- Differentiators in offering refer to the regulatory offering types (accredited vs non-accredited investor offerings), which are of the utmost importance to real estate sponsors thinking about raising capital online.
- Differentiators in platform refer to both the purpose (marketplace vs captive) and the incentives behind the platform, which is a critical investment due diligence item for anyone intending to invest through crowdfunding.
To date, the most successful real estate crowdfunding websites tend to be crowdfunding marketplaces focused on accredited investor offerings. These include CrowdStreet.com, RealCrowd.com, and EquityMultiple.com. Because these sites attract multiple sponsors (a marketplace) and can bring more money to real estate transactions (no fundraising cap), they garner the highest quality deals and attract the greatest quality and quantity of investors. In addition, they protect their brand by vetting the deals and sponsors before permitting them to market their offerings on their platform.
There has been a glut of crowdfunding platforms erected with the hopes of emerging as the real estate crowdfunding market leader. However, this glut has outpaced user-adoption. As a result, numerous crowdfunding companies have closed down or consolidated as they have struggled to generate the fee income required to outpace their large overhead. Other sites have survived by doubling down on very specific niches within commercial real estate. For example, 1031crowdfunding.com focuses exclusively on 1031 exchange investors. In other instances, crowdfunding platforms attempt to gain market share and generate more fee income by raising private equity for the purpose of lending on their sites to real estate sponsors. Called hybrid platforms (both a marketplace and captive platform), they allow platform owners to better monetize their platforms, increase the liquidity available on their marketplaces, and act to some extent as market makers while the platform adoption matures. However, as long as those hybrid platforms have captive aspects, they will have some level of conflicts as they compete with their sponsors and/or investors for capital and/or deals.
The table below reflects some of the real estate crowdfunding platforms currently available.
* All information above was sourced by RRA Capital. If any representatives of the crowdfunding sites listed above have updates to this matrix, please send them over to email@example.com and we will be happy to update!
For more information on real estate crowdfunding, obtaining a commercial real estate bridge loan, or investments in commercial real estate bridge loans, please feel free to reach out to firstname.lastname@example.org.
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