ACG National CapitalOn Thursday, March 28, ACG National Capital hosted the 25th
annual Mid-Atlantic Growth Conference. As in previous years, the conference was
a great opportunity for ACG members and their guests to network with and learn
from the east coast’s leading business people and corporate growth
professionals.
Among the speakers and presenters at this year’s conference was Ben Miller, the
co-founder of Fundrise, a company that is revolutionizing and democratizing
real estate investment. Fundrise is the world’s first electronic real estate
investment trust (eREIT).
Real estate remains one of the most profitable and best-performing assets that
most investors have in their portfolios. Unfortunately, much of the real estate
investment is done by large, institutional investment firms that make real
estate investment out of reach for the average investor. Unlike a traditional
REIT, Fundrise allows the “crowdfunding”
of real estate from a large number of individual investors as opposed to a
smaller handful of larger institutional real estate investment firms – making
it possible for the average investor to add real estate to their investment
portfolio.
As Ben tells it, the eREIT concept behind Fundrise is something “old made new
again” – a means to curry investment dollars from sources outside of the
private equity institutions and high-net worth individuals. “The
institutionalization of real estate is actually a relatively new thing,” Ben
told Laura Dietzel, Senior Manager, Real Estate Senior Analyst at RSM, during
their fireside chat at the Mid-Atlantic Growth Conference. “I started Fundrise
after the 2008 financial crisis, when institutional investors were bankrupt,
running for the hills, absolutely not prepared for what happened.”
Into this scene entered Fundrise and its eREIT platform, which took advantage
of traditional real estate investors’ reticence to spend and changes in
government regulation to tap into new pools of capital.
“It’s a different customer base than a traditional real estate [investment firm]
or really any traditional finance institution,” Mr. Miller said of Fundrise’s
customers, most of whom navigate the company’s offerings via mobile app. Since
all you need to invest on Fundrise is capital and access to their app, one can
gather capital more efficiently than you would be able to with a traditional
approach through institutional investors,
But the benefits of Fundrise could extend beyond democratizing real estate
investment. Ben believes that services like Fundrise could play a role in
overcoming what he refers to as, “the next economic crisis.”
According to Ben, “The primary sources of capital…behind every financial
institution – with perhaps the exceptions of retirement and index funds – are
people over 65.” Ben warns that – just as the next generation doesn’t shop or
communicate the same way as the last generation – this next generation of
investors may not invest the same way as their predecessors. “There’s a
presumption that as demographics shift [towards new generations of investors],
those demographics will invest in the same way,” Ben said. “And they won’t.”
Just like how tech-savvy members of Gen X and millennials use mobile banking, online
shopping, and ride hailing apps every day, a mobile-based vehicle for real
estate investing like Fundrise could offer a way to adapt the investor
experience towards that next generations of investors.
While Fundrise is an excellent idea that could have huge ramifications on
investing in the near and long term, it only can exist thanks to recent
regulatory and legislative changes. Reforms in Regulation A+ in 2012’s JOBS Act
allowed private companies to raise up to $50 Million from the public. This
opened the door for the company’s real estate crowdfunding business model.
Fundrise is more than an example of how technology is enabling new investment
opportunities and democratizing investment opportunities that were previously
only available to the select few. It’s also an incredible example of how
shifting regulatory and legislative environments can create opportunities for
innovation and investment where they didn’t exist before.
For additional information about Fundrise and its innovative real estate
investment platform visit them online at: https://fundrise.com/
