A serial entrepreneur who'd taken an enterprise software business to Nasdaq listing in 3 1/2 years talked to several eager venture capitalists about his new venture in AI-powered real estate investing.
But the company, ReAlpha Tech Corp., is now trying to raise $75 million the hard way – as little as $1,000 at a time. Launched in late September, the Dublin startup is using Regulation A of the 2012 Jobs Act to sell $10 shares in a "mini-IPO." Investors are buying into a portfolio of properties the company will buy, renovate and manage as vacation listings on Airbnb. Eventually individuals will be able to buy fractional shares in individual properties.
"The whole point is simply that it’s not easy. We love challenges," said Christie Currie, ReAlpha's chief marketing officer. "It’s more important for us to create community; we value democratizing investing."
ReAlpha had previously raised $6 million in August, led by Dublin developer Crawford Hoying, to develop its software. It borrowed from banks to buy its first 16 properties in Dallas and Miami.
The $75 million investment offering is for more tech and down payments on properties, while the company will seek a $200 million credit facility to rapidly expand in vacation markets in Florida, Currie said. The company cannot comment on how many shares have sold.
"We have seen a lot of traction very quickly, is what I can say," she said in an interview.
Home-hunting is on hold during the fundraising, Currie said. Some of the Dallas-area units have been fixed up and are renting out on Airbnb for $150 to $193 a night, hosted by "Ami" in Dublin under ReAlpha's logo.
"We are seeing that the model is doing above what we even would have projected," Currie said. "Our initial use case was we need to build the technology; we’re not going to go to market without knowing the technology works."
Despite selling shares to retail investors, ReAlpha will not be listed on a stock exchange and is subject to less restrictive reporting requirements to the U.S. Securities and Exchange Commission. For example, it files semiannual instead of quarterly financials.
Rentals will provide short-term revenue while the software will determine when to sell the properties at a profit after a few years, according to business model outlined the offering circular.
Co-founder and CEO Giri Devanur has worked in IT more than 25 years. In 2010 he founded WinHire, a personnel management software company. In June 2014 he was named CEO of Ameri100 Inc. after merging WinHire into it. Ameri100 went public at the end of 2017.
Co-founder and COO Monaz Karkaria, a longtime real estate investor, sold the company some of its initial Dallas properties.
The AI is meant to mimic Karkaria's brain, Currie said. It evaluates multiple variables – walkability, nearby amenities, neighborhood occupancy and crime rates – to generate a slate of potential properties for humans to review.
"She can only evaluate five or six properties a day (manually), max," Currie said. "Technology is the top of the funnel. We’re not removing the human capital."
Everyday investors would not have access to the large down payments, market intelligence and exclusive listings ReAlpha can obtain for them, the circular said.
"This (short-term rental) market is changing," Currie said. "Larger scale operators are entering. Airbnb needs millions of hosts to meet demand."
Currie, who grew up in Upper Arlington and graduated from Miami University, was one of the first two hires by the co-founders. A childhood cancer survivor, she founded Zandaland LLC, an online community for pediatric cancer patients.
ReAlpha landed in Central Ohio "by chance," she said.
Devanur, who lived in the New York City area, picked the new hotel in Dublin's Bridge Park as a midway point for him and his wife to meet with their grown children for an anniversary celebration. The couple fell in love with the development and moved there.
Then a friend called, asking Devanur how a regular person can come up with the down payment to invest in real estate worth $400,000. Devanur cold-called Brent Crawford, of developer Crawford Hoying, who became first investor and board chairman.
"The rest was history," Currie said. "People are so helpful and so excited. We see a lot of momentum and we love what we’re creating."
