Crowdfunding startup RealtyShares unable to secure new financing, halts new investments
By Maggie Wilson @ Real Estate Daily
November 12, 2018

Everything was going swimmingly for RealtyShares just over a year ago.

The real estate crowdfunding startup had just purchased one of its biggest rivals, Acquire Real Estate, and had plans to grow its investment in commercial and multifamily real estate, as well as “fix and flip” and construction loans for single-family housing.

Then the company ended up selling its residential lending business to Lima One Capital and shifting its focus entirely onto commercial and multifamily lending.

But now, one year later, the company has fallen on hard times and will be laying off much of its staff and stop accepting new investments on its platform.

According to an email sent to the company’s investors (which was obtained by HousingWire), RealtyShares has been unable to secure new operating capital and will be shifting away from active investing.

Therefore, the company is laying off an unknown number of employees who were focused on originating new business.

Key Takeaways

  • The company ended up selling its residential lending business to Lima One Capital and shifting its focus entirely onto commercial and multifamily lending.
  • The company will be laying off much of its staff and stop accepting new investments on its platform.
  • From this point forward, RealtyShares’ focus will be servicing our existing investors and approximately $400 million of assets under management

Excerpt

However, the company is not shutting down entirely. According to RealtyShares, the company will now be focusing on servicing its existing investors and the assets it currently manages. According to the company, it worked “aggressively” over the last few months to secure new funding for its operations, but was unable to do so.

Jason Fritton, Patch of Land’s co-founder and CEO, said that these types of things are an unfortunate part of a growing industry.

“As the industry matures, there will continue to be players in the space who are not able to make it despite their best efforts,” Fritton said. “We are proud of our growth and we continue to enjoy a healthy business with strong fundamentals.”

And, here’s the full message RealtyShares sent to its investors:

To our platform investors and operating partners:

Five years ago, RealtyShares was founded with a mission to connect capital to opportunity. With over $870 million invested across more than 1,100 projects, we have built one of the top online real estate investment platforms. We’re helping investors meet their financial goals and deploying capital to real estate operating companies to execute value-add and development strategies for properties across the U.S.

As an early stage company, we have relied upon venture capital to fund our operations. Over the past six months, RealtyShares aggressively pursued a number of financing options to continue growing the business. 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.

From this point forward, RealtyShares’ focus will be servicing our existing investors and approximately $400 million of assets under management. This transition will have no impact on the underlying real estate investments. Investments will continue to be managed and distributions will continue to be made. Investors will continue to receive asset management updates and year-end tax information.

We are committed to serving our existing investors and sponsors and have a team dedicated to supporting our ongoing operations.

The RealtyShares Team

Original articles posted at HousingWire  and The Real Deal