Adam Chapnick knows a few things about getting in on the ground floor of an entirely new movement.
As the first ever hire at crowdfunding pioneer Indiegogo, Mr. Chapnick had an insider’s view of crowdfunding’s metamorphosis from a raw idea into an industry that has revolutionized funding for start-ups, artists and causes located anywhere in the world.
Mr. Chapnick recently left Indiegogo to become the Chief Strategy Officer at Asset Avenue, the commercial real estate crowdfunding platform that closed its first deal, a piece of the Trump Palace, in under 48 hours. Officially less than a year old, Asset Avenue looks to make its mark in real estate much like Indiegogo did in crowdfunding.
Mr. Chapnick’s roots are in movies and film, and like many people accustomed to making reality from nothing but a seed of an idea, he is passionate about the process. In speaking with him it is clear he sees value in every aspect of what he does, and along with that comes a sense of personal responsibility for, and ownership over, whatever he becomes involved with. Adam Chapnick recently spent a few minutes with Bankless Times to discuss his new job, real estate crowdfunding, and where the industry is headed.
What is it about Asset Avenue that enticed you to join them?
I see the opportunity to make a difference in a new space like we made at Indiegogo by disrupting an experience that is confusing and locked up, for people to get all the benefits that have been available to others for a long time. Those without a mid-six figure income can use tried and true methodologies to take advantage of a marketplace that has so far largely been unavailable to them.
Crowdfunding can be very data driven. We can use those numbers to educate and to make good decisions. I love the challenge of mobilizing people, getting them excited about a complex idea, and then having them share it.
How do you share those ideas?
Some of them I know and some of them I know how to find out. It’s important to learn all of the hot-button issues for both sides. I know what they are from the investor’s side, as I am an investor too, but I need to learn the other perspectives.
Your background is in entertainment and film. What lessons did you learn from that period in your life that translate well to your work with Asset Avenue?
In entertainment, the most valuable creative talent to hone is storytelling. It works in macro and micro environments. What’s your core objective with certain constituents? What resonates?
People are searching for resonance. You need to be resonating with people’s deepest desire to be saved from their pain. Your goal is to be resonating with that pain so they can see your solution to that pain, that need. Connect with them, in a way they will understand, in a way that matters to them.
You were at Indiegogo from the beginning. What was it like to be in the middle of the birth of an industry and do you see a similar future at Asset Avenue?
They are similar and different at the same time. When we started at Indiegogo, the term crowdfunding didn’t even exist. That came along two years later.
People forget. When you start a new methodology for an industry that is centuries old, there is plenty of repeating, trying this way and that way. There is a long time when it should be working and it doesn’t. The tipping point comes when key people understand it and communicate it outward.
We have that here at Asset Avenue without the enormous existential piece. Now people have heard about countless game changing stories in crowdfunding and they know how to apply it in a narrow, specific sub-vertical.
What are the next areas we expect to see real estate crowdfunding branch into?
All of the asset classes within real estate are covered. The interesting thing to watch is how people will carve out niches.
America’s industrial and commercial real estate is at its oldest recorded average or close by several measures. At the same time many entrepreneurs struggle to get loans from traditional lenders. Real estate crowdfunding seems to have come along at the perfect time in both cases.
In many ways it is a perfect marriage. I look forward to seeing what Title III brings.
I recently interviewed David Manshoory and he spoke about how important proper it is to vet real estate companies you partner with. This would be especially important given that the lower minimums attract novice investors who have yet to develop the knowledge base. Because of that, do you feel a heightened sense of responsibility?
Absolutely. We hope a key value we add is that we are one of the few doing this who are tried and true real estate people. We have good algorithms that are proven. We are also experts that do all kinds of things so you don’t have to.
That does not mean you don’t have to do your homework. You still need a balanced portfolio. Diversify in that class and keep your head about you.
A few years ago no one was even talking about commercial real estate like this. When you invest in start-ups you can expect to lose everything 70 percent of the time, but with real estate there are all sorts of inherent benefits, like having that underlying hard asset. It’s a win-win much of the time.
The April 4 edition of the New York Times had a feature describing how peer lending is becoming a misnomer in some sectors as institutional investors and funds are grabbing the most attractive loans before others get a chance. As real estate crowdfunding gains popularity, will that happen here? Is that OK if it does?
Institutional investors will definitely get involved in real estate crowdfunding. They are already investing in real estate as an asset class, so it’s natural to assume they would incorporate deal flow from reputable online portals into their portfolios as well.
However, as far as the highest-quality deals being reserved for them, Asset Avenue has a stringent due diligence process that we apply to all deals that come our way, and we end up turning down the vast majority of them. All accredited investors – retail or institutional – will have access to the approved deals, and as of yet we’re not looking at allocating a certain percentage to retail versus institutional. It’s really exciting to see all the different stakeholders interested in this market and we look forward to accommodating everybody.
The industry you just left has been taken to task for what some would call selective censorship of controversial campaigns. Does the crowdfunding industry have a responsibility to keep certain types of campaigns off their sites?
I like to look at the benefit that crowdfunding as a whole is bringing to the world. What is transformative is we are an open platform. That does not mean we do not have a moral compass, but right now the focus has to be on firmly establishing the industry.
The crowd is wise in terms of figuring out the relative merits of a campaign. Down the road it is a valid question to ask – how do we play a part in keeping heinous things off sites.