Groundfloor is an American real estate investing and lending marketplace. It was the first real estate crowdfunding company to achieve SEC qualification utilizing Regulation A+ since the regulation became operable through the JOBS Act.[1]
Groundfloor was purposely built to serve self-directed investors instead of institutional ones. By October 2018, Groundfloor had loaned more than $70 million across over 500 properties in the United States and had fundraised $13.8 million.[2][3]
History
Groundfloor was founded in Raleigh, North Carolina, in February 2013 by Brian Dally (who launched Republic Wireless) and Nick Bhargava (contributor to the JOBS Act).[4] In March 2014, the company raised $300,000 from angel investors in the region.[5] After raising $1 million in seed funding, Groundfloor moved its headquarters to Atlanta because of the Invest Georgia Exemption (IGE)[6] which allows state residents to invest in crowdfunded projects regardless of their investor accreditation status.[7][8]
In August 2015, Groundfloor became the first real estate crowdfunding company to achieve SEC qualification under Regulation A+, since the regulation became operable through the JOBS Act.[1][9]
The company subsequently opened investing in California, Illinois, Maryland, Massachusetts, Texas, Virginia, Washington, Georgia and the District of Columbia in the fall of 2015.[10] By late October, Groundfloor sold out every loan originally listed.[11] By December, the company had funded 54 loans and sold more than $3 million in Limited Recourse Obligation securities. It also closed a $5 million Series A round, bringing its total financing to $7.5 million.[9] The round was led by Fintech Ventures, a $100 million venture capital investment fund focused on innovation in non-bank lending, savings and smart payments, managed by Serguei Kouzmine. Groundfloor announced it would use the money to expand its business beyond the present nine states where it operates.[12]
In 2017, Groundfloor originated $30 million in loans.[13] By October 2018, the company had loaned more than $70 million across 500 properties in the United States,[2] one third of which are in Atlanta.[14] Following $4.2 million secured from 2304 investors during the 2017-18 campaign, as of October 2018 the company had fundraised $13.8 million.[3]
Platform
Groundfloor was purposely built to serve self-directed investors instead of institutional investors.[1] Its marketplace provides short-term, high-yield returns backed by real estate. Typical loans return 12 percent annually on a six-to-12-month term.[9] In November 2015, Groundfloor 2.0 was introduced, reducing the minimum investment to $10.[1]
Groundfloor targets residential-development projects.[15] They use a proprietary loan grading algorithm in addition to application review to assign a loan a letter grade and corresponding rate. Loan terms generally range from six to 12 months and financing can be in a senior or junior position.[7][16]
In October 2015, Groundfloor introduced two new tools that expand peer-to-peer lending of real estate: quick comparison of loans and in-depth analysis of loan grading factors.[11]
