Groundfloor is a company that has been around since 2013, which is a long time when you consider just how much the fintech industry has changed since then. They first launched their pilot offering in 2014. I was interested in the company from the early days due to their intense focus on serving the retail investor. That focus continues to this day as they built the company with a model very similar to that of LendingClub and Prosper. Only in late 2017 did they share that they would be bringing on their first institutional investor as discussed on the Lend Academy Podcast episode with Founder Brian Dally.
Until now though, the company only operated in a few select states for investors, which left a majority of retail investors on the sidelines. With their announcement today, investors across all 50 states will be able to invest on the real estate crowdfunding platform. This was accomplished through qualification as an issuer under Tier 2 of Regulation A.
What makes Groundfloor’s offering unique is that it isn’t a fund structure like other Regulation A+ deals in the industry. Investors can invest in individual real estate deals with as little as $10. The company currently lends in 27 states and has originated over $50 million across 398 deals. According to the press release, average annualized returns are 11.74%.
In addition to expanding nationwide, Groundfloor has also filed a preliminary offering circular to offer equity in the company also under Regulation A.
Conclusion
Opening up access for retail investors has always been a topic we’ve focused on here at Lend Academy even as the industry has matured. In the early days I was hopeful that the new models pioneered by LendingClub and Prosper would open all sorts of opportunities for retail investors. While that hasn’t come to fruition, I think it’s important to highlight the companies that continue to overcome the regulatory obstacles to make new investment opportunities available to the retail investor. Congratulations to the entire Groundfloor team on this accomplishment! We look forward to seeing where this news takes the company in 2018.