It has been a big month for Jilliene Helman and her Realty Mogul team. The real estate crowdfunding platform, profiled here last year, has just finished it’s first year in business closing $15 million in deals on properties worth over $100 million. But the really big news is being released today. Realty Mogul has just announced that Canaan Partners has led a $9 million Series A round, the largest ever investment in a real estate crowdfunding platform.
I should note that Canaan Partners also led the Series A round for Lending Club back in 2007 and partner Dan Ciporin has been a Lending Club board member since then. So, Helman will be able to draw on the deep experience from Canaan on building an online platform to scale. While Ciporin will not be joining the Realty Mogul board (another Canaan partner Hrach Simonian will) Helman said to me in a call yesterday that he will be a tremendous resource for her and her team. Canaan is clearly becoming more active in the space, having also invested in Orchard late last year.
What will Helman do with her new cash war chest? She has two main priorities: more deals and building our her team.
“Today, on the site we typically have 2-4 deals listed, we are going to increase that number substantially in coming months,” she said. “Our near term goal is for investors to have access to up to 20 different deals at any one time.”
58 Crowdfunded Real Estate Transactions
To date, Realty Mogul has completed 58 transactions, both debt and equity deals. The debt transactions are mostly bridge loans provided to developers interested in rehabbing a property and then selling it. These are usually single family homes or apartment complexes where investors can earn an annualized return in the high single digits. These investments are typically paid off in less than a year – in fact, of these 58 transactions that Realty Mogul completed, 17 have now been fully paid. This includes their first listing that I invested in back in March of last year that paid off in three months.
There are also plenty of equity deals as well. These have longer time horizons but provide investors with potentially higher returns. While the focus to date has been on residential properties more commercial properties are coming online. These kinds of investments were simply unavailable to all but the very wealthiest individual investors just two short years ago. Now, any accredited investor can pretend they are Donald Trump and build a diversified property portfolio.
Helman said this new round of funding will mean fast growth in 2014. She expects to add around 30 employees in the next 120 days, up from just five people today. She also expects to end 2014 with $50 million in closed investor deals. This is obviously very rapid growth but is probably necessary to be the leader in the increasingly competitive online real estate crowdfunding market.
The $11 trillion real estate market is still functioning in basically the same way as it did in the 20th century when it comes to financing. Clearly, there is an opportunity to disrupt this industry but right now this is still very early days for Realty Mogul and for real estate crowdfunding in general. But with $9 million of cash on their balance sheet and the backing of Canaan Partners, Realty Mogul has every chance of establishing themselves as the clear number one in this market.