More On Fundrise And First Interaction With iFunding And Realty Mogul

It has been about a week since I starting promoting our develoment company on Fundrise. This is still the most impressive real estate "crowdfunding" portal I have seen to date. Our network has swelled to 37 investors in 7 days with an aggregate of $3.38M in capital to place given their current liquidity reported on the site. That's not bad for a week's worth of work. Several of the investors are new relationships for us and I am in the process of setting up meetings with those willing to do so. We still want to be careful with what investors we choose to partner with given the recission risks and infancy of crowdfunding.

Apparently you need 50 or more in your network to promote investments. This was kind of annoying because it was not disclosed up front and we spent some effort this week trying to hit the 25-investor mark. Things have grown organically of late though and I expect to hit the 5-investor mark this week without spending a lot more time on growing things.

The best part about this experience to date is that we're meeting new investors that we would not have found otherwise. It also allows us to communicate with investors that are waiting on some liquidity event to invest with us. We can allow them to follow us more passively than having to pick up the phone and cal them constantly to inquire about their interest in investing. I expect that several of these people will invest with us at some point in 2014 without me feeling like I am being intrusive by calling constantly to see where things are at with them freeing up capital.

I spoke for about an hour with a well-known securities attorney this week about the possibility of setting up a Regulation A (or "A+" colloquially) placement for our equity raising needs. We are toying with the idea of starting a hard money fund with separate shares as part of this activity to appeal to the broadest array of investors and to satisfy the desires/wants of the more popular crowdfunding sites. The new "tier 2" raises for Regulation A allow one to raise up to $50M, publicly solicit, and avoid onerous auditing requirements. I'll do a separate post on Regulation A after we run things to ground with a few other securities attorneys and my network of experienced promoters.

This week I also set up an account with a new company called iFunding. This company is set up more for smaller investments for fix-and-flip projects. I have traded several emails, Dropbox invitations, etc. with Sohin Shah to try to get us approved to raise money on their site. I'll post more about this experience after we have had a chance to meet with him next week.

Realty Mogul is one site I have avoided a bit to date because they don't allow folks to raise money for development projects. Since this is a large portion of what we're currently raising money for I have shied away from it some. I did create an account today to peruse the investments and it appears that they like helping investors fund loans for their investments. I have several meetings set up with local servicers, underwriters, etc. to hopefully set up a hard money option for our Regulation A placement; perhaps with a separate set of shares if that is feasible. This will allow us to develop relationships with investors that desire a first position deed of trust and perceive this as less risky than equity investing. The best investors from this pool could hopefully be converted to equity investors in the future after we establish a longer relationship with them.

I'll post more about what I find with all of this investigation next week sometime.