Fundrise, a real estate investment platform that recently entered the early-stage investment sector, has filed to raise $19.7 million in a sale of Class B Common shares. Fundrise has raised growth capital for itself in the past using the Reg A+ securities exemption. The $19.7 million represents the approximate balance available under Reg A as an issuer may raise up to $75 million in a given year. In total, Fundrise has raised almost $170 million under Reg A+, plus another $7.2 million in a Reg D offering. The price per share of the sale of $15.15 is the same as last June.
According to the Offering Circular, Fundrise topped $3 billion in assets under management in 2022, reporting over 300,000 active investors and 1.5 million users on the platform. Fundrise is optimistic about its future:
“We are encouraged by both the performance of the managed real estate assets held by our Sponsored and by our own ability to navigate and continue to grow throughout the economic upheaval and public health crisis brought on by the COVID-19 pandemic that has continued to cause many businesses to radically shift their operations during a majority of 2020, 2021 and through December 31, 2022, now coupled with a period of heightened economic uncertainty due to inflation that is not transitory in nature, supply chain problems initially brought on by pandemic disruptions and exacerbated by the Russian invasion of Ukraine, and other factors.”
Fundrise says it has “regained our pre-pandemic growth momentum, achieving a 31% growth.” The company predicts that investment activity from younger generations will help it grow its services.
Fundrise started its existence as a real estate crowdfunding platform but pivoted to offering private REITs, or “eREITS,” with different profiles. Today, it has merged six of its Income eREITs into a single fund, created a single-family rental platform, and deployed a “real estate operating platform.” In 2022, Fundrise launched an “Innovation Fund” backing early-stage private firms.
The use of additional funding is for general operating purposes. Fundrise states that it may use some of the new capital to acquire other companies but adds there are currently no target acquisitions.
Fundrise continues to lose money while growing its business both vertically and horizontally. Fundrise believes that by creating proprietary technology, they have a platform that will transform the alternative investment marketplace by leveraging economies of scale, while reducing fees and intermediation. Fundrise is a platform that has come a long way since filing the first-ever Reg A (old Reg A) for a real estate offering.
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