CrowdStreet is committed to delivering a fair and rewarding experience for our investor members. To that end, CrowdStreet includes an Evaluation Period in the lifecycle of every Marketplace offering launch.
When a new offering is announced, there will be an Evaluation Period before offers can be submitted. During this period, all investors will have an opportunity to conduct initial due diligence on the offering prior to any offers being submitted.
The offering submission window will open for all investors at the same time: at the beginning of the offering’s live webinar. Live webinars will be conducted typically 2-4 business days from the offering’s launch date, the timing of which will be posted on the offering detail page. This will allow investors to better plan and alleviates the need to monitor for new offering email announcements intraday.
To summarize, new offering launches will conform to the following sequence of events:
- Offering announcement email will go out to all investors. Investors may immediately review the offering detail page and offering documents but the “Invest Now” button will not be displayed.
- The live offering webinar will take place 2-4 days post-announcement.
- The offering submission window will open at the beginning of the live webinar and the “Invest Now” button will appear. Investors may submit their offers to invest.
- Offers will be pre-approved in the order by which they are received, up to the equity allocation amount.
- Offers submitted in excess of the equity allocation will not be immediately pre-approved and considered waitlisted in the event that any pre-approved offers are withdrawn.
Below is an illustration showing how hypothetical investor “Jane” might experience a typical new offering launch and submit an offer to invest.
Do I need to attend the live webinar in order to invest in an offering?
No, webinar attendance is entirely optional. However, the coordination of the offering submission window opening at the start of the live webinar is intended to create better conditions for investors to plan accordingly and be less subject to the timing of offering launch and email announcements.
Will I have special access to invest in an offering if I do attend the live webinar?
No. We encourage attending the live webinars to learn more about the offering and to have the opportunity to ask questions directly of the sponsor, but all submitted offers will be considered on a first-come-first-served basis, irrespective of webinar attendance.
Won’t this new process mean that offerings still risk being rapidly oversubscribed?
Yes, we expect that new offerings may still be rapidly oversubscribed upon opening the offering submission window, but expect that investors will be better prepared to submit genuine offers, having had the evaluation period during which to complete their due diligence process.
Does CrowdStreet have a policy of giving certain investors preferential treatment over others?
No, CrowdStreet is committed to ensuring that all investors have equal access to investment opportunities on our marketplace, which is why we continue to favor a first-come-first-served model, albeit modified to allow more time for conducting due diligence. All submitted offers are considered equal, irrespective of their size or the offeror’s number of past investments.
Are investors penalized for withdrawing offers?
No, offers remain non-obligatory up until the point of remitting funds to the sponsor. In the rare case of an investor who deliberately abuses this policy and habitually submits “bogus” offers and then withdraws them without a genuine intention to invest, they may be evaluated by our Investor Relations team on a case-by-case basis and subject to account suspension. When investors do need to withdraw an offer, we kindly ask that they confidentially share the reason with our Investor Relations team for the purposes of aggregating feedback on the offering or sponsor.
Why we made this change
Over the past year, the CrowdStreet marketplace has grown considerably in terms of offering volume and quality, the number of 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, and the number of participating investor members. While this growth has helped advance investment choice on the marketplace, it has also come with a new challenge: offering A commercial real estate offering is “oversubscribed” when the investor funds offered exceed the total equity the sponsor was looking to raise. Essentially, it means there is more demand than supply. To help reduce the rate of oversubscribed offers on the marketplace and ensure that all investors have equal opportunity of access to sponsor deals, CrowdStreet instituted a three-day waiting... More.
Our Investor Relations team conducted extensive research into this issue to explore ways of improving the investor experience. Through feedback from investors, we came to understand that many shared the following concerns over our current first-come-first-served model:
- Investors needed to monitor their email very closely in order to not miss out on new offering announcement emails.
- Investors were incentivized to preemptively submit their offers without the time to complete a thorough due diligence process in advance.
- Investors frequently found themselves in the situation of needing to withdraw offers once they had completed their due diligence.
- On average, investors prefer to allocate two days to their initial review of an offering before determining an intent to invest.
The introduction of the Evaluation Period was a direct result of these learnings, and feel it is a substantial improvement to our process. We are proud of the way in which our investors help shape the CrowdStreet marketplace.
As always, please feel free to contact us at [email protected] with any questions.