News Column

How Institutional Players Can Enter the Real Estate Crowdfunding Game

August 26, 2014

David Drake



The real estate crowdfunding marketplace has been dominated by young tech entrepreneurs from the start.  These entrepreneurs leverage technology and the internet to bring this new innovation  to mainstream real estate investing.

Lately, the appearance of institutional players onto the marketplace is altering the industry in a profound way. Institutional players have alluded to their many years of industry experience and wide network of investors as their edge over the small startup firms.

However, their long dominance in the industry deserves a second look.

In essence, with poor technology and poor marketing strategies, the big players cannot compete effectively in an industry already dominated by startups that have set a high standard in these areas.

Groundbreaker, a New York-based real estate crowdfunding platform, has identified this gap and is working towards bridging it by transitioning to a full SaaS (Software-as-a-Service) platform. They aim to provide new players with everything they will need to create and manage their own fully-automated and customized real estate crowdfunding website.

Cutting Edge Technology

Launched in 2012, Groundbreaker occupies a unique position in the industry by standing at the crossroads of technology and industry experience. It is the first firm designed to serve the real estate crowdfunding platforms.

The firm is setting the pace by restructuring its business strategy to help both its existing clients and the new players entering the marketplace (both startup developers and institutional players) to meet their technology and marketing needs.

While many stakeholders are concerned about the competitive landscape tilting in favour of the institutional players, Groundbreaker is poised to create a level playing field for all.

With their white label real estate portal as an SaaS platform, a real estate firm can raise funds for its project through its own customized crowdfunding platform. It is designed to allow companies to have full control over all their deals. A firm can either decide to raise funds through its platform directly from its established network of investors or by featuring it on Groundbreaker's platform. However, traffic is still redirected back to the issuer's platform for the deal process to be completed.

The uniqueness of the service is in the model

Unlike other crowdfunding platforms that centralize the deal process on their platform by acting as a marketplace where developers and investors meet, Groundbreaker's unique model allows its users to connect directly with their established networks or with the global crowd by helping them build their own customized crowdfunding platform.  

In addition, they bring in their wealth of experience in the real estate industry into play by helping their clients develop sound business strategies, understand governing laws and regulations, and provide guidance on how to secure their platforms. In particular, they help newcomers in the crowdfunding marketplace understand and take advantage of the relevant titles of the JOBS Act.

While most realty crowdfunding platforms serve solely as intermediaries that connect developers and investors, Groundbreaker's service is offered to a broader spectrum of players in the industry. Its unique application is offered to users that include placement agents, syndicators, real estate crowdfunding platforms, and developers. Adopting the firm's technology affords users the opportunity to increase productivity by simultaneously cutting redundant tasks and saving costs.

The firm is providing professional advice on strategies for fundraising governing realty crowdfunding.

Team to break new grounds

The Groundbreaker team has over 25+ years and $68 billion in collective industry experience with over $1 trillion of institutional connections to their credit. Its founders has combined years of experience in real estate and the software application development industry.  

Joey Jelinek, CEO of Groundbreaker, brings in immense experience from working with institutional players on Wall Street. During the height of this career, he was instrumental in facilitating real estate transactions worth $14 billion. Roger Smith, co-founder and CTO, leads the software development team at Groundbreaker. He has previously worked for companies that include PlotWatt and SugarCRM where he helped develop innovative software solutions. He holds a masters in machine learning and computer science from Columbia University. Stefano D'Aniello, co-founder and COO is in charge of the legal issues. In his career, he served as an associate at White & Case LLC.

Market Impact

Groundbreaker's white label service has made it easier for real estate firms to create and manage their own crowdfunding website. This is capable of triggering a boom in real estate crowdfunding platforms as many startups and institutional players will take advantage of this opportunity to join the playing field.

Moreover, as the industry landscape becomes crowded in the near future, platforms like Groundbreaker that have succeeded in marrying technology with experience will provide a new benchmark for the industry.

When asked who are their biggest competitor, Joey Jelinek has this to say, "Our biggest competitor is old habits. Even though customers see the value and love using our platform, getting people to change old habits and try new things is never an easy task - especially when investors and money are involved."

From this vantage point, looks like Groundbreaker have their work cut out for them: To live up true to their name.

David Drake is an early-stage equity expert and the founder and chairman ofLDJ Capital, a New York City-based family office, andThe Soho Loft Media Group, a global financial media company with divisions in Corporate Communications, Publications and Conferences. You can reach him directly at David@LDJCapital.com.


 


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Source: Equities.com


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