Listen to this articleCrowdStreet is disrupting the commercial real estate industry by enabling innovative real estate developers to efficiently engage in online fundraising. In May of 2015, they expanded their product portfolio to include a SaaS-based investor management solution called Sponsor Direct that enables real estate developers, operators, and capital providers (sponsors) to essentially host their own online fundraising and investor management directly on their website.
Below is our interview with Tore C. Steen, CEO and Co-Founder of CrowdStreet:
Q: What’s CrowdStreet’s story? How did CrowdStreet start?
A: CrowdStreet traces its roots back to April 2012 when we helped pioneer the concept of equity crowdfunding in commercial real estate. Since that time we’ve launched and built a successful marketplace bringing institutional quality commercial real estate offerings to individual accredited investors across the country as well as a software as a service offering, Sponsor Direct, that is powering fundraising and investor management directly from a commercial real estate developer or operator’s website.
We have offered online fundraising since launching the CrowdStreet Marketplace in April 2014, where we just recently exceeded $1 billion in assets managed through our marketplace, putting us in the top 5% of all online real estate fundraising marketplaces. In May of 2015, we expanded our product portfolio to include a SaaS-based investor management solution called Sponsor Direct which enables real estate developers, operators, and capital providers (sponsors) to essentially host their own online fundraising and investor management directly on their website, enabling them to promote offerings directly to their existing investor networks, collect investment offers, and manage ongoing investor relations through a single powerful interface.
The combined solution of the CrowdStreet Marketplace and Sponsor Direct is proving to be a powerful one and we’re excited to see where it’ll take us.
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Q: What makes CrowdStreet a good choice?
A: Great question – the answer depends on if whether you’re an investor or a sponsor.
For Investors, the CrowdStreet Marketplace provides a transparent, easy to use and understand online marketplace for accredited investors to browse, research, and ultimately invest directly into institutional quality commercial real estate investment offerings. One area that makes CrowdStreet stand out from the competition is our – “direct investment” approach that allows investors to invest directly into the Sponsor’s project or fund with no investor fees. The direct connection is important. Many players in this space operate their marketplaces using something called a Special Purpose Vehicle model or “SPV” model, where investors interested in investing in a given property or fund, actually end up investing in the marketplace’s SPV, which in turn then invests into the project or fund. CrowdStreet’s marketplace operates using a direct-to-investor approach where an investor can gain access and interact directly with the sponsor. We’ve found this leads to better outcomes for all involved, improves transparency, and builds better investor/sponsor relationships.
For Sponsors, there are two aspects of the CrowdStreet Platform that make CrowdStreet a great choice. The first is our direct-to-investor Marketplace. The direct-to-investor model not only provides increased transparency and reduced risk, it also enables sponsors to convert one-time investors into life-time investors, substantially increasing the value provided by each project or fund executed on the platform. This is a significant value-add that only increases with each deal the sponsor performs on the marketplace.
The second aspect of the platform that makes it a great choice for sponsors is our comprehensive solution for investor acquisition and management, our SaaS-based solution Sponsor Direct solution. Using CrowdStreet Sponsor Direct sponsors can manage every aspect of CRE investor acquisition, management, and conversion:
- Publish + promote investment offerings to existing investor networks
- Publish + promote investment offerings to public marketplaces
- Nurture prospects via secure + auditable communications with potential investors
- Close deals faster with a fully online investment document workflow
- Increase investor value with a secure online investor portal (w/ performance reporting & downloadable K-1s)
We have competitors offering point-solutions for the marketplace portion of the Platform (albeit using SPVs instead of direct-to-investor structures), and there are a few companies offering individual components of our SaaS solution such as investor portals or investor-CRM solutions, however we are offering a comprehensive marketplace + investor acquisition & management solution with the full CrowdStreet Platform.
Sponsors agree – since we launched the full platform in May 2015 we’ve added 50 new clients and have scaled to $1 Billion in total asset value posted and $207 Million in total investor funds managed through the platform.
Q: You’ve recently announced a $3.5 million Series A funding round; tell us something more?
A: With the additional capital we will further accelerate our sales and marketing efforts, develop and launch new innovative solutions that delight both sponsors and investors, and continue to deliver the best platform and services in the industry for commercial real estate developers and operators to efficiently and effectively acquire, engage, and manage investors.
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Q: What problems do you see in the current crowdfunding landscape?
A: In the equity crowdfunding for commercial real estate space I see two problems or maybe I would see them more as opportunities. The first is on the education front. Since direct online investment into commercial real estate is a new opportunity for many investors across the U.S. there are alot of “unknowns” about how to best evaluate the offerings and all the terms, what happens after an investor makes their investment into a project or fund, the differences between the various marketplaces, and many other open questions. Here at CrowdStreet we have and continue to develop articles and videos to help in this education process — https://www.crowdstreet.com/education. The second opportunity I see is on the sponsor side. While many sponsors are recognizing the need to build their online presence and capabilities they are just scratching the surface. For example, after possibly redesigning their website to be more inviting and easier to navigate and also enabling the online fundraising and investor management functionality the next step is outbound digital marketing to attract and acquire new investors. This is not an area of expertise nor experience for most sponsors. However, similar to the technology we are supplying to the industry we are also receiving requests for assistance on this front. With the continued growth in investors who become better educated on and interested in commercial real estate investing the ability to acquire, engage, and manage online investors will be critical.
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Q: What are your plans?
A: We will continue delivering on our promise to provide one of the most innovative acquisition and management platforms that empowers commercial real estate investing, both for sponsors and investors. We have built a strong reputation in the industry as a team that is responsive and reliable to its customers needs and plan to continue amplifying that leadership role.
Last Updated on May 11, 2016
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