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Raising Equity Through Crowdfunding: The Players and What to Expect

September 24, 2020

Although in its infant stages, crowdfunding in the commercial real estate space has made leaps and bounds in just a few short years. Here is an analysis of the prominent players and what you should expect during the process.

Exposure: Dramatically increase the exposure of your equity opportunities to a wide international audience looking to invest in top 50 MSA locations.

Centralize: Centralize the offering by narrowing in on ONE platform to host the crowdfund, directing all interested parties to that platform.​

Innovate: Begin taking the steps to move toward the future of capital raising.​

Debt or Equity: First, decide whether you intend to pursue debt or equity funding.​

Choose a Platform: Decide on a platform. All platforms differ in how they approach the underwriting process, how they structure deals for investors, and the requirements in place for borrowers and fundraising companies.​

Proven Track Record: Depending on the platform, applicants need to prove that they have adequate history of involvement in successful projects. For example, Fundrise requires $100M worth of projects​.

Apply: Submit your application. Be thorough in answering each question on the marketplace platform you choose. Some requirements include tax returns and deeds showing ownership of properties.​

What Is The Expected Raise Timeline?

Every platform has different timelines, although you should expect the same as a traditional raise​.

The only additional time required is the submission process, which could take up to 7 business days depending on the platform​.

Equity partners who we do not meet on the platform can still place their equity using the platform we choose to use, which can speed up the raise​.

Breakdown of the Best CRE Crowdfunding Platforms

  • RealCrowd​
    • Open marketplace where sponsors and investors make connections, grow networks, carry out transactions, and do deals without all the institutional intermediaries and encumbrances that existed in the pre-JOBS Act era
    • 20,000 accredited investors​
    • Facilitated over 130 different deals—18 of which are funds, with the rest being individual assets—in over 30 states and over 80 different cities.
  • Fundrise​
    • $10M – 100M in Top 50 MSA​
    • Sponsor must have $100M in real estate experience through sales or acquisitions​
    • Both Equity and Debt solutions​
    • Deals reviewed within 48 hours and underwriting within 4 weeks to close​
    • No prepayment penalty​
  • Crowdstreet​
    • Over $1B raised​
    • Company assists with the marketing plan to attract the best investors​
    • Some deals have been financed within 24 hours of posting on the website​
  • EquityDoor​
    • Based in Austin TX, this platform requires the sponsor to have an already-existing pool of investors​
    • The website is a bit outdated and there are no success stories or stats on how many deals have been done through the platform​
  • RealtyShares​
    • Over $870M deployed to date, 1,160 transactions across 41 states with values over $2.7B​
    • Provides Common Equity, Preferred Equity, and Mezzanine Debt​
    • Up to 90% LTV​

Are There Any Success Stories?​

Article sources:

  • MarketWatch​
    • Real Estate Crowdfunding Market Growth Analysis By Revenue, Size, Share, Scenario on Latest Trends, Types and Applications Forecast 2026​
  • Forbes​
    • How a Downturn Can Affect Crowdfunding​