Four years ago, my brother and I had the simple idea of giving everyone the opportunity to invest in real estate, earning strong returns while literally investing in their own communities. We had been trying to raise capital for a project in DC and found that our friends and family understood our vision much better than the big funds we spoke with across town and in New York.
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. Our company (Fundrise) is doing it right now, and has been for two years. Using Regulation A and Regulation D, we’ve raised millions of dollars from thousands of unaccredited and accredited investors in amounts as small as $100 per share.
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 offering is no small task. Unlike the crowdfunding exemption in the JOBS Act, we have to register and qualify the offerings with state and federal securities regulators before we can sell them to investors.
Here’s what it took to complete our most recent public offering:
Our most recent filing:
It 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?
We’re excited to be partnering with The News Funnel to offer weekly insights into the real estate crowdfunding space. As we seek to expand our platform around the country, we’ll have new data and learnings to share about the evolution of the industry so that we can provide a case study and valuable model for anyone who is considering investment crowdfunding.
By: Ben Miller
Co-Founder | Fundrise
Visit Ben's Website: www.fundrise.com
Visit Ben's blog: blog.fundrise.com
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