In a significant boost to the real estate crowdfunding market, private equity investment platform CrowdStreet announced Monday that it has closed a $43 million round, with the equity and debt capital raised being used to fund the company’s continued growth in the market.
TIAA is making an equity capital investment through its newly launched TIAA Ventures, which seeks investments in promising fintech companies. In addition, notable commercial real estate industry firms such as Cypress Equity Investments, The Dinerstein Companies and Foulger-Pratt joined existing venture capital partners Grotech Ventures, Rally Ventures, Seven Peaks Ventures and Green Visor Capital in the funding round.
To date, CrowdStreet has raised more than $3.6 billion for over 670 commercial real estate projects across the U.S. since its founding in 2013.
Still, although CrowdStreet is generally known as a real estate crowdfunding company, CEO and co-founder Tore Steen prefers to use another term to describe the Austin-based firm.
“In terms of crowdfunding, I like to use the term online syndication, the reason being that syndication has been a term we know in the commercial real estate space,” said Steen. “What we’ve changed is to have brought the old syndication model of raising capital through institutions, ultra-high-net-worth individuals and family office money, the way it’s traditionally been done, into the online paradigm.
“By doing that, we’ve opened up new sources of raising capital for commercial real estate developers and operators with individual investors that haven’t been able to access that offline, more limited access model.”
The goal of the fintech-proptech crossover company is to enable accredited investors to invest directly in large-scale commercial real estate projects across all asset types for minimum amounts of capital, as low as $25,000, said Steen.
CrowdStreet’s 2014 founding was spurred by the creation of the federal JOBS Act (Jumpstart Our Business Startups) in 2012, said Steen.
“The JOBS Act was created and the decentralization of capital formation became possible,” he said. “Before the JOBS Act, you couldn’t advertise that you were raising capital. You couldn’t use the internet to do that. It usually takes a decade until you start to see the industry starting to adopt and transform.”
The industry does indeed appear to have caught up.
“We’ve watched for several years as CrowdStreet has evolved its fintech platform to better serve real estate project sponsors and its community of investors,” said Shawn Lese, chief investment officer and head of Real Estate funds management for the Americas at Nuveen, an investment affiliate of TIAA. “CrowdStreet’s innovation is modernizing, demystifying and streamlining access to commercial real estate so that more investors have the potential to reap the benefits of investment in the asset class.”
CrowdStreet Advisors manages more than $400 million in client assets across private real estate funds and separately managed accounts. In 2021, the company achieved its first billion-dollar year, when its investor community funded $1.2 billion across single-property deals, professionally managed funds and separately managed accounts.
As of August 2022, 138 investments on the platform have been fully realized, generating an average 17.5 percent internal rate of return.
Philip Russo can be reached at prusso@commercialobserver.com.
