling to skepticism and remain under scrutiny. Adaptability in an Ever-Changing Market There has shown to be a necessary balance for platforms who are chasing markets and investing in what they know best. For those successful platforms, chasing markets require manpower. While those who invest in what they know could be slow to […]


How the SEC Regulation D 506 Has Changed the Industry

Over the past year we have seen real estate crowdfunding unfold into its own animal at an  unprecedented rate. With the SEC Regulation lifting the General Solicitation Ban, private companies can now publicly advertise their investment offerings. Additionally, open fundraising is the catalyst for this past year’s whirlwind of changes. Not only should all companies understand how this affects their business and their competitors, but investors should understand the importance in the development of the Title II of the JOBs Act when vetting investments. The Scope of Public Advertising What has been known over the past 80 years as illegal by the SEC under Rule 506 of Regulation D and Rule 144A of the Securities Act of 1933, is now amended. Under the amendment, companies will be allowed to fundraise investment offerings to a larger audience of people who may or may not be Accredited Investors. General solicitation has created impactful progress […]

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