The other day Crowdfund Insider shared that Fundrise was preparing for its “Greatest Innovation Yet”, today we may have a bit more information. Fundrise is going to crowdfund itself. True to form, the real estate marketplace will use Reg A+ to raise capital and offer equity in their platform.
Fundrise first filed a preliminary Form 1-A with the SEC at the end of December 2016. The filing was done under “Rise Companies Corp.” so it fell under the radar of many people. The most recent version offering circular indicates that Fundrise wants to sell up to 1 million shares of their Class B non-voting Common stock. The price per share is not yet available. Initially, Fundrise will limit the offer and sale of the shares to investors who have purchased investments sponsored on their platform.
Crowdfund Insider reached out to Senior Contributor Amy Wan for comment. She stated;
“Fundrise has been leading the pack in the real estate crowdfunding industry, and has distinguished itself from others in vision, strategy, and execution. I hope to see them continue their innovation streak.”
Opening the Kimono
One of the strongest aspects of a Reg A+ filing is the detail involved in crafting an offering circular. Fundrise discloses a lot of interesting information. Co-founded by brothers Ben and Dan Miller, the Form 1-A pretty much shares all of the operational detail.
Since Fundrise’s launch, they have originated approximately $210 million in both equity and debt investments deployed across more than approximately $1.19 billion of real estate property. This amount alone makes it part of a select group of the largest online real estate marketplaces in the US. Their first five sponsored “eREITs” have collectively generated $119 million in investment as of the beginning of this year. At the end of 2016, Fundrise claimed over 123,000 members.
Fundrise claims a compound annual growth rate of 780% – going from $0.9 to $70.9 million for a three-year period from January 2013 to December 2015. For the 9 month period ending September 2016, Fundrise had year over year growth of 129% going from $45.1 million to $103 million. For the six months ended June 30, 2016, net revenue stood at $3.5 million. For the year ended December
For the six months ended June 30, 2016, net revenue stood at $3.5 million but as one would expect, continues to generate a loss. For the year ended December 2015, Fundrise had net losses of $3.7 million. For the six months ended June 30, 2016, Fundrise had net losses of $1.4 million. The average size of the real estate assets originated by Fundrise during the nine months ended September 2016 was about $5.7 million.
The average size of the real estate assets originated by Fundrise during the nine months ended September 2016 was about $5.7 million.
As of the end of Q3 2016, none of their sponsored programs have suffered any loss of principle nor projected interest – a pretty positive thing.
Of course being an early stage company comes with many caveats. Fundrise has a long list of risks associated with an investment in their company. Again, this is similar to any other Reg A+ issuer. Fundrise is required to disclose everything.
As for the use of capital, Fundrise states it will provide financial flexibility and general corporate purchases. They do intend on broadening the number of eREITs in the coming years to 20 or more. They say they are investing in R&D and expect to release a “Fundrise Smart Investor Program” at some point in the future.
“Our end-to-end integrated web-platform transforms the real estate origination, underwriting, funding..”
Fundrise has championed a philosophy of “democratizing investing through the internet.”
They firmly believe their platform demonstrates their commitment to a mission in “a way that few other companies ever do.”
“We believe that having our customers become “investor-owners” of the Company will increase our brand equity, transforming our customers into champions of our business, and energizing our model in a way that will drive significant value to us, and therefore our investor-owners.”
While the filing has not yet been qualified by the SEC, expect the offer to be posted on Fundrise soon.
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