Rodrigo Niño: Above the crowd
How Prodigy Network became </br>New York’s most active</br>crowdfunding firm
Rodrigo Niño doesn’t quite fit in with his fellow crowdfunding entrepreneurs.
At 45, he is older than most of his peers. And in a brazen defiance of the standard tech dress code of jeans and an open collar, Niño, who is well over 6 feet, dons a suit. In a field that glorifies the nerd, Niño has the slick air of a politician who sounds like he’s on the campaign trail when he talks about his vision of democratizing real estate investment.
But most importantly, Niño’s Prodigy Network pursues projects of a size other crowdfunders only dream of.
“He is the most successful real estate developer using crowdfunding in the U.S.,” said David Drake, a close observer of real estate crowdfunding as chairman of private equity advisory firm LDJ Capital and head of the Soho Loft Media Group, an event platform and advisory firm focused on startups.
Lawrence Davis, president of Shorewood Real Estate Group, which partnered with Niño on his five New York deals, calls him a “visionary.”
In the three years since Prodigy began crowdfunding in New York, Niño has funded the acquisition of three Manhattan high-rise buildings. He also recently went into contract to buy two NoMad properties in the former Ring Brothers portfolio. He claims to have raised $100 million from global investors — a figure no other U.S. platform even comes close to.
In fact, Prodigy’s deals are so large that many other crowdfunding platforms don’t even view the firm as a competitor.
“I have great respect for Prodigy and they’ve built a great company, but I don’t really consider them competition,” said Patch of Land’s CEO Jason Fritton. “They compete for larger, specialized projects and their [minimum individual investments] are much larger than what most crowdfunding companies require.”
But while his deal volume, and his Wall Street office, put him in a league with some of New York’s more established real estate financiers, Niño still talks like an upstart outsider looking to shake up the business.
“Commercial real estate is a very boring asset class and I am very happy disrupting it,” he said.
And although Niño said Prodigy is in conversations with institutional investors to “team up in a way that makes sense,” he doesn’t see the firm tapping institutional funds en masse through its online platform, as some of its peers do.
“I have to admit that I consider wealth concentration [a market failure] and I think it is a problem,” he said. “I think the crowd should have access to projects that were privy to the guy writing $60 million checks before. Why not?”
A head start
Like other real estate crowdfunding platforms, Prodigy raises funds for projects online from myriad private investors.
But two crucial factors set Prodigy apart: first, the firm is an equity partner in the projects it finances; second, most of its investors are foreign. Those two facts help explain why it has raised so much more money than its peers.
Niño had something of a head start in the sector. He began crowdfunding projects in Latin America in 2009.
Those overseas connections allowed him to crowdfund his first New York project in 2012. At that time, crowdfunding real estate projects from U.S. investors was still illegal, but tapping into foreign money was allowed under an exemption in the rules governed by the U.S. Securities and Exchange Commission.
By the time real estate crowdfunding in the U.S. was officially legalized in September 2013, Prodigy was already a veteran in the field. And today, foreign investors still make up 90 percent of Niño’s “crowd.”
“He had the foundation of big families [from Colombia and Argentina] that had already invested with him,” said Drake.
And while other crowdfunding platforms merely act as an intermediary between developers and investors, Prodigy co-develops all the projects it funds. This solves a glaring problem: most crowdfunding platforms raise funds on a project-by-project basis, which can take months. But developers often need to close their purchases quickly. As a result, many developers are reluctant to commit to crowdfunding, fearing that the money might not be available on the closing date. Since Prodigy is also the developer, that problem doesn’t exist.
This flexibility also enables Prodigy to pursue large deals in Manhattan.
At 84 William Street and at 234 East 46th Street, Prodigy is financing the development of two extended-stay hotels under the AKA brand, in partnership with Korman Communities. At 17 John Street in Lower Manhattan, and at its two planned Ring-portfolio acquisitions at 331 Park Avenue South and 114 East 25th Street, the firm is planning a hybrid of short-term rental apartments with shared workspace.
Niño’s partner in all these deals is Lawrence Davis’ Shorewood, which sources the deals and arranges bank financing while Prodigy raises equity from the crowd. (Like most developers, Prodigy and its partners finance the majority of a project’s costs through loans.)
“I view crowdfunding equity as a very flexible, user-friendly form of common equity,” Davis said.
Stumbling into the crowd
When Davis met Niño in 2006, the Colombia native was new to New York City, though not to real estate.
Niño grew up the son of a printing-press owner in Bogotá and went to a Swiss school there (he still speaks some German).
After college, in 1996, he briefly started an ad agency in Bogotá (“we were really, really bad”). Two years later, he launched a real estate brokerage that specialized in finding apartments for Latin Americans to buy in Miami, a city he knew well from vacations with his parents. He eventually got a job as vice president of sales at the Miami brokerage Fortune International, before setting out in 2003 to launch Prodigy Network as a new development marketing firm.
Niño rode the Florida real estate boom, growing his business to 80 people by 2007, while honing his development chops on the side by building multifamily properties in Panama.
In 2006, he moved Prodigy to New York and in 2007 began marketing the Sapir Organization’s Trump Soho and the William Beaver House at 15 William Street.
“The timing couldn’t have been worse,” he recalled.
As the market tanked, sales stalled, and Niño found himself with little to do. In hindsight, the stalling of his condo-marketing career proved fortuitous, because it led him to shift his firm’s focus from marketing to crowdfunding.
In 2009, a Spanish developer named Emilio Borella approached him with plans to build Bogotá’s tallest skyscraper. “I thought he came to me for sales of condos,” Niño recalled. But Borella wanted Niño to tap his network to raise money for the project through crowdfunding, a practice that has long been legal in Colombia. Niño ultimately raised $220 million for the tower, which is dubbed BD Bacatá.
That success convinced him to try crowdfunding in New York, where he was still living.
“We had been discussing [the possibility of buying 84 William Street] and he had said that he was very successful in Colombia and looking to export this model to U.S.,” Davis recalled. “It came about organically.”
While Niño came to crowdfunding almost by chance, he also credits attention deficit disorder with helping him become a successful entrepreneur.
“Over time, I learned that people with ADD have a 300 percent higher chance of becoming entrepreneurs,” he said.
“When you’re an entrepreneur, you need to be doing 50 million things at the same time, so it fits the profile of somebody with ADD perfectly,” he added. “So I think I became an entrepreneur not necessarily by choice, but by necessity, probably.”