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GROUNDFLOOR public offering launch an ideal time to look back
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GROUNDFLOOR public offering launch an ideal time to look back

News Desk
News Desk
January 31st, 2023
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One of the best parts of having covered the alternative finance sector for seven years is watching successful companies grow from the beginning. Added points to those who make it while not always following the path well-taken.

GROUNDFLOOR is one such company that has taken a methodical approach to growing a company, while staying true to its goal of opening private capital markets to all investors. Today the real estate platform launched an online public offering allowing any GROUNDFLOOR account holder to directly purchase stock in the company. The goal is to reach 20 percent public ownership.

“During last year’s successful public offering, our customers invested $4.2 million in stock to own 14 percent of the company,” said co-founder and CEO Brian Dally. “We started GROUNDFLOOR with the radical idea that with the right product and platform, people are smart enough to make their own decisions in real estate investing. Who better than the investors who benefit from our mission to finance its acceleration?”

Brian Dally

Mr. Dally said GROUNDFLOOR’s strategy has been to develop a solid base so they are well prepared to take a leap when the opportunity best presents itself. That happened in 2016 when they went from selling only in their home state of Georgia to nine states in total. 2017 was spent digesting that growth so in 2018 they were ready to go.

“There were a lot of opportunities in there but we’ve just been very disciplined in continuing to focus on retail investors,” Mr. Dally explained.

Maintaining that discipline was a valuable trait as GROUNDFLOOR’s leadership plotted their growth strategy, Mr. Dally said. They were very deliberate when adding sales staff because they wanted the right cultural fit. Product development underwent a similar depth of analysis to ensure new offerings fit their markets. They also wanted to better know their online clients.

With the planning complete GROUNDFLOOR is prepared to dive deeper into selected markets and that involves going back to its roots, Mr. Dally said. They want to develop better relationships with borrowers who doing the types of work GROUNDFLOOR wants to support. Those borrowers know their markets and GROUNDFLOOR wants to learn what they are seeing in their neighborhoods. 

These are the borrowers GROUNDFLOOR would love to see participate in this public offering too.

“These are ways of getting deeper into developing those relationships and further be better able to spot opportunities,” Mr. Dally explained. “If you only operate online you’re just skimming the surface.

“We’re free to go where the business leads us.”

GROUNDFLOOR was born in an era when people still talked about actual “peers” in peer-to-peer lending and regular “crowds” in various crowdfunding models. But they are one of the few to stick with a focus on regular investors, who can ante in with as little as $10. A minimum investment in the public offering is 10 shares at $150.

“It’s exciting for investors as they can use the platform to generate great returns with less money,” Mr. Dally said. “The non-financial benefits include being able to invest in communities where they know the neighborhoods.”

GROUNDFLOOR stays away from what Mr. Dally said are frothy markets, but luckily there is more demand than supply in most of the country. They look for projects at or below the median property value of the region so they are not at the top of the market should a slowdown occur. 

In looking at residential housing supplies for sale, the rental markets, and the cost of lots for new development, they see plenty of opportunity, mostly driven by the expressed preferences of millennials.

“The consumer wants urban and urban-like settings but there’s only so much supply,” Mr. Dally explained. “Millennials are not open to aged and dilapidated housing.”

Coming out of the recession there was plenty of talk about democratizing the financial system and providing more access to all. But hope mostly dissipated as algorithms took the “peer” out of peer-to-peer and other platforms, including some prominent real estate ones ran to institutional capital as they sought to scale. GROUNDFLOOR doesn’t eschew institutional capital but they are not beholden to it either, and that makes them an anomaly.

“Three and a half years later it’s pretty amazing we have no competition,” Mr. Dally said.

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