Top 5 real estate crowdfunding platforms

Crowdfunding and real estate go together like peanut butter and chocolate. Capital remains one of the biggest barriers of entry into real estate investments, as the liquidity to make a seven figure investment in a single property may not be feasible even for accredited investors. Real estate crowdfunding saw $2 billion in transaction volume in 2015. Experts expect real estate crowdfunding to grow by 40 percent in 2016.

Investing through crowdfunding platforms helps investors diversify assets and can give non-accredited investors the opportunity to invest into real estate deals, which was unavailable before.

Here are five crowdfunding platforms that are opening opportunities up for real estate investments.


One of the first real estate crowdfunding platforms is Fundrise, a DC-based startup that’s been around since 2012. Over 80,000 users have invested on the site, totaling nearly $3 billion in real estate investments. Investors don’t have the ability to select specific deals, rather pick from either a debt or equity focused commercial eREIT on the platform. Fundrise has raised nearly $40 million in investment capital for its own operations since opening its doors.

Fundrise was founded by Benjamin Miller, Brandon Jenkins, and Kenny Shin, and is open to U.S. residents with a one thousand dollar minimum investment.

Realty Mogul

Founded by Jilliene Helman and Justin Hughes, Realty Mogul provides customers with debt and equity investment opportunities. Users can invest as little as $2,500 into various types of projects, including multifamily, commercial, and industrial properties. One of Realty Mogul’s most interesting features may be the opportunity for non-accredited investors to invest with the site, although investments may be limited.

The Los Angeles-based company has raised $45 million since its inception.

Patch of Land

Patch of Land provides accredited investors the opportunity to finance hard money loans. These short-term loans take the form of refinance, rehab, and bridge loan projects. Users on the platform can pick specific properties to invest in, and receive monthly payouts of annualized returns between 9 and 18 percent depending on the risk, with a five thousand dollar minimum investment.

Founded by Brian and Jason Fritton, Patch of Land has been operating since 2013, and has raised nearly $25 million to date.


Accredited investors can purchase occupied single family homes using Roofstock to buy properties. Users can implement various matrixes like price, location and even crime and flood risk to find appropriate investments. Investors can chose to put equity into a crowdfunding project, or purchase the property single-handedly and secure a loan and property manager through an integrated service.

Gary Beasley and Gregor Watson founded Roofstock in Oakland, CA in 2015, and have raised $13 million for their firm so far.

Realty Shares

Founded by Trey Clark, Nav Athwal, and Ray Sturm in San Francisco, Realty Shares is one of the more diversified crowdfunding platforms, both in terms of property type and investment nature. Investors can choose from various property types, including multi-family, commercial and self storage units. Users have the option to fund either equity or debt, including first or second positions liens. Minimum investments usually range between one and five thousand dollars, and are available for accredited investors.

Realty Shares has raised $32 million since its inception in 2013.

Is crowdfunding the religion of choice for millennials?

The website is Kickstarter, the campaign is SilverTech, a line of odorless men’s underwear spun from pure silver (we’re not making this up). SilverTech’s origin story revolves around a stalwart group of supporters that, beyond all odds, decide to “believe in [SilverTech’s] dream to change the underwear industry,” and one plucky manufacturer who eventually “believed in their vision.”

SilverTech is just one in a line of many, many crowdfunding projects that are peppered with references to belief. SilverTech wants you to believe in their vision, DOERS Coffee founder is grateful that someone believed in him, and celebrity crowdfunding darling Charity: Water “believes in a world where every single person has clean and safe water.”

The number of crowdfunding campaigns and platforms that invoke belief as muse or raison d’etre is staggering, though not surprising. In fact, quietly but consistently, crowdfunding in the US is taking over some of the major functions that established religions used to have a monopoly on.

“Religion is a really important exemplar when you think about charity or philanthropic activities,”says Dr. Dan Cox, director of research at non-profit, non-partisan organization Public Religion Research Institute. “Houses of worship did it first and really did it best for a long time.”

Cox, who previously served as a research associate at the Pew Forum on Religion & Public Life, knows the ins and mostly outs of millennial religious patterns. “Millennials are a lot more distrustful of religious institutions [than previous generations],” he explains.

There are a number of reasons for millennial’s waning trust in organized religion: the Catholic Church’s sex scandals, conservative Christian churches wading into political quagmires like LGBT issues – for many young people, this idea that being moral or religious means opposing same-sex marriage rings really wrong. Strangely, through crowdfunding, fintech is stepping up to fill in the holes that religious institutions left behind.

Doing Good

Whether they’re backing silver underwear or contributing money towards a clean water solution in Uganda, crowdfunding enables millennials to personalize their giving experience and figure out which causes matter to them, what type of products reflect their values. That crowdfunding is replacing religious organizations as the platform that facilitates cause-based giving is apparent in the number of millennials participating in crowdfunding campaigns:
47% of Millennial respondents have backed or are likely to back a crowdfunding campaign, compared to 30% of Gen-Xers, 13% of Boomers, and 4% of Matures.

“Traditionally, the way that people would engage in philanthropic activities was through the church,” says Cox. Now, through online crowdfunding platforms, millennials are swiping right to instantly finance causes they support.

Establishing communities

Without religious structure, religious institutions argued, young people risked losing the benefits of community. “One of the things that religious institutions decried about millennials moving away from religious organizations is that religion creates community,” says Cox.

So far, organized religion’s fears for the future of community haven’t materialized – quite the opposite. “What we’ve seen so far [is that] communities are still being developed, but they’re being developed in different spaces,” Cox explains.

One of these spaces is crowdfunding. Witness the widely successful Pebble E-paper Watch, which raised $10,266,845 in just 37 days. Though perhaps not as charismatic as some of your typical biblical figures, the Pebble project has a huge following: 68,929 supporters on Kickstarter (registered under the watch’s “community” tab) and its very own subreddit group.

Cultivating a new (quantifiable) spirituality

If in the past congregants were willing to donate to a church or a cause without question, millennials’ prime concern with charitable giving is that it be transparent and accountable. Cox points to charity navigators as an example of how crowdfunding can enable users to track where their dollars are going.

In a sense, crowdfunding is doing for millennials what theologians throughout the ages have tried and miserably failed to do: back up faith with fact. By taking pains to stay transparent and accountable, crowdfunding platforms can gain millennial trust and empower users to generate spiritual experiences by donating or pledging their money.

Crowdfunding platforms and projects looking to draw on a religious lexicon to market their cause should do so sparingly, Cox cautions. “Just grabbing religious language and saying ‘here support this cause/product’, and using the right terminology or the right religious language is not something that’s going to be very effective.” In fact, due to millennials’ deep distrust of religious institutions, Cox is convinced that this type of language would be more likely to push millennials away than to attract them.

Terminology aside, crowdfunding is turning out to be a viable alternative to organized religion in terms of offering opportunities to make a difference, form communities, and engender meaning in the lives of millennials. Frankly, there are worse things to believe in than odorless men’s underwear.

Photo credit: x1klima via Visual Hunt / CC BY-ND

The 6 shadiest fintech industries

sketchy fintech companies

Read the fawning media and fintech bloggers and you’d think that the fintech fairies can do no wrong — that all these startups and technologies making their way into incumbent financial institutions were sprinkled with special fintech dust that makes the problems and conflicts of that curmudgeon ol’ financial industry just, well, go away.

Now, with the fintech blessing bestowed upon us, we’re just angel-pure ethereal unicorns making everyone, including financial clients, richer. Mo’ money! Of course, that’s not actually the case and just as finance has always had a predatory, ugly side, so, too, does fintech.

In spite of the lofty intentions of some of its participants, fintech doesn’t automatically clean up the financial industry. Proof is in the pudding. Here are 6 shady fintech industries that could use some cleaning up.

Forex / Binary options

These financial companies masquerading as financial firms are bad news. Headquartered in countries like Cyprus and managed out of Israel, these companies are the pox on the home of fintech. These companies play the role of house to their legions of unsuspecting gambling clients. The thing is, they’re dressed up as investment platforms, but they’re playing a totally rigged game.

Forex firms’ clients bet on moves in currency pairs and they do it with a lot of leverage (used to be 200x, now, it’s more like 50x) . Sure, that leverage is great if it works out for you. If it doesn’t, poof (that’s the sound of money disappearing). Many of the forex brokerage firms that power these platforms came out of the online poker industry. Binary options are a new twist on the dopamine hit — gamblers bet that a certain stock or index hits a certain price. If it does, they make money. Good luck trying to cash out though — these companies are notoriously quick to take your money but extremely hard to get your money out of. Like a roach motel for cash.

“It’s gambling and we’re a bookie,” an ex-binary options salesman told the Times of Israel, which did a great expose on the industry.

Marijuana payments

The legal cannabis industry is an interesting one, at least from a fintech perspective. Legal sales of marijuana are expected to top $7 billion in 2016 and to surpass $22 billion by 2020. While many states have OK’d the sale of the herb, it’s still a controlled substance at the federal level. That means proprietors can’t really access the traditional banking industry, relying, instead, on fancy armored cars and bodyguards.

They’re lots of examples of companies trying to break this impasse, but most of them lack any traction and look like someone was high when they were designed. Mostly, it’s a child’s game. But that doesn’t mean fintech firms aren’t trying. There’s even an example of a credit union that sued the Federal Reserve when it wasn’t granted a banking license. There’s currently a bill afloat that would prevent the feds from prosecuting companies that provide financial services to legal cannabis companies, but experts don’t think it will pass.

Jail pay

There’s another sketchy form of fintech, one that makes an estimated $500 million dollars each year for the prison system off the backs of inmates and their families. Correctional facilities don’t have a lot of money to throw around for technology for their indentured guests. Instead, companies like Jpay, which controls payments for an estimated 70% of inmates, build out kiosks and tablets where inmates can video chat, use email and send faxes, and receive digital payments from their friends and families. Prisons don’t have to pay anything — these technology and services firms front the money and build out everything on their dime. Prisons then split fees on services.

Thing is, companies like this charge egregious rates: users pay for everything. This becomes a profit center for the jails. Inmates can pay as much as a 30% fee off a wire. Emails, faxes, minutes for phones — everything is nickled and dimed. Certain states have stepped in to cap these outrageous fees and now the FCC is moving in. However, with the system’s hand in the payments cookie jar, it’s going to be hard to change.

Payday loans

Payday loans are kind of like the ugly duckling of finance: they’re definitely part of the family, but no one really wants to take responsibility for them. That’s not exactly true — the Consumer Finance Protection Bureau (CFPB) has upped its game to protect people who, due to dire circumstances or lack of education, get hammered by financial firms who lend off their pay slips. For a type of loan that results 20% of the time in re-borrowing and default, that’s a welcome move.

A few years ago, there was a lot of discussion around online short-term loans that resulted in APRs of 5000 percent. One sorry sap paid 16 million percent. Wonga, a UK lender, received the brunt of the attention from regulators and authorities and has pulled things back. Its payday-like loans still reach levels of 1500+% representative APR. Because many online consumer loans are short-term, they don’t appear to be as expensive as they really are because the gross dollar amounts aren’t eye-catching.

Thankfully, other newer fintech products are almost the anti-payday loan, though, providing borrowers the tools to build credit and eventually, get themselves out of debt. That’s what Lenny does. Even Financial is a marketplace for personal loans that, while not cheap, are probably going to work out cheaper than credit card debt — and certainly a better deal than paydays. LendUp, which bills itself as a payday alternative, helps its clients build credit through education and appropriate financial products.

Bitcoin and other cryptocurrencies

Sure, read the breathless headlines from mainstream media and you may think that bitcoin was going to “revolutionize” payments. Well, sure, it might (actually, its underlying technology, the blockchain, might actually have a chance). But truth is, for now, for bitcoin and most other cryptocurrencies, the only people really using them  are drug dealers and other purveyors of the nefarious.

With a certain level of anonymity, Bitcoin is well-suited for the drug trade. Silk Road, an international online marketplace of all things illegal that was eventually shuttered, preferred to transact in bitcoins. Read the news every week and you’ll learn about international authorities auctioning off millions of dollars of bitcoin confiscated from felons. Just recently, a college student went online to buy LSD and began trafficking it to his school buddies. His currency of choice? Yep, bitcoin.


Sure, with crowdfunding, you can back the next cool watch, music artist, and manufacturer of niche clothes for your pet iguana. But as the fundraising medium made popular by Kickstarter and Indiegogo becomes more commonplace, so is fraud becoming de rigueur.

There are some cases where a crowdfunding project was just an outright sham, a project owner bilking unsuspecting backers and absconding with large sums of money. But then there’s this gray area of crowdfunding fraud. It’s not outright theft, but backers, those people who advanced money to a project or cause they deemed worthy of their hard-earned funds, are left holding the bag. Or more accurately, they’re left with no bag and no product. These cases of fundraising are typically the result of mismanagement or poor planning to bring a new product to market.

Regardless, it’s against outright theft that AIG just launched its new crowdfunding insurance product, protecting crowdfunding platforms, and the people who transact on them, against snake oil salesmen.

A little 3rd party insurance and a little more transparency can help make the dirty underbelly of fintech a little less dirty.


Photo credit: Abi Skipp via VisualHunt / CC BY

High Five! The top 5 fintech stories we’re following today

5 trends we're tracking in finance

Top 10 things JPM’s Jamie Dimon said about fintech

Start your workweek off right with a roundup of Jamie Dimon fintech gems. While he’s sometimes disparaging of the shady behavior of the startups, it turns out JPMorgan’s chief is very much focused on fintech. For someone who claims that fintech isn’t actually anything different, he certainly has a lot to say about the space: from Silicon Valley to payments to marketplace lending to consumer data, Jamie Dimon will tell you how fintech is changing finance.

Serious contender for the best Jamie Dimon quote ever: When asked about how financial technology is replacing real jobs, JD replies,

“There are downsides to flying — people die every now and then. Do you want to stop all air flights?”

Read more: Dimon can’t stop talking fintech and just dropped a remark that JPM plans to offer free roboadvice to its best clients.

Paypal isn’t a bank, but it may be the new face of banking

In the race to shift services to the web or mobile phones, the stakes are in the billions of dollars for traditional banks and upstarts alike. Paypal has said that it has no intention to upend banks, and that its next target market are the 2 billion plus people who are currently unbanked. Nevertheless, with its popular Venmo unit enabling consumers to take small money transfers into their own hands, Paypal seems very happy to serve banked consumers as well.

As with any new technology that encroaches on traditional banks’ turf (think bitcoin), banks have been quick to point out that due to a lack of government regulation, your money isn’t as secure with Paypal as it would be with a traditional bank. Will that stop the gravitation towards mobile wallet services offered by Paypal and others like Stripe, Square, SoFi, and TransferWise? The Wall Street Journal thinks not.

The road to nowhere: legal cannabis business can’t be solved by fintech

A clash in state and federal rulings has prevented banks from accepting money from cannabis sales. This legal limbo prevents banks from doing business, but more importantly is life-threatening to marijuana retailers; with nowhere to bank, “ganjaprenuers” deal entirely in cash, making them a prime target for thieves.

Fintech has come up with some creative solutions to this state versus federal imbroglio. However, at the end of the day, the problem is a legal one. Until Congress is replaced by robots, tech won’t be the savior for legal marijuana banking.

The march of the bots for customer service: should bank CIOs slam shut or swing open the door?

The emphasis here is on humanizing robots rather than “robotizing” humans, letting those humans who care most about outcomes make sure the end-to-end customer experience is continuously improved.

This means that long-suffering (human) customer service representatives will finally get (robotic) personal assistants to help them proactively find the information they need to use on their computers. In this way, customer service professionals will spend less time searching for things and more time actually serving customers. However, outdated legacy banking systems may prove to be a major stumbling block on the way to this robotic/CRM utopia.

For more on cyborg fintech, read “How quant hedge funds balance computer and brain power”.

AIG enters the crowdfunding market [drops mic]

Insurance exists to reassure and protect policy holders. Whatever may come, insurance says comfortingly – whether car accident, disease, fire, loss, theft, or even death – we’ve got you covered.

Which is why crowdfunding insurance is somewhat of an anomaly. Though AIG just entered the market with Crowdfunding Fidelity, a new crowdfunding insurance policy that will be made available to select crowdfunding platforms, the coverage period and cap mean that the insurance offered is very, very limited.

Bottom line: investors probably shouldn’t breathe a sigh of relief just yet.

Photo credit: Loozrboy via Visual hunt / CC BY-SA

Has PayPal soured on crowdfunding?

paypal sours on crowdfunding

Does PayPal’s announcement that the company will eliminate its Purchase Protection coverage for crowdfunding payments indicate a lack of confidence in crowdfunding?

PayPal says ‘no.’ In an email exchange with Tradestreaming, PayPal said the payment company is the only platform that has customized its policy and processes to support crowdfunding, and added that the firm would continue building strategic partnerships with crowdfunding platforms “to make it even easier to offer flexible and secure payment options, so that it is simple for people with great ideas and important causes to raise money.”

But the move is the latest chapter in a historically rocky relationship between the online and mobile payments giant and the crowdfunding industry. It reverses a March, 2014 commitment to closely examine crowdfunding projects to ensure they fit legal definitions of “donation” (as opposed to “commerce”) but to continue offering buyer protection for payments made to crowdfunding sites. That program offers to refund a buyer’s money if an item purchased online doesn’t arrive, or doesn’t match the seller’s description.

The 2014 decision followed a series of clashes between PayPal and crowdfunding project owners, mainly focused on unilateral decisions by the company to freeze donations to campaigns that PayPal determined to be pre-selling merchandise instead of fundraising.

At the time, PayPal kept crowdfunding payments under the umbrella of its Purchase Protection scheme, but also added that the company would “engag[e] directly with campaign owners ‘early on’ to ensure they comply with PayPal policies and government regulations — and help bring them up to snuff if they don’t.”

(Crowdfunding) times are a changin’

“Together with the crowdfunding sites, we identify if campaigns are strictly fundraising or pre-selling merchandise,” said PayPal’s chief risk officer, Tomer Barel, said in a blog post at the time. “We enable their campaigns without interrupting payments under the condition that the campaign owner is explicit and transparent to their contributors that there is no guarantee of delivery regarding the rewards being offered upon contribution.”

Two years later, however, PayPal appears to have decided the risk associated with crowdfunding is too great to shoulder. One London-based representative for the company would not confirm that the decision represents a “lack of confidence” in crowdfunding as a source of fundraising, but at the time she stressed that the move “is consistent with the risks and uncertainties involved in contributing to crowdfunding campaigns, which do not guarantee a return for the investment made in these types of campaigns.”

At issue is the legal distinction between the categories of “donation” and “pre-sales”. In the latter case, the seller makes a clear commitment to eventually provide goods, and buyers have a reasonable expectation of receiving a refund in the event they do not receive the goods they have purchased. For “donations”, there is no such expectation, but PayPal has now decided not to address that distinction by removing crowdfunding payments from its buyer protection program altogether.

Accountability problems

In addition to legal ambiguities, there are some indications that the move was also driven by concerns about the crowdfunding industry.

Several publications, including Consumer Reports, have documented a lack of accountability among people who run crowdfunding projects, and about difficulties that donors have had in recouping their donations. In one recent example, a smart watch campaign by Central Standard Timing ended when the company declared bankruptcy, leaving over 7,600 backers with no watch and no recourse.

Also, industry observer Glenn Fleishman noted in February that the collapse of the Zano drone project resulted in a messy refund situation that was made more complicated by the fact that some customers who pre-ordered a personal drone outside of Kickstarter received their units before crowdfunding investors. The investigation also revealed that customers were able to receive refunds, while people who had backed the Kickstarter campaign had trouble receiving their money back.

In an industry that raised $34.4 billion in 2015, and could surpass total venture capital investment in 2016, even a small percent of chargebacks from crowdfunding sites would add up to a lot of money that could potentially have to be refunded.

Crowdfunding platforms moving on

Notably, the only major crowdfunding platform that will be affected by PayPal’s decision appears to be the only one that accepts payments via PayPal, Indiegogo. Some smaller platforms, including Fundrazr, also work with Paypal, but other platforms, such as Kickstarter and GoFundMe, accept payments via online payment platforms such as Stripe and WePay, but not PayPal.

GoFundMe simply says the platform “no longer uses PayPal to accept donations for campaigns,” and instead refers donors to the Stripe and WePay websites, both of which offer a series of tools designed specifically for marketplace sites, including fraud protection.

PayPal spokespeople said in response that the company would “continue building strategic partnerships with crowdfunding platforms like Indiegogo and FundRazr to make it even easier to offer flexible and secure payment options, “so that it is simple for people with great ideas and important causes to raise money.”

Crowdsourcing, banking, and the future of enterprise collaboration according to Crowdsourcing Week’s Epi Ludvik Nekaj


Epi Ludvik Nekaj is the founder and CEO of Crowdsourcing Week

What is Crowdsourcing Week and where did the inspiration come to launch it? Why crowdsourcing and why is it so interesting now?

Epi Ludvik Nekaj of Crowdsourcing Week
Epi Ludvik Nekaj of Crowdsourcing Week

Crowdsourcing Week (CSW) is a global platform for innovators to present collaborative solutions that are relevant in the 21st century. Our aim is to capitalise the abundance of platforms, ideas, technologies, and crowds, turning these resources into social productivity. We want to empower the people to use all these means to create shared value across all sectors. One of our goals is to enable organisations to see crowdsourcing in a completely different light.

When I launched CSW, 2+ years ago, the term was in its infancy, but now I believe it has become fundamental to the digital economy. Today, the convergence of technology, connectivity and crowds is producing a massive hub of ideas and innovations. I am placing my bet on the crowd’s ability to create and produce valuable and meaningful products and services.

What are the challenges/opportunities of building a global media business in today’s market?

CSW is a knowledge hub on the crowd economy for the new generation of leaders. We have a community based approach and that takes time to build. When operating on a global scale we have to adapt to diversity in culture and stay ahead of trends. Operating in a tech-enabled ecosystem requires a different mindset. We have to be open to collaboration and lay less emphasis on competition, and that’s what the crowd economy is all about—open, shared, transparent, with a twist of caution for the new paradigms we are exploring.

What are some of the most exciting trends in crowdsourcing? What are some of the most overrated?

Crowdsourcing has moved beyond being just a competition to source the next slogan for your brand. The exciting applications I see span finance where crowdfunding is rewriting all rules of how projects get off the ground. Crowdsourcing is coming to smart city and mobility development in a big way and will play an important part in making cities more livable, more resource efficient and inventive. Large organizations are using crowds like never before to remain competitive and even change their business offerings for the hyper-connected population.

Our next week-long global conference, CSW Global is coming to London, April 11-15, next year and will feature all these key topics. Another area I am very excited to see grow is the education sector.  With the launch of our integrated e-learning program, this is one of the areas we will focus on post our equity crowdfunding raise on Crowdcube.

There are a lot of start-ups bringing innovative business models using crowdfunding. How are incumbent firms incorporating crowdsourcing into their own existing models?

The banking sector is waking up to crowd-powered applications like crowdfunding and blockchain protocol. They see value in exploring crowd currencies—on how to integrate the block chain technology into the banking system because it’s scalable. Barclays is the first premier bank to accept bitcoin. BNP Paribas Fortis is also one of the pioneers in incorporating crowdsourcing into its banking system that have subsidiary companies that are into crowdfunding, as they see them as a potential partners rather than competition.

This is a great way to stay relevant, to source financing for start-ups and facilitate innovation. Instead of building physical bank locations, banks are thinking about service innovation and this change in mindset and attitude is key.

Where are you taking your business in 2016?

The outlook for 2016 and beyond is looking very exciting for Crowdsourcing Week and our subsidiary consulting company, CSW2. We are most excited about building crowdcapital through our crowdfunding round. We plan to expand our consulting arm CSW2, spearheaded by our consulting think tank and crowdsourcing experts, while also launching an integrated e-learning platform that will be accessible globally to harness “social productivity” and educate participants on the Crowd Economy.

In 2016, CSW events will launch in new markets that include Africa and the Middle East: we have plans for Tehran, Johannesburg, San Francisco, Seattle, Dubai and Latin America. And after 3 years in Singapore, our flagship global conference is moving to London in 2016. Very exciting times ahead indeed.

5 trends we’re watching this week

5 trends in finance this week

[alert type=yellow ]Every week at Tradestreaming, we’re tracking and analyzing the top trends impacting the finance industry. The following is a list of important things going on we think are worth paying attention to. For more in depth trendfollowing, subscribe to Tradestreaming’s weekly newsletter (published every Sunday).[/alert]

1. [podcast] Stephane Dubois of Xignite on providing stock market data to (almost) all of fintech (Tradestreaming)
You can build your own apps or sell tools to others building apps. Xignite powers today’s top investment platforms with stock market data. Founder and CEO, Stephane Dubois joins Tradestreaming to discuss his 10+ years building stock market data products powering most of today’s top fintech platforms.

2. BBVA investment in Atom is a small step in a much larger plan (BANKNXT)
BBVA has invested $68 million in Atom Bank (here’s the story from Bloomberg). Daniel Gusev believes this is part of a much larger digital strategy for the bank.

3. Diebold To Acquire Wincor Nixdorf (PYMNTS)
Diebold will soon be the largest ATM maker in the world — if regulatory authorities approve its latest move to buy out rival Wincor Nixdorf.

4. The Disruption Of Millennial Investing (TechCrunch)
The media proliferates stories analyzing millennials’ work ethic, buying patterns and values. But what about investing? What’s changing with the way millennials invest?

5. First crowdfunding results: 70 go bust, one makes money (Telegraph)
Some celebrities, including Andy Murray, are investing in crowdfunding, but the risks are high. This article, based on one of the first studies out of the nascent equity crowdfunding field, shows just how risky early stage investing really is on these platforms.

Fundrise’s Brandon Jenkins on the need to keep raising the quality of real estate deals online

Fundrise is a leader in online real estate investing and it’s soon to get even more interesting as recent regulatory changes are making it easier for crowdfunding platforms to incorporate even more investors. It’s an interesting time for the firm: it recently announced it had raised $50M for an e-REIT in light of the new Regulation A+ changes.

Fundrise COO, Brandon Jenkins joins us to talk about the state of his business, how competition in online real estate investing is changing the market, and how he thinks 2016 is going to turn out to be a huge year in his industry.

What was the inspiration for creating Fundrise? What was the genesis story?

brandon jenkins, COO of fundrise

The idea behind Fundrise came out of the personal experience of our founding team as real estate developers in Washington, DC. After an unsuccessful experience seeking funding for a new type of real estate project with local tenants, we saw an opportunity to open up the world of real estate investing to a broader audience.

More players are entering the online real estate investing space — how do you differentiate yourself? How do you think the market is organizing (is it around debt/equity or residential/commercial?)

First and foremost quality. We only work with the best quality real estate companies and search through hundreds of deals a week selecting only the top 1% to actually offer as investments.

Second, we focus on providing unmatched customer experience by creating a one-of-a-kind platform. Our technology is 100% designed and built in house…from scratch, so that the experience of investing on the platform is as straightforward and enjoyable as possible.

How big a role does education play in investor acquisition?

When you democratize an asset class for the first time, you’re naturally going to connect with investors who’ve never picked their own real estate investments before.   

To that end, we take education very seriously.

Our biggest concern right now is around the quality of deals being done by other platforms in the space. We’re seeing other companies do bad deals, with bad prices and bad terms so we feel that we have an obligation to give investors the tools they need to make smart, informed decisions — whether that’s a deep dive into our underwriting process or a rating system for understanding risk-return tradeoffs.

You moved from a brokerage model to more of an origination model — why? how did that position you differently?

Funding all our investments upfront using our own $25M balance sheet has a few key benefits:

1. You see higher quality investments: We can negotiate better deals with top real estate companies because they require certainty of funding. By funding real estate projects upfront, we believe we are able to achieve superior pricing and terms, and source more investment opportunities from the best companies in the country.

2. You start earning immediately: Interest starts accruing as soon as your investment settles—typically within five days—eliminating lengthy escrows. This model more closely resembles stocks, bonds, and other publicly-traded securities.

3. Your interests are the same as ours: Fundrise pre-funds every real estate project, using our own balance sheet. This puts our “skin in the game” and shows our conviction in the deal.

Where is your business/market headed in 2016 and beyond?

Since we founded the industry back in 2012, real estate crowdfunding has seen tremendous growth. But it’s really just beginning. 2016 will be a huge year for the space. I think we’ll start to see consolidation of platforms and some platforms really start to own one and dominate an asset class — like the SFH market. Investors will begin to enter the space in droves.

How Funded Today’s Zach Smith raises millions of dollars for its crowdfunding clients

zach smith and crowdfunding agency, funded today

While crowdfunding is a great example of the growing democratization of capital formation online, many of the top campaigns turn to professionals for help running their campaigns. One of these professionals, Zach Smith, founded a firm to do exactly that. Funded Today has helped over 150 start-ups achieve success. In one example, with the help of Funded Today, BauBax raised $9.1 million to launch its travel jacket, making it the most funded clothing project in the history of crowdfunding and the 4th most successful Kickstarter project of all time.

Zach Smith, co-founder of Funded Today joins Tradestreaming for an exclusive interview.

Why would crowdfunding campaigns turn to an agency? Can you crowdfund on your own?

Zach Smith, Funded Today
Zach Smith, Funded Today

You can crowdfund on your own, but any campaign needs some marketing in place, and unless you’re an expert in PR and paid media, you’re leaving a lot of money on the table. With a campaign that has a good product and does no marketing, Funded Today increases pledges by 1000%.

For example, if a campaign is averaging $500 to $2,000 per day, we could take them to $20,000 per day. Magbelt is an example of one of our clients. We increased pledges by 10,000%. Even if a client is running a successful crowdfunding campaign, we can still reach more people than anyone else and drive additional sales because we’re experts in paid media on multiple channels. We can reach over 2 billion people by honing in on likely buyers. We will always augment whatever a client is already doing.

Has crowdfunding gotten more competitive — if so, how?

It used to be that you if you had a good product, you could put it on Kickstarter and reach out to press and they would cover it. Or, if a company had a good product, they would sell X many units per day and stay within the top 5 on Kickstarter (essentially, you’d stay within the top 5 on Kickstarter and continue to generate more sales because you’re in that popular category).
Now, the crowdfunding market is pretty saturated, and it’s not as easy to be a success. With that said, if you have a successful campaign, the market is much bigger, so instead of having a $250K campaign, it might result in a $2.5M campaign.

What are some of the tools in your toolbox that help you be successful for your clients?

We have worked on over 300 campaigns, so we have audience demographics that we use in our social media marketing that we can utilize to hone in on markets that work well and convert well. We can also scale a campaign with just two weeks or four weeks, whereas most people wouldn’t be able to scale that quickly. And, we have credit that we can leverage, so if there’s a campaign that we know will have a good ROI we can spend half a million dollars to front it.
Essentially, we are experts in paid media because the audience for a campaign is the most important. And finally, we know how to reach out to media and generate publicity for our clients. In fact, just this week, we became the first crowdfunding agency to ever represent clients in the top two most popular campaigns on Kickstarter (Xpand Lacing System and UsBidi).

What components are necessary for a successful crowdfunding campaign?

crowdfunding success matric
We have something we call the Crowdfunding Success Matrix : there are 4 quadrants that a campaign fits into:
  1. good product and good marketing
  2. a good product with bad marketing
  3. a bad product and bad marketing, called “outer darkness,”
  4. a bad product with good marketing, a “black hole”.

We also have a formula we came up with: Ubiquity + Techy (i.e. groundbreaking technology in their field) + Chill Factor Story + Amazing Video = huge chance of success.

So, ubiquity means is it everywhere. One example is one of our clients called Trunkster. They developed luggage and of course everybody has luggage. Another example (not one of our clients) is Pebble Watch: it’s a watch but the client made it like an Apple iPhone. Or the Coolest Cooler (not a Funded Today client). SilverAir invented socks that don’t stink. By soaking the fibers of the cloth in silver you can wear their socks for 10 days. These are a few examples of clients that fit that success formula.

What does crowdfunding in the future look like? Do you see trends from your clients and in the market? Will more bigger brands enter the space?

Your question comes at the perfect time. In fact, Hasbro, one of the world’s leading toy and game manufacturers, just announced they will be doing a crowdfunding campaign as a way to connect with gamers. So, definitely, we will start to see bigger brands entering this space, and we already are. Also we will see more equity crowdfunding. Typically, you’re pledging to get a perk, and this is the type of crowdfunding we specialize in.