Crowdfunding startup RealtyShares to cease investing, faces mass layoffs

Company, backed by $63M in venture capital, failed to land more funding: sources

National /
Nov.November 07, 2018 01:20 PM

Nav Athwal and Alexis de Belloy (Credit: iStock, Twitter, and RealtyShares)

Real estate crowdfunding company RealtyShares is set to lay off the vast majority of its staff and faces an uncertain future following a failed attempt to secure more funding, according to multiple sources familiar with the matter.

The startup has raised more than $63 million from venture capital players like Union Square Ventures, Cross Creek, Hone Capital and Blue Mountain, as well as Starwood Capital’s Barry Sternlicht and Chinese firm Danhuan Capital. Its downfall would be a heavy blow to the young crowdfunding industry, which still harbors ambitions to revolutionize real estate finance.

A source close to the firm said that last-ditch efforts to find a buyer for the company last week failed. The source said RealtyShares, formerly led by ex-Cushman & Wakefield CEO Ed Forst, still has some money in the bank and will ensure that customers who invested in real estate projects through its platform will be paid back.

“Over the past six months, RealtyShares aggressively pursued a number of financing options to continue growing the business,” RealtyShares wrote in an email to customers on Wednesday. “Unfortunately, despite our best efforts, we were unable to secure additional capital. As a result, we will not offer new investments or accept new investors on the RealtyShares platform.” The email noted that RealtyShares will keep a team to manage existing investments through its platform and that the “transition will have no impact on the underlying real estate investments.”

Founded in 2013, the California-based company claims to have raised more than $870 million for more than 1,160 real estate projects. RealtyShares is part of a wave of crowdfunding startups, along with companies like Cadre, Fundrise and RealtyMogul, launched in the wake of the 2012 JOBS Act, which made it legal to advertise private investments online under certain conditions.

RealtyShares’ co-founder and CEO Nav Athwal left the company in November 2017 and Forst took over as his interim replacement. The current CEO is Alexis de Belloy, a former vice president at Homeaway.


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)
Real estate stocks push up this week as U.S.-China trade tensions ease
Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
1440 Broadway and CIM Group’s Shaul Kuba (Google Maps, Getty)
CIM closes on $400M refi for 1440 Broadway
CIM closes on $400M refi for 1440 Broadway
Acore Partner Warren de Haan. (Acore, Getty)
Acore Capital raises $1B to provide rescue cash to hotels
Acore Capital raises $1B to provide rescue cash to hotels
 61 Bond Street in Brooklyn, iStar's Jay Sugarman and GFI's Allen Gross (Photos via Google Maps, iStar and Urban Land Institute)
GFI sells ground under Ace Hotel in Brooklyn for $45M
GFI sells ground under Ace Hotel in Brooklyn for $45M
AKA United Nations at 234 East 46th Street (Google Maps, iStock)
Bank forecloses on Prodigy’s AKA United Nations hotel building
Bank forecloses on Prodigy’s AKA United Nations hotel building
From left: 410 Tenth Avenue, 100 Park Avenue, a rendering of 230 East 20th Street, a rendering of 30 Morningside Drive, SL Green's Marc Holliday (Photos via Google Maps, Getty, Gramercy Square, 30 Morningside Drive/Illustration by Kevin Rebong for TRD) 
These were the largest Manhattan real estate loans in January
These were the largest Manhattan real estate loans in January
Ron Perelman with 27-33, 35 and 41 East 62nd Street (Getty; Google Maps)
Citi looks to sell $193M in defaulted loans on Ron Perelman’s buildings
Citi looks to sell $193M in defaulted loans on Ron Perelman’s buildings
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...