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Young guns hit the big money bullseye

By Konrad Putzier

Flush with $31 million from a recent capital raising, crowdfunding startup Fundrise is thinking big.

Crowdfunding startup Fundrise raised $31 million to expand.
Crowdfunding startup Fundrise raised $31 million to expand.

Co-founder Daniel Miller told Real Estate Weekly that the company is looking at several ground-up developments in Manhattan and Brooklyn with a cost of more than $100 million each, for which it would seek to raise $15-40 million each through crowdfunding.

Miller said the recent capital raising will help the company target bigger projects by tapping into institutional money and rich individuals.

Fundrise hopes to spend much of the money on hiring people with contacts to big money who can “source deals”. The company is also looking to add software engineers and underwriters.

The $31 million, raised from investors including Silverstein Properties’ Tal Kerret and Marty Burger and Ackman-Ziff’s Simon Ziff, will be spent on the company itself — not on its crowdfunding projects.

Fundrise’s new focus on institutional money is indicative of a larger shift in the crowdfunding industry. So far, most crowdfunding firms have mainly targeted middle-class investors, pooling their money to finance small-scale real estate projects. But as these firms look to scale up and invest in larger projects, they are starting to turn to insurance companies and the global rich.

Miller said that, starting next month, Fundrise will allow an institutional investor to invest between $10 million and $20 million in a portfolio of buildings through its platform. So far, its investors can only buy into individual buildings.The D.C.-based company, founded by brothers Benjamin and Daniel Miller in 2012, claims to have raised close to $17 million for real estate projects through crowdfunding — most of it for deals between $200,000 and $3 million.

BEN MILLER
BEN MILLER

Its latest capital raising should enable it to significantly increase that number, and Miller said he expects the company to surpass the $50 million mark this year.

Miller was vague on whether Fundrise’s new investors at Silverstein Properties will use the site to crowdfund their own projects, such as 3 World Trade Center. “We’re working with them on a few projects,” he said.

Although he conceded specific crowdfunding projects for Silverstein aren’t in the works, he said the two companies “seem like a good fit”.

Miller, who is 26, founded Fundrise with his brother Benjamin in 2012. Since then, the company has become one of the most successful U.S. real estate crowdfunding platforms.

Although it funds projects across the country, New York is one of its most important markets.

DAN MILLER
DAN MILLER

Its current projects here include small multifamily buildings at 137 Avenue C in the East Village and at 533 Bergen Street in Prospect Heights.

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