Crowdfunding has become a major source of capital for a number of industries and real estate has been one of the primary industries to benefit. Fundrise, which is a platform that is the best backed crowdfunding system for real estate, has raised nearly $40 million in total after a $3.6 million haul in its latest Series A funding round.
There are some big names included with the latest round of fundraising, including Guggenheim Partners. The lead backer, however, is reported to be Renren Inc. This is a Chinese social networking company and the CEO, Joseph Chen, sits on Fundrise’s board.
Fundrise Isn’t the Only Name That Is Finding Success
There are some other crowdfunding platforms that have found success, though not to the level that Fundrise has been able to achieve. Realty Mogul, for example, has been able to raise $10 million in total. Realty Shares and Asset Avenue have both raise another $3 million each and others have raised at least $800k in the past year.
Fundrise is dominating the industry, however, because they aren’t new to the game. The company was founded in 2010 as Rise Companies Corporation in Washington by a pair of brothers whose father is a real estate developer. The goal of this company from the start was pretty simple: to let new, emerging neighborhoods in the District of Colombia by able to join in with local funding for real estate funding projects.
Fundrise Dominates Because They Are Proactive
Fundrise began local crowdfunding efforts right away, before the JOBS Act was passed in 2012. They had a lawyer in hand and actively solicited backers, even non-accredited backers, for amounts as low as $100 for projects. Their first project was able to raise about $400k from 175 backers, but it took Fundrise over 2 years and $800k in legal fees to make that happen.
It is that experience, however, that is paying off today with major dividends. Real estate companies have been contacting Fundrise for the last 18 months to get their hands on the software that the company uses. Once all of the crowdfunding regulations are finally approved, everyone at Fundrise expects the real estate industry to be completely disrupted. The comparison is to how internet news was able to shake up the US newspaper industry.
Whether crowdfunding is happening on a national level with only accredited investors or it stays at a state level and focuses on non-accredited investors, there is going to be a wave of new projects that get funded after Title III is finally approved. Fundrise appears to be the leader in the real estate niche of this market, but with millions at stake, any platform is better than none when the tide finally starts coming in.
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