DC Startup Fundrise Is Redefining How We Invest in Real Estate
Building Manhattan’s 3 World Trade Center is projected to cost more than $2 billion, and difficulties paying the bill have delayed construction several times.
Fundrise, an online platform for investing in real estate, is helping fix that problem and others like it. The company’s technology opens doors for individuals who want to invest in local real estate developments, but maybe don’t have millions of dollars lying around. The concept has blossomed since the company launched in 2012, and in the last year, the Fundrise team has almost doubled. Kendall Davis, an investment associate at Fundrise, said her favorite days at work are the ones when a whole deal is sold out in one day.
The company has seen 1,500 percent growth in deal volume since May 2014. Currently, Fundrise holds the Class 1 bonds for 3 World Trade Center, which provide an annual return of 5 percent over 60 months to investors.
“Typically, an investor would need to prove assets of at least $100 million to be able to invest [in 3 World Trade Center],” Davis said. “We were able to give our users a chance to do so for $5,000.”
All the employees are keen on re-maneuvering the real estate market, which translates into a very low-ego kind of company.
“It’s not uncommon to walk into the office and see the CEO doing dishes, or someone whose job is in accounting going to CVS to buy stamps for a marketing project,” said Jordan Sale, director of marketing. “People are so excited about what we’re doing, the energy is so high, people will do anything they can to move it forward. Sometimes that means doing your defined role, sometimes it means stepping in to do something else.”
The company is well known in 10 markets in the U.S. and is aiming to achieve a similar level of recognition in at least 25 markets by early 2016. Progress took off in May 2014, when Fundrise raised a Series A funding round.
“It was a $35 million funding round and gave us ton of momentum, meaning more hiring and funding more deals,” Sale said.
The company’s goal is to double the number of employees in the next year. Sale said the co-founders approach hiring with a basic notion: Everyone is different.
“They recognized early on that not everyone is the same, people work and learn in different ways and it’s good to let them do what they need to do to be successful,” Sale said. “The way to find and keep great employees it to let them be themselves. Don’t micromanage their lives. Let them be free to determine where some of their extra energy is best spent.”
That means flexible hours are acceptable on a case-by-case basis and that the company does whatever it can to support employee interests and personal goals. Sale said one of the main things the company is looking for in new hires is a passion for learning beyond real estate and crowdfunding. In the interview process, one of the questions job candidates are asked is: “What’s the last thing you geeked out about outside of work?”
“Because we want excited, energetic, and curious people, that has helped build a culture focused on continuous learning,” Sale said. “The other thing is our co-founders are always reading a million things at once. Articles, books, podcasts, documentaries. They’re both constantly learning and they have really ingrained that in the culture.”
Fundrise is currently working to open up investing internationally, beginning with Canada, the U.K., and Australia. From its inception, investors from around the world have been interested in Fundrise’s concept.
“We get hundreds of emails a month from investors in other countries who want to invest or people who want to crowdfund real estate in other countries,” Sale said. “The U.S. market is very secure in comparison to other economies around the world, so there’s a lot of interest in accessing this real estate.”
Early on, Davis said that everyone at Fundrise hoped and expected their investors would become unofficial Fundrise ambassadors, and that word of mouth would be the company’s biggest business driver.
“We were wrong,” Davis said. “Talking about investing and money is still somewhat taboo and, in many cases, something that takes place behind closed doors.”
That is slowly changing, she said, as more and more users have positive experiences with Fundrise and begin to see real cash flow. Davis, who previously worked at Wall Street giant Citibank, said she’s learning a lot about investor preferences and tendencies with Fundrise’s new investment methods.
“Often investing can become an emotional experience,” she said. “It’s helped to inform the way we communicate with our investors, to make sure that we’re very, very transparent and that we promote smart decision making by encouraging diversification.”
April Nowicki is a contributor at Street Fight.