GROUNDFLOOR, an investment and lending platform for real estate loans, has raised $3 million in crowdfunding from 1,580 new and existing investors. In addition, the startup reports it had its strongest quarter ever in 2019 Q2.
With the new funding, GROUNDFLOOR has raised a total of $18.3 million and has 20 percent public ownership. GROUNDFLOOR co-founder and CEO Brian Dally said the funding will help accelerate the company's growth by expanding its teams in sales, software engineering and investor relations.
"Demand for our product is growing dramatically on both the borrower and investor sides," he said. "Our team has managed this growth very efficiently. In fact, revenue per employee has doubled over the last year."
As the company continues to grow and gain momentum later this year, Dally said GROUNDFLOOR will invest time and resources in expanding and developing its workforce.
"We currently have positions open in all departments, with a priority on hiring additional customer-facing personnel," he said. "We are actively recruiting to put four to five Atlanta-based investment loan advisors/originators and several investor support personnel in place by the end of Q3."
According to GROUNDFLOOR representatives, investors can chip in $10 at a time on the platform to fractionally invest in real estate. The company has achieved 20 percent ownership by 3,160 individual investors total.
"Our investor base looks like America," Dally said. "They come from all walks of life. The concept of getting involved in real estate is attractive to a lot of people. Having access to lucrative private capital markets in general is new, while investing in startups before they go public is gaining in popularity and acceptance. More than any demographic descriptor, GROUNDFLOOR shareholders are really pioneers on a totally new frontier of personal finance."
In Q2 GROUNDFLOOR reports it has seen a 139 percent year-over-year increase in non-GAAP revenue, to $1.6 million for the second quarter and $2.6 million for the first half of 2019. The company also reports $22.4 million in retail investment volume and $13.2 million in principal and interest repaid to investors. The company has a total of 65,000 registered users.
"We are focused on scaling the business by offering more loans, more frequently, as well as growing the size of our retail investor base," Dally said, when asked what the rest of 2019 looks like for the company. "This means hiring more staff here in Atlanta to build up our operations and double down on what's working. We're also planning to continue experimenting with different types of loans beyond the traditional fix-and-flips. But overall, we want to take a more is more approach because of the demand we continue to see for our products."
Founded in 2013 by Brian Dally and Nick Bhargava, GROUNDFLOOR says it is the only product offering a fully customizable real estate debt portfolio for short-term, high-yield returns. The startup offers borrower friendly loan terms like a deferred payment option to give developers more control over their cash flow. Anyone in the country can invest using GROUNDFLOOR, but the company focuses on lending in 30 states. ᐧ
Dally said the funding is further proof that GROUNDFLOOR's method of investing works. To date, the company has funded and sold more than $150 million in real estate investor loans.
"Growth is accelerating, but without compromising credit quality," he said. "Soon, we’ll publish an update to our semi-annual diversification analysis that lays out all the data to further show how our offering is changing the game ... Our $10 minimum investment ensures everyone can get the benefits of diversification no matter the size of their portfolio."
