Real Estate Crowdfunding Platform Groundfloor Raises $18 Million
A peer-to-peer real estate loan investment platform has just raised a significant amount of money to fuel its growth. Groundfloor has announced an $18 million mixed funding round. This figure actually includes three separate elements. First, the platform raised $5.8 million in equity from Medipower. Additionally, $7.2 million was raised via an equity crowdfunding campaign on SeedInvest, which drew interest from more than 3,600 individuals. Finally, another $5 million was raised through convertible notes issued to 86 individuals on Groundfloor’s site.
According to Crunchbase, the startup has now raised a total of $34.8 million to date. With Medipower planning to invest up to $100 million on Groundfloor’s platform during the first year (and up to $220 million in the second year), the company is touting a total of $118 million in new capital.
Founded in 2013, Groundfloor offers “short-term, high-yield real estate debt investment.” For a minimum investment of $10, investors can participate in real estate loans and earn a percentage of the interest paid on said loan. According to the site, loans on the platform have generated more than $12.6 million in interest, earning customers returns of 10.5% to date. Also notable is that, with the latest funding round, the company is over 30% customer-owned.
Sharing the idea and philosophy behind Groundfloor while also commenting on the latest funding, the company’s CEO Brian Dally said in a statement, “This is an important moment for Groundfloor’s loyal and rapidly growing base of retail investors and the entrepreneurs whose real estate projects they finance. Retail investors deserve their share of the same pie on which hedge funds, private equity, and all other financially privileged players have been enriched in the modern Wall Street-oriented era.”
Dally continued, “This new strategic relationship supports our mission to deliver that and is purposefully structured to be consistent with our vision for a level playing field in saving and investing.” Meanwhile, Medipower Chairman — and now Groundfloor board member — Yair Goldfinger said of the startup, “The numbers don’t lie. Groundfloor has a proven track record when it comes to residential real estate in the United States. Their differentiated approach to capital markets and mission to serve retail investors delivers impressive results in loan origination and asset management that align perfectly with Medipower’s goals.”
While the headline “$118 million in new capital” declared on Groundfloor’s press release might be a bit misleading, the $18 million mixed-funding round is still impressive. In fact, the round demonstrates how startups can now raise funds from a number of different sources, including equity crowdfunding. To that point, it makes perfect sense that Groundfloor would use such a strategy, being a crowdfunding platform themselves. Following two years in which interest in retail investment has grown and with Groundfloor being open to non-accredited investors, the platform could well set up for a boom in the coming months.