A Dublin fintech startup that uses AI to guide investments in Airbnb properties has acquired a complementary real estate tech startup called the "Robinhood of real estate" – uniting their missions to help non-wealthy investors break into the real estate market.
ReAlpha Tech Corp. plans more acquisitions in the fragmented short-term rental market, founder and CEO Giri Devanur told Columbus Inno.
The company completed the acquisition of Columbus-based Rhove on Monday for undisclosed terms. The two had started talks in December, Rhove founder and CEO Calvin Cooper said in an exclusive joint interview.
Cooper joins ReAlpha's advisory board, and will lead the search for other technology and real estate acquisitions, Devanur said.
"We believe we can acquire a series of companies and build a platform that can access every aspect of this real estate business," he said. "The market has become fragmented. There is no unified player."
Rhove was among Columbus Inno's inaugural Startups to Watch last year, and ReAlpha made the 2023 class.
Both last year ran SEC-approved crowdfunding campaigns open to everyday, non-accredited investors. Both were delayed by regulators and then got rolling right as the Fed hiked interest rates by four points in a span of months – chilling the real estate market.
ReAlpha raised $9 million of a $75 million maximum toward investing in Airbnb properties.
"I would have loved to raise a lot more capital," Devanur said. "As we all know, the last six months have not been the best in the space."
Separately ReAlpha secured credit lines, joint ventures and capital commitments that will help it build a property portfolio in the hundreds of millions.
This month, the startup launched its first campaign for direct investment in a specific property, as little as $500 to own a fraction of an Orlando-area townhouse. That campaign ends Friday.
Rhove, the DBA of Roost Enterprises Inc., had a different investment target but developed technology that augments ReAlpha's fractional ownership program.
In July the startup posted the first investment circulars for fractional real estate ownership at $1 a share, starting with a four-unit German Village property. The startup had four property offerings by November, according to regulatory filings, including a historic vacation lodging property in Sandusky near Cedar Point. Long-term it aimed for a portfolio of $40 million in commercial properties owned by everyday investors.
Right as Rhove found product-market fit, drawing 10,000 enthusiastic members, interest rates soared and venture capital firms suddenly got tight with capital, Cooper said. Rhove also had developed technology to represent real estate ownership as a digital token on the blockchain, but last year's collapse of FTX and resulting skepticism about cryptocurrency in general hurt that strategy.
Ultimately Rhove's four investment offerings for multifamily properties did not raise the minimum, so the startup refunded all investors and wound down operations in December, while quietly in talks with ReAlpha.
Rhove had raised a cumulative $10 million from "incredible supporters," Cooper said: Columbus VC firm Drive Capital LLC and Kaufman Development founder Brett Kaufman. Cooper had three co-founders but no employees.
Uniting made sense, Devanur said. ReAlpha can take on Rhove's technology and the "legal puzzle" that Cooper solved for getting the SEC to OK fractional ownership, he said, and apply it to Airbnb investing instead of multifamily and commercial real estate.
Both Devanur and Cooper still believe in democratizing investment despite the outside forces buffeting the sector last year. They hope Rhove's 10,000 former members join ReAlpha's growing audience of 70,000.
"Rich people shouldn't be the only ones that have access," Cooper said. "If anything we need to prove we're going to double down."
