In the previous post on real estate crowdfunding, we covered the regulatory structures of crowdfunding offerings and the impact that those offerings have on sponsors. In this post, we’ll look at two distinctly different types of crowdfunding platforms that every investor should be aware of and how each affects the investor’s ability to find great deals. The differentiators discussed below expose the business strategies, and more importantly the incentives, behind crowdfunding platforms that impact the investor.
There are two major types of crowdfunding platforms: crowdfunding marketplaces and captive crowdfunding sites.
- Crowdfunding marketplaces are websites built to be a truly independent and free marketplace for investors and sponsors. The crowdfunding marketplaces are created to provide the investor community with deals from numerous sponsors, most often pre-approved for quality control.
- Captive crowdfunding sites are sites created by a real estate sponsor to satisfy a specific business need. They do not necessarily find the investor the absolute best deal in the available market.