RALEIGH – Groundfloor, the crowdfunding real estate lending site that is a pioneer in the field and has a growing resume of successful deals, is seeking to raise some $5 million from rank-and-file investors. Born in Raleigh in 2013 but based in Atlanta after North Carolina proved to be a slow adopter of crowdfunding legislation, Groundfloor is seeking backers through a very new tool: Regulation A+ Online Public Offering, as allowed by the SEC.
Backed by numerous Triangle investors such as Michael Goodmon and Mark Easley (a crowdfunding advocated who lobbied to get legislation passed in North Carolina in 2016), Groundfloor says investors have a chance to gain a piece of ownership for as little as $100.
More than 500,000 shares are being offered at $10 each.
“Why should VCs get all the upside?” Groundfloor’s owners say.
“Now, instead of just owning a piece of our loans, you can own a piece of Groundfloor itself as well.”
The fundraiser is similar to crowdfunding itself, permitting just about anyone to invest rather than being limited to people of significant net worth as required by most investing options.
Raising more than $4 million overall
So far, hundreds of people have participated in a series of recent fundraisers, netting Groundfloor more than $4 million.
In announcing the new funding, CEO Brian Dally said the firm’s “vision to level the playing field of investing by opening private markets to the public is working. Thousands of regular Americans have invested tens of millions of dollars in Groundfloor’s real estate loans and are making substantial returns. Now, true to our mission of providing access to everyone, we are thrilled to open up investment in Groundfloor itself as we grow the business.”
Groundfloor has soared from 18 loan originations worth $884,000 in 2014 to 203 originations totaling more than $30 million in 2017.
“They have successfully developed a platform that allows anyone to invest in secured real estate loans, and that provides a whole new source of funding for developers in the real estate industry,” Easley tells WRAL TechWire. “The work Groundfloor has done is really a historic and important inflection point for the crowdfunding industry and the real estate financing industry.”
Groundfloor focuses on “lending for single-family or small multi-family home rehab and renovation loans” as well as “access to short-term, high-yield returns with a minimum investment of as little as $10 with no fees or middlemen.” The startup says its investors are realizing returns of between 6 and 14 percent in a year or less.
In a testimonial video about Groundfloor, Goodmon, a senior executive with Capitol Broadcasting which is the corporate parent of WRAL TechWire, explained:
“Watching other crowdfunding platforms, what was really missing was how can I do crowdfunding but also make a really good investment at the same time? How can I crowdfund into something where I have collateral, and I have security, and I have confidence of repayment? Make it less of a social tool and more of an investment tool, or a yield tool for those who might not be able to access what institutions can access – I think that’s the true power of Groundfloor.”
“From day one, Groundfloor has had the important philosophy that they’re going to enable the retail investors in this space, and there are very few people doing this, so it is a competitive advantage…This is more difficult to do, and takes more time, but once it works, then the sky’s the limit, because everyone in the US can do this kind of investing….I’ve invested in a lot of companies, and we don’t often come across one that has this kind of scale factor to it….The potential for this turning into a really high scale business is absolutely there – that’s what I like about Groundfloor, and I think that’s what the other investors like about it too.”
Information about the offering is available online.
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