Crowdfunding for real estate deals is gaining steam in the commercial sector.
A crowdfunding website known as FundRise has raised more than $31 million in its first round of raising funds from investors to finance commercial real estate projects, The New York Times reported.
The Washington, D.C.-based real estate crowdfunding firm has also been breeding a new form of investors in commercial transactions - once known as the exclusive domain of wealthy investors and private equity firms.
The site allows individuals to invest as little as $100 in hotels, apartment buildings, and other development projects. Fundrise's mission has been to let any resident of a community invest in a real estate project being developed there.
The latest financing round in raising $31 million was led by Renren, a large social networking company based in China. Several real estate firms and individuals also backed the financing round.
Interest in crowdfunding has been growing in recent months. For example, Realty Mogul announced a $9 million funding round from the venture capital firm Canaan Partners. Last month, the Carlton Group, a real estate investment banking firm, also had begun a crowdfunding portal that would offer $1 billion worth of deals globally.
"When we started, no one had ever heard of real estate crowdfunding," said Ben Miller, one of the Fundrise founders.
But now three years later, more investors are embracing the concept. In just the last few months, the site owners say that nearly 300 developers have signed on to the site.