Commercial real estate (“CRE”) firms are taking a bigger step into online fundraising, AKA crowdfunding. Real estate operator and developers are moving from dipping a toe in the water to test crowdfunding, to taking the reins by adding their own online fundraising portals to their company websites.
The emergence of new crowdfunding models that give CRE In commercial real estate, the sponsor is an individual or company in charge of finding, acquiring and managing the real estate property on behalf of the partnership. The sponsor is usually expected to invest anywhere from 5-20% of the total required equity capital. They are then responsible for raising the remaining funds and acquiring and managing the investment property’s day-to-day... More more options is another testament to the growing momentum of the crowdfunding sector. At CrowdStreet, we have learned that there is significant demand among sponsors to host their own online fundraising portals and we are happy to provide the tools to do it. We are the first and only real estate crowdfunding platform to offer both a direct investment crowdfunding marketplace, as well as a “white label” software solution that gives sponsors the flexibility to choose the model that best fits their needs.
New Investor Management Software
CrowdStreet introduced its white label software as a service (SaaS) solution to allow sponsors to offer online real estate fundraising and investor management capabilities on their own branded websites. The CrowdStreet platform uses the same technology infrastructure that powers the CrowdStreet marketplace, which gives investors access to the same online investing tools. Investors can view offer information, complete offer transactions, receive post-funding updates and track investment performance over time.
CRE sponsors can take advantage of the efficiencies of the crowdfunding marketplace, and yet still keep that fundraising “in-house” so to speak on their own websites. Many sponsors view the portal as another tool to better serve their existing pool of investors while cultivating new relationships generated from the crowd. For example, sponsors can use their online platform to “tier” an offering by first opening up new investment to their existing private pool of investors and then promoting the same offering publicly within the larger CrowdStreet Marketplace.
One example of a CRE sponsor using the CrowdStreet platform is Farran Realty Partners based in Missoula, MT. Farran is a private real estate investment firm focused on creating meaningful value for its investors. They are using CrowdStreet to provide an investor portal to their existing investor network and the Marketplace to raise additional capital from new investor relationships sourced online.
The Evolution of Crowdfunding
One of the exciting aspects of the CrowdStreet platform is that it is another sign of the evolution – and innovation – taking place within the crowdfunding sector. This new product suite speaks to the vision behind CrowdStreet, which was to democratize access for individual investors to institutional quality real estate investments. We knew from the beginning that not everything was going to happen on the CrowdStreet Marketplace. Rather, investors would also want to go directly to the sponsor’s website, and likewise, sponsors would want to use these tools in-house to better serve their investor clients.
We are seeing this shift happen as the marketplace continues to mature. At CrowdStreet, we embrace that change and we continue to look at ways to bring new online capital raising solutions to the industry to better serve both sponsors and investors.