A Triangle startup is taking aim at remaking financing for real estate.
Groundfloor has closed on its first funding and says it will launch projects before the end of the year that will revolve around corporate real estate financing based on the crowdfunding concept.
The funding announcement and formal launch come a day after the SEC announced proposed guidelines for some aspects of crowdfunding.
Among the investors is Capitol Broadcasting’s American Underground. Capitol is the parent company of WRALTechWire. Also listed in an announcement formally announcing the funding today is Bandwidth Labs.
One of Groundwork’s co-founders, Brian Dally, is a former Bandwidth executive who helped that firm launch Republic Wireless, a provider of voice and data communications.
According to an SEC filing, Groundfloor has raised $125,000 from four investors. It still looks to raise another $25,000.
A Disruptive Goal
The company’s goal is nothing less than to “disrupt” the “$240 billion commercial real estate finance market.”
“The web has a message for Wall Street,” said Dally, who is Groundfloor’s chief executive officer. “Real estate innovators and doers frustrated with the bank underwriting status quo are ready to be unleashed.
“Banding together, depositors and self-directed investors can do everything traditional lenders do, but better—to the benefit of a broader base of people well beyond accredited investors and powerful incumbent financial institutions.”
Dally co-founded the firm along with Nick Bhargava. The two met at NC IDEA’s Groundwork Labs in Durham.
Bhargava has a finance background and was an early supporter of the crowdfunding concept. He has worked for or with the Financial Services Roundtable, SEC, FINRA, TD Waterhouse and RBC Financial Group.
The two lay out their mission at the firm’s website:
“Financial markets in the 21st century are broken, and the evidence is all around us. Based in the Raleigh-Durham-Chapel Hill Triangle region of North Carolina, Groundfloor champions democracy, transparency, speed, efficiency and freedom as the path to building a new kind of finance. The Web is primed and ready to move beyond bloated financial institutions that are “too big to fail” themselves, but fail the rest of us regularly.
“Our first product revolutionizes the financing of real estate development projects, to the benefit of developers, savers and investors. It’s a tested and true type of savings vehicle with a new and important twist, coming available in 2013 to anyone with $100 to lend. … The banks aren’t invited, but you are.”
The advisory board for the firm includes Michael Goodmon, vice president of real estate for Capitol, and Chris Matton, general counsel at Bandwidth. Jason Wilden, executive director and co-founder of HQ Raleigh, which offers co-location space and services to startups, also is an adviser.
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