A Manhattan-based developer who has raised $171 million through crowdfunding for a skyscraper project in South America plans to replicate the fundraising strategy for a Financial District hotel project.
The developer, Prodigy Network, wants to raise $31 million from equity investors in $100,000 increments to convert an apartment building at 17 John Street into an extended-stay hotel. The company has previously raised $171 million for its mixed-use skyscraper project in Bogota, Colombia, in $20,000 increments.
Prodigy is looking to tap into a push by the Securities and Exchange Commission to lift the ban on private companies advertising investments that aren’t registered with the agency, people familiar with the developer’s plans told the Wall Street Journal. The change is expected to kick in Sept. 23.
Unlike with crowdfunding sites such as Kickstarter, where proceeds go to fund a project that is not expected to produce returns, investors through real estate crowdfunding will share in any proceeds, which is why SEC rules are relevant.
“We have learned that crowdfunding not only democratizes investments, it also makes projects viable that otherwise would not be possible,” Prodigy’s chief executive officer Rodrigo Niño told the newspaper.