Commercial real estate can be a lucrative investment, but it can be hard to come up with the money to buy a stake in the first place.
That’s the idea behind RealtyShares, a platform which pools together debt and equity investments for apartments, office buildings and retail centers.
Now the San Francisco-based startup has gained enough traction to find another big investment for itself. RealtyShares is raising a $28 million Series C round led by Cross Creek Advisors, with participation from existing investors including Union Square Ventures, General Catalyst Partners, and Menlo Ventures.
Founder and CEO Nav Athwal says that RealtyShares has over 120,000 users on the platform. The startup says it has deployed over $500 million across more than 1,000 properties since it was founded in 2013.
RealtyShares aims to “diversify in real estate in a way that hasn’t been possible before,” said Athwal. He said that the typical transaction is between $2 million and $50 million.
Although once considered a site for crowdfunding, Athwal says he’d like to move beyond that label. These days, RealtyShares is focused on institutional investors and accredited high net worth individuals.
RealtyShares makes money from placement fees and asset management fees. Basically, it earns a commission at the time of the investment and also over time. Athwal claims that these fees are lower than the industry average.
Tyler Christenson, managing director at Cross Creek Advisors, sent us a note saying his team led the investment round because he believes “RealtyShares is positioned to become the leading marketplace for sub-institutional debt and equity commercial real estate investment. These commercial investment opportunities in multifamily, retail, industrial, and office properties have historically been limited to large institutions, and RealtyShares has been able to break down many of the barriers investors have faced.”
John Jarve, partner emeritus at Menlo Ventures says he invested because “creating an online marketplace for funding middle-market commercial real estate development projects is an enormous opportunity. RealtyShares is the leader in this space and has assembled a stellar team to conquer this market.”
But RealtyShares isn’t the only startup looking to disrupt the real estate investment space. Although the businesses differ, Fundrise, Patch of Land and RealtyMogul are all looking at the larger market opportunity.
RealtyShares plans to spend the money on improving its technology and brand. Athwal says they are looking to hire employees with backgrounds in data science, engineering, commercial real estate, originations, and underwriting.
RealtyShares previously raised over $35 million in equity funding.