Formigle says the disruption in the capital markets at the end of 2018 led to the next wave of growth.
PORTLAND, OR—Portland-based CrowdStreet raised $47 million in February, a one-month record for the online real estate investing marketplace. Investors on CrowdStreet made more than 1,000 investments across 35 property offerings last month.
This is the largest single month of fundraising since CrowdStreet launched five years ago. Sponsors who raised capital on the CrowdStreet marketplace last month included Feldman Equities, KBS, SMARTCAP and Trion Properties. More than 112,000 investors along with 275 commercial real estate operators and developers are on the CrowdStreet platform.
“Ironically, some of the disruption in the overall capital markets at the end of 2018 led to the next wave of growth for our marketplace,” Ian Formigle, vice president of Investments at CrowdStreet, tells GlobeSt.com. “Together with the additional solutions CrowdStreet now offers, it's unlocked the next wave of demand.”
This disruption includes interest rates/Fed, global trade disputes and stock market volatility. Additional solutions include the launch of CrowdStreet diversified fund product in October 2018 and CrowdStreet private managed accounts advisory services business launched in December 2018, Formigle indicates.
Successful crowdfunding campaigns positively influence the ability to attract additional capital, likely by providing proof of concept to potential external investors. However this relationship is more nuanced. More precisely, crowdfunding as proof of concept benefits entrepreneurs with smaller campaigns ($75,000 or less), according to the Small Business Association's office of advocacy. For larger campaigns of greater than $75,000, additional funds do not appear to offer the same degree of proof-of-concept benefits in attracting additional capital.
One SBA report finds that only the project objective and prior attempts to secure outside capital were found to influence the effect of crowdfunding campaign success on external financing at a statistically significant level. The report also finds that stronger crowdfunding campaign performance increases the probability of business partnerships, greater publicity, a stronger customer base and ease of finding employees. Also, crowdfunding campaign performance has the strongest effects on building a customer base and generating publicity for the new product (compared to the other benefits), but only when the amount raised was less than $100,000.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
