Groundfloor (company)

Last updated
GROUNDFLOOR Finance Inc.
Industry Crowdfunded real estate investing
Founded2013
Founders
  • Brian Dally
  • Nick Bhargava
HeadquartersBank of America Plaza,
Atlanta, Georgia
,
U.S.A.
Key people
  • Brian Dally (CEO)
  • Nick Bhargava (EVP)
ServicesReal estate peer-to-peer lending
Number of employees
102 (2022)
Website groundfloor.com

Groundfloor is an American real estate investing and lending marketplace. It was the first real estate crowdfunding company to achieve SEC qualification utilizing Regulation A+ since the regulation became operable through the JOBS Act. [1]

Contents

Groundfloor was purposely built to serve self-directed investors instead of institutional ones. By October 2018, Groundfloor had loaned more than $70 million across over 500 properties in the United States and had fundraised $13.8 million. [2] [3]

History

Groundfloor was founded in Raleigh, North Carolina, in February 2013 by Brian Dally (who launched Republic Wireless) and Nick Bhargava (contributor to the JOBS Act). [4] In March 2014, the company raised $300,000 from angel investors in the region. [5] After raising $1 million in seed funding, Groundfloor moved its headquarters to Atlanta because of the Invest Georgia Exemption (IGE) [6] which allows state residents to invest in crowdfunded projects regardless of their investor accreditation status. [7] [8]

In August 2015, Groundfloor became the first real estate crowdfunding company to achieve SEC qualification under Regulation A+, since the regulation became operable through the JOBS Act. [1] [9] The company subsequently opened investing in California, Illinois, Maryland, Massachusetts, Texas, Virginia, Washington, Georgia and the District of Columbia in the fall of 2015. [10] By late October, Groundfloor sold out every loan originally listed. [11] By December, the company had funded 54 loans and sold more than $3 million in Limited Recourse Obligation securities. It also closed a $5 million Series A round, bringing its total financing to $7.5 million. [9] The round was led by Fintech Ventures, a $100 million venture capital investment fund focused on innovation in non-bank lending, savings and smart payments, managed by Serguei Kouzmine. Groundfloor announced it would use the money to expand its business beyond the present nine states where it operates. [12]

In 2017, Groundfloor originated $30 million in loans. [13] By October 2018, the company had loaned more than $70 million across 500 properties in the United States, [2] one third of which are in Atlanta. [14] Following $4.2 million secured from 2304 investors during the 2017-18 campaign, as of October 2018 the company had fundraised $13.8 million. [3]

Platform

Groundfloor was purposely built to serve self-directed investors instead of institutional investors. [1] Its marketplace provides short-term, high-yield returns backed by real estate. Typical loans return 12 percent annually on a six-to-12-month term. [9] In November 2015, Groundfloor 2.0 was introduced, reducing the minimum investment to $10. [1]

Groundfloor targets residential-development projects. [15] They use a proprietary loan grading algorithm in addition to application review to assign a loan a letter grade and corresponding rate. Loan terms generally range from six to 12 months and financing can be in a senior or junior position. [7] [16]

In October 2015, Groundfloor introduced two new tools that expand peer-to-peer lending of real estate: quick comparison of loans and in-depth analysis of loan grading factors. [11]

See also

Related Research Articles

<span class="mw-page-title-main">Peer-to-peer lending</span> Practice of lending money

Peer-to-peer lending, also abbreviated as P2P lending, is the practice of lending money to individuals or businesses through online services that match lenders with borrowers. Peer-to-peer lending companies often offer their services online, and attempt to operate with lower overhead and provide their services more cheaply than traditional financial institutions. As a result, lenders can earn higher returns compared to savings and investment products offered by banks, while borrowers can borrow money at lower interest rates, even after the P2P lending company has taken a fee for providing the match-making platform and credit checking the borrower. There is the risk of the borrower defaulting on the loans taken out from peer-lending websites.

<span class="mw-page-title-main">Funding Circle</span> Multinational peer-to-peer lending marketplace

Funding Circle is a commercial lender. Originally it was peer-to-peer lending marketplace that allows the public to lend money directly to small and medium-sized businesses. Through this exchange businesses access lower costs of financing than they would get at a bank and the public are able to become lenders and in doing so make a return on their capital. It closed its lending option to "retail investors" between 2020 and 2022, and then announced, in March 2022, that it had made the closure permanent.

Crowdfunding is a process in which individuals or groups pool money and other resources to fund projects initiated by other people or organizations "without standard financial intermediaries." Crowdfunded projects may include creative works, products, nonprofit organizations, supporting entrepreneurship, businesses, or donations for a specific purpose. Crowdfunding usually takes place via an online portal that handles the financial transactions involved and may also provide services such as media hosting, social networking, and facilitating contact with contributors. It has increased since the passage of the Jumpstart Our Business Startups (JOBS) Act.

<span class="mw-page-title-main">Assetz Capital</span>

Assetz Capital is a British peer-to-peer or "marketplace" lender which allows private and institutional investors to lend money directly to small businesses (SMEs) and property developers.

LendInvest is a non-bank mortgage lender in the UK, and is a property lending and investing platform. As an alternative Fintech lender in the property market, LendInvest provides finance to property professionals and small and medium-sized businesses (SMEs) around the UK. It also makes it possible for individuals, corporates and institutions to invest in secured property loans originated and underwritten by its mortgage team.

Fundrise is a Washington, D.C.-based financial technology company founded in 2010 that operates an online investment platform. Fundrise has been labeled as the first company to successfully crowdfund investment into the real estate market.

Lendico was a multinational company, operating a peer-to-peer lending platform. It was taken over by Dutch bank ING Groep in early 2018 and now operates as a subsidiary. The international online marketplace for business and consumer lending was founded in December 2013 by the incubator and venture capitalist, Rocket Internet. After launching in Germany, the company expanded into Spain, Poland, Austria, South Africa, the Netherlands and Brazil. Using the crowdfunding model, the company based in Berlin, Germany, directly connects investors and private and business borrowers. Lendico is led by Friedrich Hubel and co-founder Clemens Paschke. Currently, Lendico Brazil still exists but is an independent company from Lendico Global Services.

Zencap was a German company, operating a peer-to-peer lending platform, which allowed private savers to lend money directly to small and medium-sized businesses in Germany, Spain, and the Netherlands. Using the crowdfunding model, the company based in Berlin, Germany aimed to create a direct link between private lenders and small businesses seeking loans. As of December 2014, Zencap had facilitated 5 million Euro in loans to small and medium-sized firms.

StreetShares, Inc. is a financial technology company and small business funding marketplace based outside of Washington, D.C.

In the United States under the Securities Act of 1933, any offer to sell securities must either be registered with the United States Securities and Exchange Commission (SEC) or meet certain qualifications to exempt it from such registration. Regulation A contains rules providing exemptions from the registration requirements, allowing some companies to use equity crowdfunding to offer and sell their securities without having to register the securities with the SEC. Regulation A offerings are intended to make access to capital possible for small and medium-sized companies that could not otherwise bear the costs of a normal SEC registration and to allow nonaccredited investors to participate in the offering. The regulation is found under Title 17 of the Code of Federal Regulations, chapter 2, part 230. The legal citation is 17 C.F.R. §230.251 et seq.

Crowdfunding is the practice of funding a project or venture by raising money from a large number of people, typically via the internet. Crowdfunding is a form of crowdsourcing and alternative finance. In 2015, over US$34 billion was raised worldwide by crowdfunding.

<span class="mw-page-title-main">Cross River Bank</span>

Cross River is an American financial services organization that provides technology infrastructure to fintech and technology companies. Based in Fort Lee, New Jersey, Cross River services its clients with embedded payments, cards, lending, and cryptocurrency solutions, and is an FDIC member. Cross River is noted for its embrace of the trend in the financial services sector towards API-based payment platform services.

<span class="mw-page-title-main">Funding Societies</span>

Funding Societies is Southeast Asia’s largest digital financing platform for small and medium-sized enterprises (SMEs), headquartered in Singapore. It was the first such platform in Singapore to engage an escrow agency to independently and safely manage investors’ funds. In Indonesia it is known as Modalku. The platform crossed S$ 1Bn in loans given out in 2019 making it the largest such platform in the region. To date, it has given out more than S$2.5 billion in financing through 4.8 billion loans across the region.

FinMkt, Inc. is a New York City-based financial technology company originally founded in 2014 as Crowdnetic and rebranding in 2016 to its current iteration, FinMkt. In September 2015, the company launched Lendvious.com, a multi-lender consumer loan marketplace using their Gateway Technology to seamlessly connect consumers to multiple lenders so that borrowers can compare prequalified offers from multiple lenders using one, universal application. FinMkt then pivoted the technology to build a premier SaaS, multi-lender, omni-channel, customizable point of sale financing platform that launched in the summer of 2020.

Patch of Land is a peer-to-peer real estate crowdfunding online marketplace and hard money loan provider that connects real estate developers needing financing to lenders and real estate investors. Patch of Land focuses on 6–24 months real-estate first lien mortgage loans with borrower guarantees.

<span class="mw-page-title-main">ID Finance</span>

ID Finance is a financial technology company founded in 2012 by Boris Batine and Alexander Dunaev. It is predominantly focused on emerging markets, which are characterized by noncompetitive financial services, limited availability of credit and high barriers to entry.

Capital Match is a invoice financing platform for small and medium enterprises (SMEs) in Southeast Asia. Headquartered in Singapore, it operates an online platform for SMEs to seek funds from investors.

Unison Home Ownership Investors is a home ownership investment company based in San Francisco, California.

Biz2Credit is an online financing platform for small businesses. The company provides direct funding to small businesses across the United States. The company is known for its financing products, educational resources for business such as the BizAnalyzer, and research that it publishes periodically, including the Small Business Lending Index, and its subsidiary SaaS business lending platform Biz2X.

Utah-based Lendio, founded in 2011 by Brock Blake and Trent Miskin, is a free online loan marketplace in the U.S. targeting small business owners.

References

  1. 1 2 3 4 Ryan Lichtenwald (2015-09-12). "GROUNDFLOOR Is Breaking New Ground With The World's First Regulation A+ Deal". Lend Academy. Retrieved 10 December 2018.
  2. 1 2 "Crowdfunding startup says its loans will help ease Triangle's housing crunch". News & Observer. 31 October 2018. Retrieved 2018-12-10.
  3. 1 2 "Groundfloor CEO Brian Dally Opines on IPO Results, Growth & Platform Updates". Crowdfundinsider.com. 20 September 2018. Retrieved 2018-12-11.
  4. ↑ Rebecca Grant (30 May 2013). "Groundfloor unveils 'Lending Club for real-estate' so you can get richer, faster (exclusive)". Venture Beat. Retrieved 10 December 2018.
  5. ↑ Catherine Clifford (1 April 2014). "Crowdfunding's Next Hot Frontier: Real Estate". Entrepreneur. Retrieved 2018-12-10.
  6. ↑ "Rule 590-4-2-.08 - Invest Georgia Exemption". Rules and Regulations of the State of Georgia. Retrieved 2018-12-10.
  7. 1 2 Deborah Gage (19 August 2014). "Groundfloor Raises $1M, Moves to Georgia to Crowdfund Real Estate". Wall Street Journal. Retrieved 2018-12-10.
  8. ↑ Bevington, Rickey (2015-11-10). "Company tests new waters for small-scale investors". Marketplace.org. Retrieved 10 December 2018.
  9. 1 2 3 Kiki Roeder (2015-12-11). "GROUNDFLOOR High Rises with $5M Series A, First of New $100M Fintech Ventures Fund". Hypepotamus. Retrieved 2018-12-10.
  10. ↑ "Form 1-A". United States Securities and Exchange Commission. Retrieved 10 December 2018.
  11. 1 2 Samantha Hurst (26 October 2015). "Groundfloor Announces Three New Tools to Expand Peer-to-Peer Real Estate Lending". Crowdfund Insider. Retrieved 2018-12-10.
  12. ↑ Philip Ryan (2015-12-15). "Real Estate Service Groundfloor to Expand Footprint with $5M Raise". Bank Innovation. Retrieved 2018-12-10.
  13. ↑ Beth Mattson-Telg (2018-05-08). "CRE Crowdfunding Firms Continue to Scale Up Platforms". National Real Estate Investor. Retrieved 10 December 2018.
  14. ↑ "Home flipping once again on the rise in metro Atlanta". The Atlanta Journal-Constitution. 2018-08-22. Retrieved 2018-12-10.
  15. ↑ Laura Baverman (28 April 2014). "Groundfloor stretches crowd-funding's limits". USA Today. Retrieved 2018-12-10.
  16. ↑ Rebecca Burns (8 May 2014). "Crowd lending: Groundfloor makes real estate investing accessible". Atlanta Magazine. Retrieved 2018-12-10.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.