D.C.-based commercial real estate investment firm Fundrise raised an iPO. But the company isn't going public.
In what it's calling an "Internet Public Offering," Fundrise raised $14.7 million in just 24 hours from its existing user base. Investors who use the platform to invest in real estate investment trusts without having to go through the public market were invited to invest in Fundrise, itself, earlier this week.
The crowdsource investment platform opens up the real estate investment game to anyone through its online platform. By recruiting various real estate investment trusts, or REITs, to its platform, people are able to invest in different projects. One example of such a project is Maketto on H Street, one of its early projects, and Fundrise now has more than 80,000 members and nearly $3 billion worth of real estate investments to its name.
In the first day, the company surpassed its target goal by 146 percent and oversubscribed the raise by around 50 percent.
"We're pleased with the results of this and it's such a positive moment for our growth, but at the end of the day, we are a realty company, so it's heads down," said Kendall Davis, director of investments at Fundrise.
The idea for the iPO came back in 2012, around the time the company started, Davis said. Fundrise's CEO and founder Ben Miller just had a random idea—"What if we let the users invest in us, too?"—and the company finally brought it to fruition this week. But the idea to let the public invest in a company's "iPO," rather than go through the pageantry that is the IPO roadshow with investors made sense given Fundrise's mission.
"We are very much committed to low-fee investing and allowing anyone to invest easily online in a diverse portfolio," Davis said. "That mission has always been embedded in our DNA."
Investors in Fundrise aren't just anyone. Only exisiting, long-standing Fundrise members were able to partake in the event this week, and Davis said a lot of the investors currently look at themselves as partners in the company. In the next few weeks, Davis said the startup is hoping to be able to offer more shares to other potential investors; however, because the offering is so oversubscribed currently, they have to wait for a green light from the SEC. It's important to note that Fundrise's iPO crowdsource raise is possible because of a federal regulation change that lowers the barriers for investing in the 2012 JOBS Act.
"It's been a very strong showing," Davis said. "Our investors who invest on the platform are interested in participating in the momentum of the technology company that is Fundrise."
The idea of a crowdsources investment isn't brand new for the D.C. metro area. In November, Ivy City-based Republic Restoratives distillery was one of four companies invited to raise a round of funding using Indiegogo's brand new private equity platform. On the platform, the distillery raised about $300,000, as of today and with one day left in the raise.
"We always are trying to stay on track, and that means as soon as this is done, it's on to the next thing," Kendall said.
