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Groundfloor (company)

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GROUNDFLOOR Finance Inc.
IndustryFintech
Founded2013
Founders
  • Brian Dally
  • Nick Bhargava
HeadquartersBank of America Plaza,
Atlanta, Georgia
,
U.S.A.
Key people
  • Brian Dally (CEO)
  • Nick Bhargava (EVP)
ServicesReal Estate Investing
Number of employees
50 (2018)
Websitegroundfloor.com

Groundfloor is an American real estate investing and lending marketplace. It was the first real estate crowdfunding crowdfunding company to achieve SEC qualification utilizing Regulation A+ since the regulation became operable through the JOBS Act.[1]

Groundfloor was purposely built to serve self-directed investors instead of institutional ones. It allows accredited and non-accredited investors to fractionally invest in real estate.[2] By October 2018, Groundfloor had loaned more than $70 million across over 500 properties in the United States and had fundraised $13.8 million.[3][4]

History

Groundfloor was founded in Raleigh, North Carolina, in February 2013 by Brian Dally (who launched Republic Wireless) and Nick Bhargava (contributor to the JOBS Act).[5] In March 2014, the company raised $300,000 from angel investors in the region.[6] After raising $1 million in seed funding, Groundfloor moved its headquarters to Atlanta because of the Invest Georgia Exemption (IGE)[7] which allows state residents to invest in crowdfunded projects regardless of their investor accreditation status.[8][9]

In August 2015, Groundfloor became the first real estate crowdfunding company to achieve SEC qualification under Regulation A+, since the regulation became operable through the JOBS Act.[1][10] The company subsequently opened investing in California, Illinois, Maryland, Massachusetts, Texas, Virginia, Washington, Georgia and the District of Columbia in the fall of 2015.[11] By late October, Groundfloor sold out every loan originally listed.[12] By December, the company had funded 54 loans and sold more than $3 million in Limited Recourse Obligation securities. It also closed a $5 million Series A round, bringing its total financing to $7.5 million.[10] The round was led by Fintech Ventures, a $100 million venture capital investment fund focused on innovation in non-bank lending, savings and smart payments, managed by Serguei Kouzmine. Groundfloor announced it would use the money to expand its business beyond the present nine states where it operates.[13]

In 2017, Groundfloor originated $30 million in loans.[14] By October 2018, the company had loaned more than $70 million across 500 properties in the United States,[3] one third of which are in Atlanta.[15] Following $4.2 million secured from 2304 investors during the 2017-18 campaign, as of October 2018 the company had fundraised $13.8 million.[4]

Groundfloor ended 2019 with more than $100 million in annual investment volume, with the amount of originations doubling, while topping more than 75,000 registered users.[16] Groundfloor reported a 10.6% annualized rate of return (source), alongside $22 million in funds raised, with 3,200 public investors.[17]

By the end of 2020, 90,000 investors had invested $145 million into Groundfloor’s renovation projects.[18] Groundfloor was named to the Inc 5000 list of fastest growing companies, ranking #402.[19] It also appeared in the Deloitte’s Technology Fast 500 List, ranking #102.[20] Benzinga awarded the company as the Best Lending Platform alsol in 2020.[21] By March 2021, after raising funds through SeedInvest, Groundfloor updated its fundraising total to $26 million.[22]

Platform

Groundfloor was purposely built to serve self-directed investors instead of institutional ones.[1] Its marketplace provides short-term, high-yield returns backed by real estate. Typical loans return 12 percent annually on a six-to-12-month term.[10] In November 2015, Groundfloor 2.0 was introduced, reducing the minimum investment to $10.[1]

Groundfloor targets residential-development projects.[23] They use a proprietary loan grading algorithm in addition to application review to assign a loan a letter grade and corresponding rate. Loan terms generally range from six to 12 months and financing can be in a senior or junior position.[8][24]

In October 2015, Groundfloor introduced two new tools that expand peer-to-peer lending of real estate: quick comparison of loans and in-depth analysis of loan grading factors.[12]

Groundfloor began offering investors the option to invest via self-directed IRAs in 2019.[25]

In March of 2020, Groundfloor announced a product called Notes, which is similar to publicly issued, non-traded secured debt.[26]

In November 2020, Groundfloor launched additional programs for borrowers, alongside reduced application and origination fees.[27]

One new program was called the Loan100 program, which offered borrowers 100% financing for total project costs, including purchase and renovation. The program allowed developers with extensive experience to borrow funds for their projects with 0% down.[28]

See also

References

  1. ^ a b c d Ryan Lichtenwald (4 September 2015). "GROUNDFLOOR Is Breaking New Ground With The World's First Regulation A+ Deal". Lend Academy. Retrieved 10 December 2018.
  2. ^ "Investing in Real Estate: These Platforms Simplify the Process of Property Investing". crowdfundinsider.com. Retrieved 10 February 2021.
  3. ^ a b "Crowdfunding startup says its loans will help ease Triangle's housing crunch". News & Observer. 31 October 2018. Retrieved 10 December 2018.
  4. ^ a b "Groundfloor CEO Brian Dally Opines on IPO Results, Growth & Platform Updates". Crowdfundinsider.com. 20 September 2018. Retrieved 11 December 2018.
  5. ^ Rebecca Grant (30 May 2013). "Groundfloor unveils 'Lending Club for real-estate' so you can get richer, faster (exclusive)". Venture Beat. Retrieved 10 December 2018.
  6. ^ Catherine Clifford (1 April 2014). "Crowdfunding's Next Hot Frontier: Real Estate". Entrepreneur. Retrieved 10 December 2018.
  7. ^ "Rule 590-4-2-.08 - Invest Georgia Exemption". Rules and Regulations of the State of Georgia. Retrieved 10 December 2018.
  8. ^ a b Deborah Gage (19 August 2014). "Groundfloor Raises $1M, Moves to Georgia to Crowdfund Real Estate". Wall Street Journal. Retrieved 10 December 2018.
  9. ^ Bevington, Rickey (10 November 2015). "Company tests new waters for small-scale investors". Marketplace.org. Retrieved 10 December 2018.
  10. ^ a b c Kiki Roeder (11 December 2015). "GROUNDFLOOR High Rises with $5M Series A, First of New $100M Fintech Ventures Fund". Hypepotamus. Retrieved 10 December 2018.
  11. ^ "Form 1-A". United States Securities and Exchange Commission. Retrieved 10 December 2018.
  12. ^ a b Samantha Hurst (26 October 2015). "Groundfloor Announces Three New Tools to Expand Peer-to-Peer Real Estate Lending". Crowdfund Insider. Retrieved 10 December 2018.
  13. ^ Philip Ryan (15 December 2015). "Real Estate Service Groundfloor to Expand Footprint with $5M Raise". Bank Innovation. Retrieved 10 December 2018.
  14. ^ Beth Mattson-Telg (9 May 2018). "CRE Crowdfunding Firms Continue to Scale Up Platforms". National Real Estate Investor. Retrieved 10 December 2018.
  15. ^ "Home flipping once again on the rise in metro Atlanta". Atlanta Journal Constitution. 22 August 2018. Retrieved 10 December 2018.
  16. ^ "Real Estate Crowdfunding Platform Groundfloor Tops $100 Million in Annual Volume, Doubles Top Line Revenue". crowdfundinsider.com. Retrieved 2 March 2020.
  17. ^ "Groundfloor Says Q2 was a Record Quarter". crowdfundinsider.com. Retrieved 21 July 2020.
  18. ^ "Get in on the GROUNDFLOOR". evepicker.com. Retrieved 10 March 2021.
  19. ^ "GROUNDFLOOR - Altanta, GA". inc.com. Retrieved 11 August 2020.
  20. ^ "2020 Technology Fast 500" (PDF). deloitte.com. Retrieved 1 November 2020.
  21. ^ "Benzinga Global Fintech Awards". benzinga.com. Retrieved 10 November 2020.
  22. ^ "21 STARTUPS TO WATCH IN 2021". bizjournals.com. Retrieved 18 March 2021.
  23. ^ Laura Baverman (28 April 2014). "Groundfloor stretches crowd-funding's limits". USA Today. Retrieved 10 December 2018.
  24. ^ Rebecca Burns (8 May 2014). "Crowd lending: Groundfloor makes real estate investing accessible". Atlanta Magazine. Retrieved 10 December 2018.
  25. ^ "Groundfloor Now Offerings Self Directed IRA Access for Real Estate Investments Available to Everyone". crowdfundinsider.com. Retrieved 28 October 2019.
  26. ^ "Real Estate Crowdfunding: Groundfloor Adds Short Term Offering Backed by Property". crowdfundinsider.com. Retrieved 26 March 2020.
  27. ^ "GROUNDFLOOR Reduces Fees, Will Now Finance Up to 100% of Project for Some Borrowers". crowdfundinsider.com. Retrieved 12 November 2020.
  28. ^ "GROUNDFLOOR Reduces Fees, Will Now Finance Up to 100% of Project for Some Borrowers". crowdfundinsider.com. Retrieved 12 November 2020.
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