Real estate crowdfunding platform AssetAvenue has raised $3 million in funding from investors including Matrix Partners and NetEase.
The infusion is earmarked toward technological enhancement of the platform and growing its investor bases.
“We are thrilled to have such an incredible caliber of investors supporting AssetAvenue’s mission to revolutionize the real estate investment industry by removing the barriers that have traditionally prevented individuals from investing in lucrative commercial real estate opportunities,” said David Manshoory, founder and CEO of AssetAvenue.
Matrix Partners have a solid track record, with the list of companies in their portfolio including Apple, Gilt Groupe, JustFab, Oculus VR, and Zendesk. Fifty companies they invested in had successful IPO’s while 75 went on to successful M&A events. They claim a consistent top five venture firm finish for returns to investors.
“AssetAvenue is the most compelling real estate crowdfunding platform available today,” said Josh Hannah, General Partner of Matrix Partners. “The management team’s deep experience and clear focus in the real estate debt market sets it apart from the competition and we believe it will grow to become the largest player in the commercial real estate peer to peer lending space.”
NetEase is one of the largest publicly traded internet and technology companies in China.
“We are thrilled to team up with AssetAvenue as they continue to reinvent real estate financing,” said Benjamin Ha, Managing Partner of NetEase Capital. “The real estate financing market has not kept up with the pace of other consumer technology innovations and we believe David and his talented team are well positioned to create the leading peer-to-peer real estate lending platform.”
Other participants include Hong Kong early stage VC Vectr Ventures, Grandpoint Capital Founder Russ Meyer, LegalZoom Founder Brian Lee’s capital fund Bam Ventures, and Launchpad LA.
AssetAvenue Founder and CEO David Manshoory spoke with BT about the new investment and shared his thoughts on the state of the industry.
In what ways are you looking to build your proprietary lending platform? Is it strictly a matter of efficiency or are you looking at other ways?
At AssetAvenue, we are integrating technology and big data to originate, underwrite, fund and service commercial real estate loans. We have built a proprietary underwriting and analytics model to rate loans so that investors can efficiently deploy capital based on their risk-reward profile into a highly attractive, fixed income asset class. Borrowers benefit by leveraging an efficient, online platform to apply for and quickly fund their real estate project from thousands of investors, including hedge funds, family offices, banks, asset management firms.
In dealing with venture capitalists what have you found their attitude toward real estate crowdfunding to be in comparison to more traditional businesses? Have they been quick to accept and grasp it? Did you have to overcome any skepticism?
Venture capitalists look for businesses that disrupt traditional business models. AssetAvenue is a debt platform that modernizes the real estate investing and lending industries and brings them into the 21st century. Venture capitalists have been overwhelmingly positive about the disruptive opportunities of a platform like ours, especially since it creates benefits for so many players in the industry. VC’s are less concerned about the potential in real estate crowdfunding, and more focused on the experience and track record of the leadership team in place to execute on the business plan. AssetAvenue’s team represents some of the brightest individuals in real estate, technology, law and finance industries, and we are excited about the caliber of investors that have partnered with us.
Real estate crowdfunders are attracting more institutional investors. Is that a sure sign of the industry’s staying power?
Institutional investors already have an appetite for real estate debt as an attractive investment option, so it stands to reason that a debt focused crowdfunding platform like ours simply offers them a more efficient alternative to deploy capital into the asset class.
The fact that institutional investors are coming to crowdfunding does further demonstrate the anticipated growth rate and potential of the crowdfunding industry. AssetAvenue has institutional investors on its platform and is diligently working with them to serve their investment appetite.
In May you published an article on how commercial real estate provides a hedge against inflation. Can you summarize why that is?
When you invest in commercial real estate equity it does serve as a hedge against inflation, because the value of your equity increases as property values increase.
However, investing in equity also means you are in a first loss position during a market correction. Although investing in real estate debt does not provide a hedge against inflation, it is a high-yielding fixed income investment and your capital is in a last loss position, thus providing you with the most protection from market fluctuations. AssetAvenue and its investors value the downside protection that debt provides them over any imminent threat of inflationary pressures, which is why we do not provide equity investment opportunities on our platform.
How will next year’s predicted rate hikes affect investors and the industry? How will things change?
Interest rates affect the availability of capital and the demand for investment. These capital flows influence the supply and demand for real estate properties and, as a result, they affect property values. Interest rates impact the cost of capital, which in turn impacts your projected cash-on-cash yields. Therefore, in the short term, rising interest rates would put downward pressure on property values.