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 run a background check on both the firm and principals.
- Track record review: We look to see if 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 with the following information:
- Deep background checks
- Interviews and reference checks
- 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.
|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.
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 can complement their expertise, providing additional negotiating benefits and bringing more 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||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 to determine if it meets the baseline eligibility standards of our Marketplace:
- 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 ultimately determines if the deal is right for the Marketplace.
To help us answer these questions, we ask that sponsors provide us with:
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 track the opportunity’s performance. The process also helps with our fraud prevention and mitigation goals.
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 make sure the legal documents say what the sponsor told us, say what we understood the deal to be, and conform to what CrowdStreet understood the deal to be.
- Any known 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 in an effort to confirm pro forma assumptions, capital structure, and the feasibility of the business plan. Among other things, our team collects and reviews the:
We believe that informed investors are empowered investors. Be sure to review the detail page of any live deal as you conduct your own due diligence before deciding which deals are right for your portfolio.
Though we review each offering, our review process is not a substitute for your own review, and you are advised to consult your financial, tax, and legal advisors for each and every offering. Our deal review process should not be construed as investment advice for you. CrowdStreet’s posting of any offering of its Marketplace is not an approval or endorsement of the offering or an indication of suitability.
Browse the Marketplace.