High home prices and low housing inventory has stopped many Americans from buying a home over the last year. That has been particularly true across the Southeast, as a recent Zillow ranking found seven out of the ten “hottest” housing markets are in the region right now.
But increasing real estates values have moved a new crop of people to invest in the space. And that has meant big opportunities for local startups helping bridge the gap between real estate deals and the “everyday investor.”
Groundfloor, the Atlanta-based investing and lending marketplace that allows individual investors to jump in on real estate deals, has seen revenue grow 114% with 160,000 users and $220 million in assets under management.
“Public stock markets have exposed a larger cohort of retail investors to wild and unpredictable price swings. Many have responded by trying out and allocating more into new alternative investments such as our short-term, high-yield real estate-backed notes and loans. Real estate debt is this new option that people are realizing offers the lowest possible volatility without sacrificing returns,” the Groundfloor team told Hypepotamus.
Following that growth, the team announced this week $118 million in new capital, coming through a mix of different funding avenues. That includes $5.8 million in equity from Medipower, a publicly-traded commercial real estate firm, $7.2 million from individual investors on SeedInvest, and a $5.0 million convertible note from 86 individual investors.
Back in 2015, the startup raised a $5 million institutional round from Atlanta-based Fintech Ventures.
Alongside the investment, Medipower will join in on Groundfloor’s real estate loans alongside other retail investors and invest $100 million on the platform, further validating the company’s premise that “retail investors deserve their share of the same pie on which hedge funds, private equity, and all other financially privileged players have been enriched in the modern Wall Street-oriented era,” co-founder and CEO Brian Dally, said in a statement. “This new strategic relationship supports our mission to deliver that and is purposefully structured to be consistent with our vision for a level playing field in saving and investing.”
Medipower’s Chairman Yair Goldfinger will also join Groundfloor’s board.
The team isn’t done growing. They are looking to add 50 positions, which are heavily concentrated in engineering and product. It is also expanding into the Jacksonville, Florida area, which is number 2 on Zillow’s list of “hottest” real estate markets.
“We like Jacksonville as a complement to other markets like Atlanta and Raleigh, NC because the macroeconomic factors that drive and support Jacksonville’s growth are quite different, providing our investors with another form of diversification,” the Groundfloor team added.
They added that the new funding will “accelerate our ability to build the critical mass needed to support local concentration across an increasing number of U.S. cities and regions. Long term, this will enable another layer of risk management available to investors who want to leverage it.”