Investment in private markets has long been reserved for the ultra-rich. But thanks to tech start-ups, this process is much more accessible to those who aren’t members of the wealthiest American “1 percent.”
FinancingA company that anyone can invest in real estate with a minimum investment of only $ 10 flashes into the venture capital market with the goal of raising a new $ 1 billion growth equity fund to invest in late-stage tech startups. We are entering the market. Announced today. The new fund will be evergreens. That is, it has an indefinite life. This is a structure that investors can come and go as they like, unlike the traditional VC model.
Ben Miller founded Fundrise in 2012 to provide individual investors with access to the private real estate market, and has since been CEO of the company as one of the top 20 investors in the field. Miller told TechCrunch in an interview.
“When I started Fundrise, all the big realtors said we couldn’t do that. It’s funny. [and we] It shouldn’t be, “Mr. Miller said.
Miller’s strategy of using technology to reduce the costs associated with real estate investment seems to have paid off, despite the initial backlash. Fundrise manages over $ 2.8 billion in real estate equity on behalf of 300,000 active investors on its current platform. According to Miller, the company is growing rapidly and is expected to be in the top 10 in terms of private real estate size. Within the next two years.
If all goes according to plan, the new growth equity fund will reflect Fundrise’s current real estate offerings in its structure, allowing investors to invest just $ 10 each. Sweater Ventures and assignHowever, the Fundrise offer is more widely available, as the former has a high minimum investment of $ 500 and the latter is only available to accredited investors.
All investment decisions of the fund are approved by a three-member investment committee consisting of Miller and Fundrise’s Chief Strategy Officer and Chief Operating Officer. Miller added that the company is aiming to raise its $ 1 billion target from customers and new users who are already using the platform.
According to Miller, the fund requires investors a flat management fee of 1.85% and the standard “2 and 20” fee structure used by most traditional VCs (2% management fee and 20%). It will be significantly lower than the success fee).
According to Miller, the low cost of Fundrise’s products is due to the company’s use of technology to streamline and automate processes such as shareholder records management. Fundrise has proved that it can run on a low-cost model of real estate investment while providing strong returns (real estate funds will increase by 5% this year and S & P 500 will decrease by more than 20%), which will make it happen. You will know if it is over time. The same can be done for venture capital.
“The approach we’re trying to take is basically not doing what the traditional venture industry is doing. [to] Hire a lot of sales people and analysts who actually spend time on sales and meetings and try to convince people to pay. It’s the old-fashioned way of doing business. That’s how IBM did business 50 years ago, but it’s no longer the way SaaS companies do business, “Miller said.
When it comes to Fundrise’s ability to raise lucrative deals, Miller stands now as many start-ups desperately need capital as venture capital trading slows sharply in the face of a recession. I am convinced that raising it is the ideal timing.
“I’m fortunate that the tech market’s expiration is a better starting point for us. This is a once-in-a-generation opportunity … if we were to do this in 2021, we would break in. Wouldn’t have been possible. [to the venture ecosystem]”Miller said.