Now, Real Estate Where Anyone Can Invest
Three years ago we started with a simple idea: give everyone the opportunity to invest in real estate. At that time, only high net-worth, accredited investors were allowed to invest, while the other 97% of the population was excluded.
This was before crowdfunding or the JOBS Act were on the table, and every lawyer we spoke to told us that our idea was impossible.
Well, they were wrong. It is possible. We’re doing it right now, and have been for two years. Using Regulation A and Regulation D, we’ve raised millions of dollars from hundreds of unaccredited and accredited investors in amounts as small as $100 per share.
Fundrise Stats: Regulation A Offerings for Unaccredited Investors
How Did We Make it Happen?
Instead of waiting for the rules to change, we addressed the problem head on. We used a little known exemption called Regulation A that allows companies to raise investment capital from everyone, including unaccredited investors. Though it’s been around for a long time, it had never been used to crowdfund real estate investment.
Completing a Reg A is no small task. Unlike the crowdfunding exemption from the JOBS Act, we have to register our offerings by national and state securities regulators before we can sell them to investors.
Here’s what it took to complete our most recent public offering:
The amount of time, effort and money required to complete the process highlights just how useful the new crowdfunding exemption will be in allowing companies to raise investment capital.
Our most recent filing:
It also proved the age-old saying that “Nothing beats experience.” Few people, if any, can tell you what it’s like to have 536 individual investors with as little as $100 of equity as limited partners in your business. We now can.
So, What’s Next for Fundrise?
Since our first Reg A, we’ve conducted three public offerings and four testing-the-waters solicitations. We’ve expanded our platform to cities including Chicago, Cleveland, New York, Philadelphia, and Portland.
Now that the SEC has outlined its proposed rules around crowdfunding, we plan to follow them in figuring out how to create the first true real estate offerings under the crowdfunding exemption.
We’ll be publishing our data on average investment amount, geographic dispersion, compliance costs, timing, customer support requirements, etc. so that we can provide a case study and valuable model for anyone who is considering investment crowdfunding under the JOBS Act.
- Ben Miller
P.S. Check out our latest public offering available to residents in DC, Maryland and Virginia.
Fundrise, co-founded by Ben and Dan Miller, is the first U.S. online equity crowdfunding platform for real estate. Fundrise gives communities the tools to build the city they want to live in. With Fundrise, local people can invest in, own, and build local real estate, fundamentally changing what is possible in community development. The team also co-founded Popularise, the online ...