Sharestates said it crossed the $100 million threshold in capital raised through its online crowdfunding platform, marking a milestone for the year-old startup.
That the New York-based firm was able to reach the $100 million mark so quickly is largely due to its institutional partnerships.
Co-founder Allen Shayanfekr recently told The Real Deal that around 80 percent of the capital Sharestates raises through its online platform comes directly from investment funds, and only 20 percent from crowdfunding investors in the strictest sense.
In contrast, rival platforms like Prodigy Network, Patch of Land and Fundrise have raised most or all of their funds to-date from small-time investors – the so-called crowd.
Sharestates, founded by Atlantis Organization veterans Allen Shayanfekr, Radni Davoodi and Raymond Y. Davoodi, specializes in bridge funding for small commercial and residential real estate projects. Most investments offered on its platform come with a term of 12 months and a minimum individual investment of $1,000. The startup claims to have returned $21 million to its investors to-date, with an average annual return of 10.4 percent.
In May 2015, Texas-based Ranger Direct Lending Fund agreed to invest up to $30 million through Sharestates – a target it has since exceeded. “It brings more validity, more traction to the platform,” said Sharestates’ co-founder Allen Shayanfekr of the agreement with Ranger.
As The Real Deal previously reported, Crowdfunding startups increasingly turn to institutional investors as a quick and relatively easy way to access capital. But while partnering with investment funds offers the chance to grow more quickly, it also raises questions over the appeal of the traditional crowdfunding model.