Groundfloor (company)

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]

GROUNDFLOOR Finance Inc.
IndustryCrowdfunded 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)
Websitegroundfloor.com

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

References
  1. 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. "Crowdfunding startup says its loans will help ease Triangle's housing crunch". News & Observer. 31 October 2018. Retrieved 2018-12-10.
  3. "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. 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. 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. 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.
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