GROUNDFLOOR, an Atlanta-based investment and lending platform for real estate loans, is raising a $10 million round through crowdfunding platform SeedInvest.
As of 1:30 p.m. May 29, the startup has raised more than $637,000 of the $10 million round in its first week of opening the investment. The new funding would bring GROUNDFLOOR's total raise to about $28.3 million.
CEO and co-founder Brian Dally said the funding will be used for expanding product categories and customer acquisition.
"We’re just excited, too, about what this capital can do to reach the next stage of growth," he said. "This is going to be an important inflection point for the company and I think it comes at a very interesting time.
When asked what it felt like to have garnered so much of the company's goal investment in the first week, Dally said the interest further validates GROUNDFLOOR's mission.
"It feels awesome," he said. "As an entrepreneur, you always hope the problem you see in the world is an important one. You always hope the solution you’ve envisioned and worked on is a good one and other people want to be a part of it... We know that the product works and we have a track record to prove that, but it always feels good when people vote with their investment capital. It’s just always satisfying."
GROUNDFLOOR originates and underwrites loans for residential real estate projects. These loans are converted into investment securities (LROs) and qualified by the SEC. Once qualified, individual investors can invest in any LRO on a fractional basis with as little as $10 and create a fully-diversified, custom portfolio of real estate debt tailored to their personal risk tolerance. GROUNDFLOOR employs about 33 people.
GROUNDFLOOR - Built for Times Like These from Groundfloor on Vimeo.
Prior to the coronavirus reaching U.S. soil, Dally said the company knew they were going to raise another round this year. The pandemic gave them the opportunity to examine how they wanted to continue to deliver on their mission.
"With the pandemic, we really stepped back and looked at our business, from our customer's point of view and a strategic point of view," he said. "It’s a different picture from what we started the year with, a vision that’s now seven years old. It’s a more exciting way forward than what we were thinking about before."
Dally said he and his team got ahead of the virus and started working from home immediately. One of the most important practices the company introduced, though, wasn't logistical, he said.
"You can’t predict how any one individual is going to react to this crisis," he said. "One of the very early precepts we put forward with our employees was to ask everyone to give everyone around them a wide berth. We decided early on to add an extra measure of kindness."
Thanks to that philosophy, Dally said the company did a bottoms-up analysis of their portfolio and gave a three-month extension for no cost with no strings attached to customers in good standing.
"I think that was the right thing to do, to have a human-centered approach to this crisis," he said.
The rest of 2020 is going to be focused on staying the course and repeating the success GROUNDFLOOR had last year, Dally said.
"The very idea of having a no-growth year is kind of unpalatable for most startups... I think the rest of this year is going to look like the last month or two looked like, frankly," he said.
For now, GROUNDFLOOR will continue to be a refuge from volatile public markets for the individual investor, Dally said.
"That’s what the rest of the year looks like... Delivering on our promises," he said. "There's a lot of opportunities to build. We have a bunch of product ideas we have on our roadmap we want to get to during that time."
