A Dublin startup using AI to guide investments in Airbnb properties raised a total of $9.1 million in its "mini-IPO" that had paused for several months and restarted in a changing economy.
An eventual real IPO is one option on the table.
ReAlpha Asset Management Inc. had filed the offering for the maximum $75 million allowed using Regulation A of the 2012 Jobs Act to sell to everyday, non-accredited investors. Shares were $10 each with a minimum investment of $1,000. There's no guarantee how much any such campaign raises.
“ReAlpha is pleased with the investor interest it received, especially in light of the challenging macroeconomic environment, and looks forward to leveraging this capital to advance its growth strategy and mission to democratize the short-term rental economy," the company said in a written statement to Columbus Inno.
Meanwhile, in December ReAlpha reserved the Nasdaq ticker symbol RHOM, pronounced "our home," as part of a potential private financing deal: Gem Global Yield LLC SCS, a Luxembourg-based alternative investment group, committed up to $100 million over three years – but only if ReAlpha is listed on public markets.
"We have not taken any other steps towards a public listing, (which) could be a part of how we grow, right alongside building our portfolio of vacation rental properties," according to a company LinkedIn post recapping 2022. The reservation is good for two years.
Parent company ReAlpha Tech Corp. is one of Columbus Inno's Startups to Watch for 2023.
CEO Giri Devanur, a serial entrepreneur who took his last company public, founded the company in late 2020 with a Texas real estate developer, who remains a director but left operations.
Devanur had moved to Dublin that year from New York City after a vacation stay in Bridge Park – whose developer, Brent Crawford of Crawford Hoying, became ReAlpha's first investor in a round to build its software.
The mini-IPO had first launched in fall of 2021, but was suspended early last year after some states objected that ReAlpha had not filed required "blue sky" notices. The campaign re-launched in late summer. ReAlpha stopped accepting new investments after Jan. 19, according to regulatory filings.
Crowdfunding was the company's mechanism to open up wealth creation through real estate investing, typically restricted to wealthy individuals accredited by the SEC.
Startups raised a total of $329 million using Regulation A in calendar 2022, an average of $7.6 million per deal, according to research by KingsCrowd Inc., a ratings and analytics platform for online private markets.
ReAlpha has secured several other significant sources of financing, including a December joint venture with a Singapore-based investment firm that eventually could help it build a half-billion-dollar portfolio of Airbnb rentals. ReAlpha will own 51% of the properties, and Saiml Pte. Ltd. the other 49%, according to regulatory filings.
A first phase leveraging cash and long-term debt will amass as much as $200 million in "rental-ready" properties across California, Arizona, Florida, and Tennessee. Depending on results, the second phase could add up to an additional $300 million.
In November, the startup also secured a $200 million credit line from New York City-based Churchill Real Estate, which could help purchase 500 properties.
At first ReAlpha looked for properties to renovate, then pivoted to rental-ready properties and unique experiences, such as a deal to introduce spherical treehouses to the U.S. market.
For the six months ended Oct. 31, the company had a $1.6 million loss and just under $60,000 in rental income, according to its semiannual report for the fiscal year that ends in April. The company previously said it would start acquiring properties in early 2023, seeking a sweet spot between rising interest rates and falling home prices.
