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Real estate investor acquisition and management platform CrowdStreet has raised USD3.5 million in Series A funding. Rally Ventures led the round with participation from seed investors Green Visor Capital, Seven Peaks Ventures and Portland Seed Fund.
CrowdStreet is aiming to democratise access to commercial real estate investing with its integrated online investor marketplace and software as a service (SaaS)-based investor lifecycle management solution. The company will use the funds from the Series A round to drive further innovation in its products and core technology and to develop key partnerships while scaling its investment platform.
"CrowdStreet is taking a comprehensive approach to creating a vibrant marketplace for commercial real estate investment that includes something others don't have: the underlying SaaS technology that enables developers and operators to manage the relationship with investors across the entire lifetime of the investment," says Jeff Hinck, a general partner at Rally Ventures, who will be taking a seat on CrowdStreet's board. "The CrowdStreet solution has quickly gained traction in the market because of its ability to connect investors with high-quality investments that deliver strong ROI."
"CrowdStreet has experienced incredible growth since launching its marketplace in 2014, which was complemented by our SaaS offering that debuted in May 2015. Our unique offering has attracted over 40 commercial real estate clients, with more than USD1 billion in institutional-quality assets managed through the CrowdStreet platform," says Tore Steen, co-founder and CEO of CrowdStreet. "Our latest funding will enable us to accelerate our already impressive client growth and continue to release innovations to our platform that redefine real estate fundraising, lead nurturing, investor communications and distribution management for the digital age."
CrowdStreet distinguishes itself from other major online real estate investment marketplaces with a direct-investment approach, which reduces risk, improves investor visibility and benefits, and is structured so that the sponsor pays for all services. There is no fee for accredited investors to register or invest via CrowdStreet. The marketplace enables investors to diversify their portfolios through co-investments, starting as low as USD10,000, alongside commercial real estate developers, operators and capital providers (sponsors).
For commercial real estate developers and operators, CrowdStreet provides a multifaceted investor acquisition and management platform, on which they can easily publish their investment opportunities. The direct-investment architecture enables each new investor to become a sponsor's long-term repeat customer, rather than a one-time, fractional share of a special purpose vehicle as with other online real estate marketplaces. Sponsors can leverage the CrowdStreet public marketplace or use Sponsor Direct, a white-label version of the software that enables them to publish opportunities directly to their existing websites. Regardless of which option they choose, once an offer is made, investors are channeled through a single, unified interface where sponsors can electronically review and manage every step of the investment process. Once investments are approved, investors are given access to a secure, sponsor-branded investment website where they can review the performance of their investments, correspond with sponsors, and review and download documents.
"The value that CrowdStreet provides extends far beyond simply raising capital," says Bharat Sangani, chairman of Encore Enterprises, Inc., a diversified commercial real estate investment firm that has completed more than USD1.6 billion of acquisition and development. "Through our use of the CrowdStreet platform we've grown our investor base, launched a feature rich Encore-branded online investor portal, and transformed our internal investment processes in ways that make our business both more efficient and more rewarding to our investors."
"Global markets continue experiencing distress and there is volatility in US equities, yet the world's most sophisticated investors are earning outsized returns with continued over allocation to direct real estate investments," says Darren Powderly, CrowdStreet's co-founder and vice president of Business Development. "Bringing direct real estate investment to individuals, like we do at CrowdStreet, couldn't come at a better time. We are pleased to be leading the next major wave in the evolution of online investing."
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