Fundrise

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Fundrise, LLC
Industry Financial services
Financial technology
Real Estate Investing
Founded 2010
Founders Dan Miller and Ben Miller
Headquarters Washington, D.C., United States
Key people
Ben Miller, Co-Founder and CEO
Brandon Jenkins, COO
Kenny Shin, CTO
Bjorn Hall, General Counsel [1]
Parent Rise Companies Corp.[2]
Website fundrise.com

Fundrise is a US-based financial technology startup company that operates an online investment platform[3]. Fundrise has been labeled as the first company to successfully crowdfund investment into the real estate market.[4]

As of December 31, 2017, Fundrise had originated approximately $344 million in both equity and debt investments across real estate transactions representing approximately $1.9 billion of real estate property value.[5]

History[edit]

Fundrise was founded in 2010 by brothers Ben and Dan Miller and launched in 2012 before the passing of the JOBS Act, which enacted securities regulation to streamline the process of equity crowdfunding in the United States.[3] Their father, Herb Miller of Western Development Corp., developed 20 million square feet of real estate based in Washington, D.C. Ben Miller worked as President of Western Development Corp. and Managing Partner of WestMill Capital Partners prior to Fundrise. Prior to Fundrise, Dan Miller worked for Western Development Corp. and also as Managing Partner of WestMill Capital Partners. The brothers founded the company with the idea to allow residents in the D.C. area to invest in real estate development projects they were building.[2] Fundrise's first project, Maketto, in the H Street NE Corridor in Washington D.C. raised $325,000 from 175 investors, where any resident of D.C. or Virginia could invest for as little as $100, making it the first crowdfunded real estate project in the United States.[2][4]

Early growth[edit]

After the initial project, Fundrise was contacted by real estate companies looking to use the Fundrise platform to raise capital.[2] Soon thereafter, the company expanded its platform to allow conventional real estate investments from commercial developers across the United States.[2]

By May 2014 the company reported to have facilitated $15 million in investments involving 1,000+ investors[3]. One of Fundrise's most publicized investments came in January 2015 when it began offering bonds for the construction of 3 World Trade Center, the location of the third tallest tower at the site of the World Trade Center in lower Manhattan.[6] The initial offering was for $2 million of the $5 million worth of bonds purchased by Fundrise for the financing of the $1 billion project. Bonds were offered for $5,000 each with a 5% tax-free gross annual return for five years.[6][7]

Fundrise also raised more capital in its first-round of Series A investment than any other crowdfunding company, totaling $38 million.[4] Funding was led by Chinese social networking company Renren who invested $31 million of the total $38 million.[8] Additional Series A investors include Guggenheim Partners, Justin Elghanayan of Rockrose Development Corporation, and James Ratner of Forest City Enterprises.[2] By February 2015, Fundrise had commitments from six institutional investors for an additional $100 million in investment into the company's real estate offerings.[9] In October 2015, co-founder and president Daniel Miller left the company.

In February 2016, Fundrise terminated its senior accountant for allegedly attempting to extort over $1 million from the enterprise over a claim that "the company acted inappropriately concerning two real estate deals." The accountant denied the allegations of extortion and claimed that the termination was retaliation for reporting "serious fraudulant behavior." [10] The company denied the claims and hired an outside audit firm to conduct an investigation into the allegations, which ultimately concluded there was no reasonable basis to the allegations.[11][12][13][14]

eREIT launch[edit]

On December 3, 2015, Fundrise launched the Fundrise Real Estate Investment Trust, the world's first "eREIT" or online real estate investment trust with an initial offering of $50 million pursuant to Regulation A+.[15]

The Fundrise eREIT offering provides prospective investors with the opportunity to invest in an intended portfolio of properties across the United States for a minimum of $1000. The aim of the eREIT is to use new technology to give both accredited and unaccredited investors the option to invest in US real estate. This financial offering, the first of its kind, was made possible by the expansion of Regulation A under the JOBS Act.[citation needed][16]

The company subsequently opened a second eREIT™, the Fundrise Equity REIT™, in February 2016.[11]

In December 2016, the Fundrise Income eREIT was the first company to raise $50 million, the maximum amount allowed under Regulation A. Later in December 2016, the Fundrise Growth eREIT became the second ever issuer to raise $50 million pursuant to Regulation A.[17]

eFund launch[edit]

In June 2017, Fundrise announced the eFund, a diversified portfolio of for-sale housing in major US cities.[18] The first eFund was the Los Angeles eFund, with an initial offering of $50 million under Regulation A+.[19] In conjunction with the eFund launch, Fundrise introduced a goal-based investing and an advisory service. [20]

Awards[edit]

Fundrise was selected for the Forbes Fintech 50 list in 2016, 2017, and 2018[21][22][23].

See also[edit]

References[edit]

  1. ^ "About Us". fundrise.com. 
  2. ^ a b c d e f Gage, Deborah (26 September 2015). "Renren-Backed Fundrise Bulks Up In Real Estate Crowdfunding Sector". The Wall Street Journal. Retrieved 23 February 2015. 
  3. ^ a b c Cortese, Amy (27 May 2014). "Fundrise, a Crowdfunding Website, Raises $31 Million". The New York Times. Retrieved 23 February 2015. 
  4. ^ a b c Alois, JD (26 September 2014). "Fundrise Adds Big Name Investors Including Ratner, Elghanayan & Guggenheim: Funding Now at $38 Million". Crowdfund Insider. Retrieved 23 February 2015. 
  5. ^ "Rise Companies Corp - Form 1-K Annual Report - For the fiscal year ended December 31, 2017 - As filed with the Securities and Exchange Commission on April 30, 2018 - Filed Pursuant to Rule 253(g)(2) File No. 024-10659". Securities and Exchange Commission. April 30, 2018. Retrieved May 16, 2018. 
  6. ^ a b Clarke, Katherine (27 January 2015). "Investors can snag a stake in 3 World Trade Center for just $5,000 with new crowd funding initiative". New York Daily News. Retrieved 24 February 2015. 
  7. ^ "Crowdfunder Fundrise marketing 3 WTC bonds". The Real Deal. 27 January 2015. Retrieved 24 February 2015. 
  8. ^ Schwartz, Eric Hal (28 May 2014). "Chinese Firm Leads $31 Million Investment in Fundrise". Streetwise. Retrieved 23 February 2015. 
  9. ^ Alois, JD (6 February 2015). "Six Institutional Funds Commit Over $100 Million to Fundrise". Crowdfund Insider. Retrieved 24 February 2015. 
  10. ^ O'Connell, Jonathan (7 Mar 2016). "Fundrise CFO says he was ousted after alerting crowdfunding company of 'serious fraudulent behavior'". Washington Post. Retrieved 2016-08-03. 
  11. ^ a b "FUNDRISE REAL ESTATE INVESTMENT TRUST, LLC - FORM 1-K". UNITED STATES SECURITIES AND EXCHANGE COMMISSION. April 26, 2016. 
  12. ^ Sernovitz, Daniel. "Fundrise chief financial officer terminated". Washington Business Journal. American City Business Journals. Retrieved 2016-02-19. 
  13. ^ "United States Securities and Exchange Commission Pursuant Regulation A of the Securities Act of 1933". SEC.gov. Securities and Exchange Commission. February 9, 2016. Retrieved 23 February 2016. 
  14. ^ "Fundrise Equity REIT Offering Circular" (PDF). 
  15. ^ Ho, Ky Trang. "How To Play Billion-Dollar Real Estate Deals With Just $1,000". Forbes. Retrieved 2017-06-09. 
  16. ^ "Fundrise Lets Common Folk Invest In Posh Real Estate Ventures". Wired. 
  17. ^ "Rise Companies Offering Circular". 
  18. ^ "Home Sweet Investment: Fundrise Introduces New Way For Millennials To Endow Their Future Houses". www.forbes.com. Retrieved 2017-11-30. 
  19. ^ "Fundrise Officially Announces New eFunds | Crowdfund Insider". Crowdfund Insider. 2017-07-20. Retrieved 2017-11-30. 
  20. ^ "Fundrise 2.0: Online Real Estate Investment Platform Revamps Service with First Ever Robo-Advisor for Real Estate | Crowdfund Insider". Crowdfund Insider. 2017-06-13. Retrieved 2017-11-30. 
  21. ^ "Fintech 50: The Future Of Your Money". Forbes. Retrieved 7 February 2018. 
  22. ^ Schifrin, Janet Novack,Matt. "The Forbes Fintech 50 For 2016". Retrieved 7 February 2018. 
  23. ^ Sharf, Samantha. "The Forbes Fintech 50 For 2018". Retrieved 20 February 2018. 

Further reading[edit]

External links[edit]