Uncompromising commitment to quality
Our Capital Markets team is on the ground in every region of the U.S., looking for best-in-class sponsors with institutional-quality deals. They bring these opportunities to our Investments team, which puts both the sponsor and their deal through our review process to determine if they are a good fit for our Marketplace. Out of every 100 deals, approximately five make it to the Marketplace for investors to compare and review.
ROUND 1: SPONSOR REVIEW
Evaluating the firm
We’re committed to working with best-in-class partners. Each new sponsor is subject to the same, objective review process.
- Background check: Using industry-leading platforms, we conduct an in-depth background check on both the firm and principals.
- Track record review: We confirm the sponsor has successfully executed projects in the asset type they are looking to bring to the Marketplace.
- Sponsor designation: We organize sponsors into four unique categories based on their background and experience–Emerging, Seasoned, Tenured, and Enterprise.
Sponsor background check:
Our Investments team evaluates each potential sponsor by conducting:
- Deep background checks
- Interviews and reference checks
- In-depth online news and social media research
Red flags including “bad actor” violations or any pending material litigation are grounds for immediate rejection of the sponsor.
| FINRA BrokerCheck |
| Track Record-Spot Audit |
| Investor Reference Check |
| Google and Linkedin Search |
| Crowd DD Search |
| Business Address Verification |
| Bankruptcy and Lien Search |
| Criminal and Lawsuit Records Search |
| UCC Filings Search |
| Professional Licenses Search |
Track record review:
We evaluate the sponsor’s track record, including a review of their quarterly reporting, to confirm they have successfully executed on past deals and can demonstrate stewardship of investor capital. We specifically look for successes in the asset type they are trying to bring to the Marketplace. We want to work with sponsors that value direct relationships with investors and have the infrastructure to support those investors for the duration of the project.
Sponsor designation:
Expertise is gained through experience, with sponsors transacting on numerous deals across multiple commercial real estate cycles. A more established sponsor’s network of banking relationships and capital sources complement their expertise, providing negotiating benefits and bringing favorable terms to a project. We tier our sponsors based on their experience and track record so our investors can get a sense of the firm behind the deal.
| Sponsor Designation | |
|---|---|
| Enterprise | |
| Age of Firm | |
| 15+ years | |
| Principle Experience | |
| 30+ years | |
| Total Portfolio Value | |
| Must be $5B+ | |
| Additional Requirements | |
|
|
| Tenured | |
| Age of Firm | |
| 10+ years | |
| Principle Experience | |
| 20+ years | |
| Total Portfolio Value | |
| Must be $500 MM+ | |
| Additional Requirements | |
|
|
| Seasoned | |
| Age of Firm | |
| 5+ years | |
| Principle Experience | |
| 10+ years | |
| Total Portfolio Value | |
| Must be $100 MM+ | |
| Additional Requirements | |
|
|
| Emerging | |
| Age of Firm | |
| <5 Years | |
| Principle Experience | |
| 5 years (at least 2) | |
| Total Portfolio Value | |
| May be < $100MM | |
| Additional Requirements | |
|
|
| Sponsor Designation | |
|---|---|
| Enterprise | |
| Age of Firm | 15+ years |
| Principle Experience | 30+ years |
| Total Portfolio Value | Must be $5B+ |
| Additional Requirements |
|
| Tenured | |
| Age of Firm | 10+ years |
| Principle Experience | 20+ years |
| Total Portfolio Value | Must be $500 MM+ |
| Additional Requirements |
|
| Seasoned | |
| Age of Firm | 5+ years |
| Principle Experience | 10+ years |
| Total Portfolio Value | Must be $100 MM+ |
| Additional Requirements |
|
| Emerging | |
| Age of Firm | <5 Years |
| Principle Experience | 5 years (at least 2) |
| Total Portfolio Value | May be < $100MM |
| Additional Requirements |
|
| Sponsor Designation | |
|---|---|
| Enterprise | |
| Age of Firm | 15+ years |
| Principle Experience | 30+ years |
| Total Portfolio Value | Must be $5B+ |
| Additional Requirements |
|
| Tenured | |
| Age of Firm | 10+ years |
| Principle Experience | 20+ years |
| Total Portfolio Value | Must be $500 MM+ |
| Additional Requirements |
|
| Seasoned | |
| Age of Firm | 5+ years |
| Principle Experience | 10+ years |
| Total Portfolio Value | Must be $100 MM+ |
| Additional Requirements |
|
| Emerging | |
| Age of Firm | <5 Years |
| Principle Experience | 5 years (at least 2) |
| Total Portfolio Value | May be < $100MM |
| Additional Requirements |
|
| Sponsor Designation | Age of Firm | Principle Experience | Total Portfolio Value | Additional Requirements |
|---|---|---|---|---|
| Enterprise | 15+ years | 30+ years | Must be $5B+ |
|
| Tenured | 10+ years | 20+ years | Must be $500 MM+ |
|
| Seasoned | 5+ years | 10+ years | Must be $100 MM+ |
|
| Emerging | <5 Years | 5 years (at least 2) | May be < $100MM |
|
Are you a sponsor looking to raise capital on the CrowdStreet Marketplace?
Contact our Capital Markets team for more information.
ROUND 2: DEAL REVIEW
Evaluating the asset
When reviewing a potential deal, our team asks four key questions:
- Is the project within a core competency of the sponsor?
- Do the materials demonstrate professionalism and conform to industry standards?
- Are the deal assumptions supported by market data?
- Does the project match CrowdStreet investor preferences in terms of asset type, projected returns, and location?
We’re looking for deals, both single asset properties and commercial real estate funds, in markets across the U.S. with positive economic and demographic trends. Once a sponsor passes the initial screening stage, our Investments team reviews the individual deal to make sure that it aligns with the sponsor’s background and they have a track record of successfully executing that specific asset type. We also look for 3rd party data to support the business plan and validate the sponsor’s underlying assumptions. The team prepares an Investment Memo that covers sponsor designation, key deal points, capital stack, co-investment, and financial returns. All of that information is reviewed by our Investment Committee, which determines if the deal is right for the Marketplace.
To help us answer these questions, we ask that sponsors provide us with:
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The team reviews the deal’s terms and associated documents against our standard deal term criteria. All potential deals are also screened against investor demand to ensure that there is an audience for and sufficient interest in the project.
As part of our ongoing review, our quality control process collects documentation throughout the lifecycle of the project to validate the sponsor and the underwriting of the opportunity, as well as for fraud prevention.
Read our Investment Thesis to learn more about what we’re looking for in each asset class.
ROUND 3: DOCUMENT REVIEW
Evaluating the deal materials
Our goal in reviewing the deal’s legal documents is to ensure there are no issues or discrepancies relating to the numbers and content between the documents and/or any conversations between CrowdStreet and the sponsor.
- Any issues will be raised with the sponsor prior to launch.
- Our team provides direct feedback and suggestions to help the deal conform to our standards
- Sponsors can either adjust the terms or documents or withdraw their deal for consideration.
We collect standard third party reports and deal documents to confirm pro forma assumptions, capital structure, and the feasibility of the business plan. Among other things our team collects and reviews the:
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We believe that informed investors are empowered investors. Our team posts much of the information we collect onto the detail page of any live deal so investors can do their own due diligence before deciding which deals are right for their portfolio.
Bringing institutional-quality deals to investors
Our Capital Markets team has relationships with best-in-class sponsors across the country, bringing dozens of potential deals to our Investments team for a more in-depth review every month. The Investments team puts each sponsor and their deal through our multi-stage, objective review process, looking for institutional-quality investment opportunities that meet the standards of our Marketplace. We pride ourselves on both the quantity and quality of our deal flow, giving investors the opportunity to build a diversified commercial real estate portfolio that meets their own investing criteria.
Updated April 2021. This content was written by an employee of CrowdStreet, Inc. (“CrowdStreet”) and has been prepared solely for informational purposes. The information contained herein or presented herewith is not a recommendation of, or solicitation for, the subscription, purchase or sale of any security or offering, including but not limited to any offering which may invest in the geographic area(s) or asset type(s) mentioned herein, whether or not such offering is posted on the CrowdStreet Marketplace. Though CrowdStreet believes the information contained and compiled herein has been obtained from sources believed to be reliable, CrowdStreet makes no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the subject thereof. All projections, forecasts, and estimates of returns or future performance, and other “forward-looking” information not purely historical in nature are based on assumptions, which are unlikely to be consistent with, and may differ materially from, actual events or conditions. Such forward-looking information only illustrates hypothetical results under certain assumptions.
CrowdStreet is not a registered broker-dealer or investment adviser. Nothing herein should be construed as an offer, recommendation, or solicitation to buy or sell any security or investment product issued by CrowdStreet or otherwise. This page is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any investor. All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate.