MortgagePolitics & Money

Crowdfunding lending platform Groundfloor turns to crowdfunding to raise money, for itself

Aims to raise $7 million by inviting public to buy shares in company

Groundfloor, a real estate lending platform that raises its loan funds via crowdfunding from the public, is turning to crowdfunding to raise money for something else – itself.

The company bills itself as a “real estate crowdfunding platform that is open to non-accredited investors,” meaning that anyone is able to invest in residential real estate using the company’s platform.

The company, which is based in Atlanta, takes its crowdfunded money and lends it to residential real estate investors. The company specializes in lending for single-family or small multifamily home rehab and renovation loans and also provides access to short-term, high-yield returns.

To date, Groundfloor has originated nearly 420 loans worth more than $54 million. The company said that its typical loans return between 6% and 14% annually on a six- to 12-month term.

Despite getting its loan funds from the public, Groundfloor has mostly relied on venture capital as its source of funding since its founding in 2013.

To date, the company has raised $7.6 million from leading fintech VCs and early stage investors including Fintech Ventures, former WorldPay USA CEO Anthony Catalfano and Raleigh, N.C.-based MDO Ventures.

Now, the company is turning to the public to raise money to fund its own operations.

But, the company is not going the Initial Public Offering route via the New York Stock Exchange or Nasdaq. Rather, Groundfloor is launching an online public offering, in which it’s seeking to raise more than $7 million from the public.

According to the company, it plans to offer up to 530,000 shares of common stock in the company at a cost of $10 per share in its online public offering.

The company said that investors in the online offering will not be required to pay investors fees for the life of their investment. Investors will also get access to regular shareholder-only loan offerings and invitations to attend annual Groundfloor shareholder events.

This actually won’t be the first time that Groundfloor raised money in an online public offering. The company said that it recently raised a total of $4.3 million from 687 participating investors in a combination of two recent financing events, a private online bridge note that closed late last year and an initial closing of its online public offering of equity.

In each case, the company kicked off the invitation-only raises to customers and friends of the company with a $1 million target, but, both times, it passed that target in less than 48 hours.

Due to the response to its earlier online offering, Groundfloor is opening the capital raise to the public at large.

According to the company, the new round of funding is expected raise as much as $7.05 million upon the successful completion of its online public offering.

The company said that it is already using the earlier round of online funding to scale and grow its sales and lending operations team. The company said that the new money will be used to offer a greater number of loans, serve more customers, and supply investors’ demands for high return investments.

According to the company, demand for its loans has been “extremely strong,” with loans regularly selling out in minutes.

The company also said that the umber of investments on the platform grew by 100% in 2017, increasing from 25,602 in 2016 to 52,153 in 2017.

“Groundfloor’s vision to level the playing field of investing by opening private markets to the public is working,” Brian Dally, Groundfloor’s co-founder and CEO, said.

“Thousands of regular Americans have invested tens of millions of dollars in Groundfloor’s real estate loans and are making substantial returns,” Dally added. “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. After all, why should VCs get all the upside?”

3d rendering of a row of luxury townhouses along a street

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