In a volatile real estate investment environment, sponsors need every advantage they can get when it comes to finding and retaining investors.
By taking the manual process of real estate investment online and creating an innovative platform for both General and Limited Partners, InvestNext is making raising and distributing capital as easy as clicking a button. The Detroit-based platform has grown in leaps and bounds since launching in 2016, streamlining the often-tedious capital management process and making the real estate investment space more democratic in the process. TRD sat down with the InvestNext team to learn how their platform is removing the barriers that have long bogged down the process of taking capital and reinvesting it in our communities.
Born in Detroit
InvestNext Co-Founder Michael Gisi cooked up the first iteration of the firm’s core software in 2016 after learning that most investment management systems were decades behind the times.
“A family friend is the CFO of a real estate investment trust, and he showed me the antiquated cap table management system that they were using at the time,” recalls Gisi. “It was a Windows 95 application with a command shell. It was pretty rough, and I thought, ‘We could definitely do better than that.’”
After doing a deep dive into the world of cap table management, Gisi created the earliest version of what would become InvestNext. He soon joined forces with Co-Founders Kevin Heras and Matthew Attou to expand the software into a platform that would change the relationship that both sponsors and investors have with their real estate investments.
“Our mission is to democratize real estate investing and empower investors to make a meaningful impact on the communities they invest in,” explains Attou, who emphasizes the importance of Detroit, InvestNext’s hometown, in shaping the company’s philosophy. “I fell in love with the idea once I was able to see the impact that real estate could have on the city.”
The passion that drives the InvestNext team to continue innovating the next generation of investment management software comes from watching Detroit go from being a cautionary tale that Heras “learned about in my middle school civics class” to a city that is in the process of being revitalized by real estate investment.
“Capital being invested in this place is causing it to undergo a renaissance,” says Heras. “It’s just totally unrecognizable in the space of seven years.”
The One-Stop Real Estate Investment Management Platform
In many ways, InvestNext’s platform is the logical evolution of real estate investment management in the digital age.
“When you think about how these large sums of capital were transacted in the old days, you imagine a mix of phone calls, emails, and physical paperwork, with some Excel spreadsheets and visits to brick and mortar banks in the middle,” explains Heras. “Realistically, it would take three to seven days for a transaction to happen, and that was one transaction from one investor to one investment fund.”
Not only has InvestNext completely digitized that process, but the company is constantly adding new features and innovating ways to add value for sponsors and investors.
On one platform, GPs can manage their cap table, raise capital, distribute payments to LPs, and work with co-sponsors, all the while benefiting from financial institution grade security backed by SOC2 compliance. InvestNext’s automated cap table and distribution platform supports a wide range of fund structures, all without having to manage calculations outside the system.
Meanwhile, onboarding for LPs through the Investor Portal is streamlined and straightforward. InvestNext brings a host of common LP tasks onto a single platform, reducing friction and keeping capital flowing by funneling the entire process of deal selection, document e-signing, integrated accreditation, KYC/AML verification, and ACH funding into the Portal.
The result is the type of easy-to-use online experience that we’ve all become accustomed to in the age of Amazon and Robin Hood, where both sides of a transaction are verified by a central platform. InvestNext has taken a bespoke, manual process that traditionally takes days and turned it into something that can be accomplished in hours, all the while ensuring compliance with SEC regulations via fully integrated accreditation and KYC verification.
VP of Revenue, Dan Richardson, regularly speaks with GPs and highlights how InvestNext enables sponsors to focus more on finding new investors and deals rather than getting bogged down in minutiae. “Before moving to InvestNext, a lot of manual work went into keeping investors happy,” he explains. “Now, because they can reduce time spent fielding phone calls and sending emails by 90%, our clients have been able to increase their target base by 9x, focus on growing their firm, and ultimately raise money more effectively.”
In the world of real estate investment, this innovation couldn’t have come at a better time.
“The sentiment we’ve gotten across the ecosystem is that raising $1 today feels like raising $5 three years ago,” says Heras. “So what has become critical in that process is that our customers deliver a very clear, concise experience while building trust with their investors.”
A History of Innovation
InvestNext helped pioneer the digital RE investment management space, bringing a number of critical features to market long before their competitors. The platform was the first to offer end-to-end digital payments, both inbound funding and outbound payments to LPs, as well as being the first to integrate KYC/AML compliance services.
The platform was also the first to bring crucial sponsor tasks online. InvestNext was the first platform to offer co-sponsor and joint functionality with privacy controls in a digital space, as well as debuting the ability to do capital calls with the push of a button. This history of innovation put InvestNext in a commanding position within the digital RE management space, an advantage the firm has continued to press with a wave of new features that will shore up the platform’s foundational goal of streamlining and democratizing the process of real estate investment.
“It’s an incredible opportunity for our clients to provide trust and transparency and build relationships with investors,” says Richardson. “Not only to retain existing investors, but drive additional repeat investing opportunities through the platform.”
Growing Fast
InvestNext has seen 100% year over year growth since launching in 2016, proof that the system not only works as intended, but was desperately needed by GPs and LPs alike.
“We have over 1,600 GPs on our platform, along with 75,000 active investors,” says Richardson, who emphasizes that, by giving investors easy access to GPs and vice versa, InvestNext is facilitating reinvestment in communities and “democratizing real estate investing.”
“Collectively, our clients have $200b+ in AUM, and they actively manage $15 billion in capital contributions on the platform,” says Gisi. “We’ve now processed well over a billion dollars in ACH payment distributions alone, and that’s out of many more billions in actual distributions calculated and sent through the platform.”
But Attou focuses on another number when talking about the impact that InvestNext is having on the real estate investment world. “We have $6.1 billion in commitments raised on our platform,” he says. “To me, that’s quite meaningful. That went from LP to GP on InvestNext and is now deployed into physical assets out in the real world.”
If you are a Sponsor, GP, or Fund Manager, schedule a demo to see why top RE fund managers are choosing InvestNext to automate capital raising and management.