Building a more diversified online real estate investment platform

The real estate crowdfunding marketplaces have done a good job of starting to connect the fragmented real estate market to investors. But the system isn’t perfect yet. Most platforms deal with a single asset class, so investors trying to build a diverse real estate portfolio may find themselves investing on multiple crowdfunding sites. The pain of keeping track of investments across multiple platforms can be a confusing, time-wasting process.

But some platforms are taking on the task of offering a suite of real estate asset classes investors.

“It came down to offering investors diversification potential,” said Nav Athwal, CEO of RealtyShares. “Many investors, especially individuals, can’t invest in real estate outside of a REIT or don’t have access to diversify real estate investments. Our ultimate goal is to be able to provide a diverse set of opportunities in terms of products, asset types, and capital stacked positions.”

Diversification on the RealtyShares marketplace comes both in property type and ownership status. Most of the platform’s debt investments are centered on fix and flip, single family, short-term loans. A vast majority of equity investments are occupied commercial properties with a 3 to 5 year hold period, but the site occasionally has a development project available for investment. Some projects have a preferred return with little upside, while others have common equity with lower annual returns but higher upside potential.

The San Francisco-based marketplace has surpassed $200 million in financing through the platform and recent completed a $33 million debt financing and venture round. CEO Nav Athwal, who also happens to be a finalist for the Tradestreaming best first name in fintech award, said “more than a few scotch and tequila bottles had to be cleaned from the office after the round was finished.”

Athwal attributes some of the success of his platform to the the familiarity of real estate to the retail investor. As opposed to investing money into  businesses through VC or online lending platforms, most people have a basic understanding of real estate

“A retail investor with little sophistication still understands real estate investment because it’s such a part of our daily lives. Big funds and pensions have made money through real estate, and outperformed the S&P. We’re bringing real estate, which is a great way to build wealth, to the retail market,” he said.

Currently, RealtyShares only works accredited investors. With new regulations that have opened up crowdfunding to non-accredited investors, Athwal hopes the platform will one day be made available to the general public, but doesn’t see it happening in the near future. Instead, his firm is going after the white wale of crowdfunding platforms: family offices and institutional investors.

“The level of crowdfunding adoption from the mainstream real estate industry has skyrocketed,” he remarked. “In 2013, online fundraising for real estate was very foreign, but in the last 2 years, the level of interest from institutions has been surprisingly good. Crowdfunding for real estate isn’t mainstream yet, but it’s going to continue to make inroads in the real estate industry,” he concluded.

The Startups: Who’s shaking things up (Week ending February 28, 2016)

fintech startups shaking things up

[alert type=yellow ]Every week, Tradestreaming highlights startups in the news, making things happen. The following is just part of this week’s news roundup. You can get these updates delivered direct to your inbox by signing up for the Tradestreaming newsletters.[/alert]

Startups raising/Investors investing


oscar health raises $400 million

Oscar Health raises $400m, said to be valued at $2.7b in Fidelity-led round (Bloomberg)
Health insurance startup, Oscar Health was valued at $2.7 billion in the startup’s latest round of funding, according to a person familiar with the matter. That’s about $1 billion more than when the health insurer raised funds in September. In the latest round, the company said it took in $400 million from backers led by Fidelity Investments.

Australia’s MoneyMe taps $30m from family fund (Sydney Morning Herald)
Start-up short-term lender MoneyMe has secured $30 million in debt funding in another sign the payday lending sector can survive without bank funding.

RealtyShares raises $20m for its real estate investment marketplace (TechCrunch)
The San Francisco-based company has raised over $130 million for over 1600 properties through 290 since its launch, which the company says makes it one of the largest real estate investment platforms in the U.S.

Canadian marketplace lender, Borrowell pockets $6.4m investment (Finextra)
Technology-driven marketplace lender and Canadian fintech leader Borrowell reported that Equitable Bank, along with Hedgewood, Power Financial Corporation and other investors, will invest $6.4 million of operating and loan capital in Borrowell’s platform.

Merchant payment solution, Spreedly secures $3m (Finovate)
Originally focused on subscription-based payments, Spreedly pivoted in 2013 to launch a credit card vault in the cloud. The new platform enables businesses to securely tokenize client credit card information for repeat transactions across any of the 100+ payment gateways it supports, all while remaining PCI compliant. The company handles 1+ million transactions every month for its 300 clients.

Ex–Citi boss Vikram Pandit turns active fintech investor (Institutional Investor)
Since his surprise departure as CEO of Citigroup in 2012, Vikram Pandit has been an active fintech investor. His investments have ranged from Indian real estate lender FICS Consultancy Services to U.K. money transfer start-up TransferWise. He likes peer-to-peer, or marketplace, lending.

Pandit, 59, was an early investor in student loan service CommonBond, trading technology provider Orchard Platform and credit risk assessment outfit PeerIQ. These U.S. firms are all part of a disruptive alternative financial economy that hopes to upend much of the business done by Pandit and his former employers.

Seven keys to understanding Propel and BBVA fintech investment (BBVA)
BBVA reveals more details on its new investment fund, Propel: what it is, who’s managing it, and what type of fintech investments it plans on making

The Startups: Who’s shaking things up

How Qapital uses IFTTT to integrate its savings app into hundreds of apps (Tradestreaming)
To save isn’t human. Or at least, we humans aren’t good at doing it. Savings app, Qapital recognized that to get users saving money, it needed to automate the process. Instead of integrating into multiple apps its target audience uses, it did one integration with IFTTT and it’s working like a charm.

kensho in action

Kensho is powering the automation robots on Wall Street, eliminating jobs in its wake (NY Times)
“Within a decade, he said, between a third and a half of the current employees in finance will lose their jobs to Kensho and other automation software.

The bank that fintech built: Number26 and TransferWise team up (VentureBeat)
Peter Thiel investment, Number26 is a German bank that’s attempting to create a modern digital bank. And now, it’s partnered with Transferwise to provide account holders with cheap, easy-to-use money exchange services right in their accounts.

Tradestreaming looks at how these next generation financial services companies are scaling via mashups and 3rd party integrations. It’s a good strategy – get big by being ubiquitous.

Robinhood ditches 3-day wait, fronts new users $1k to buy stocks (TechCrunch)
No brokerage has reached $2 billion in transactions quicker and the free-trading app has reportedly saved customers $70m in fees. To start trading immediately upon signing up (called, Robinhood Instant), users have to invite in other users.

As marijuana sales grow, startups step in for wary banks (NY Times)
The legal marijuana business is rocking but most banks still won’t work with dispensaries. Tokken and others start-ups, with names like Hypur and Kind Financial, have been putting together software that helps banks and dispensaries monitor and record transactions, with the long-term goal of moving transactions away from cash.

Top economist, Dan Ariely joins insurance startup, Lemonade (TechInsider)
Duke University behavioral economist Dan Ariely thinks that if you sought out a system designed to bring the worst out of people, it would look a lot like modern day insurance. Ariely announced he was joining the much-discussed insurance startup, Lemonade.

“Lemonade is saying, this is not our money,” Ariely says. “It’s really your money. We are the custodians of this money. We will not make a penny more if we deny claims. at the end of the day, the pool belongs to everybody. And if it gets poorer, it gets poorer for everybody.”

Tougher times for Chinese p2p sector (
The nation’s online peer-to-peer lending sector is on the decline, with the number of new platforms continuing to drop while the number of problematic sites increasing, media reports said Tuesday.