In early February we launched AlphaFlow Fund I live for investment, and it has been an incredibly exciting couple of weeks. We took just over 5 hours to cross $1 million in investments, and since then we’ve added family offices, hedge funds, and even a founder of one of the real estate crowdfunding platforms as investors in the fund.
If you haven’t had a chance to take a look yet, the idea behind the Fund is pretty straightforward. In short, we’ll allocate your funds across 75-100 loans using multiple platforms to give you a level of diversification you can’t find anywhere else in real estate crowdfunding today. We do all of the work, and if we don’t hit the 9% target return rate, we won’t take a dime in fees.
In preparing the Fund, we’ve met with platforms all across the country to speak to them about their underwriting process, lending guidelines, performance history, and how AlphaFlow Funds can grow with them in 2016. We were incredibly impressed by the fantastic teams at established platforms such as Patch of Land, LendingHome, and PeerStreet. We were similarly impressed by newer platforms like Fund That Flip, which are less than six months old but have tremendous executive teams with robust experience and thorough underwriting processes.
For those of us who have been in real estate crowdfunding since its earliest days, it sometimes feels like we’ve grown up and made it into mainstream finance. When Patch of Land announces a $250 million forward flow agreement and Realty Mogul funds a $49 million real estate loan, you have to be incredibly impressed. These teams are both still hungry though, and know the industry has the potential to grow so much more and the best days are still ahead.
While I’ve seen some sharp elbows in the industry, that’s fortunately been the exception. Leaders like AdaPia d’Errico have paved the way for collaborative meet-ups with multiple platforms, bringing investors tremendous value. The greatest competition for any single platform today isn’t any other platform, but rather, lack of awareness from investors who have no idea that real estate crowdfunding exists. We’re proud that AlphaFlow Fund I has over 50% of its investments from people who never actually invested on one of these platforms themselves. That means new investors for our partner platforms, so we all benefit.
The winners in this space will be the ones who step back and realize that fighting for a bigger pie will be so much more impactful than simply competing for a bigger slice of what’s there today. We’re excited to work with as many of you as possible to help make that happen.
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About the author:
Ray Sturm is a leading entrepreneur in financial technology, and is currently the CEO of AlphaFlow. Prior to launching AlphaFlow, he founded RealtyShares, one of the P2P industry’s top platforms for real estate investing. His early career in finance included investment banking at Bear Stearns, restructuring at Lazard Frères and private equity at CCMP Capital.
Ray has a BBA-Finance from the University of Notre Dame and a JD/MBA from the University of Chicago.