Friday, June 14, 2024

Fundrise, a real estate investment firm, enters the venture capital market

Investing in private markets has permanently been restricted to the very wealthy. However, thanks to tech entrepreneurs, the procedure is becoming much more accessible to individuals who do not belong to the “one percent” of the wealthiest Americans.

Fundraise, a company that allows anybody to invest in real estate for as little as $10, announced today that it is entering the venture capital market, intending to create a new $1 billion growth equity fund to invest in late-stage digital startups. The new fund will be evergreen, which means it will exist indefinitely, unlike the usual VC model, which allows investors to come and go as they wish.

If all goes as planned, the new growth equity fund will be structured similarly to Fundrise’s current real estate offering, allowing any investor to spend as little as $10. Sweater Ventures and Allocate are two other companies that allow individuals to acquire VC exposure in their portfolios. However, Fundrise’s product is more broadly available because the former has a higher investment minimum of $500, and the latter is only available to accredited investors.

All fund investment decisions will be reviewed by a three-person investment committee that includes Miller and Fundrise’s chief strategy officer and operations officer. Miller noted that the company plans to raise its $1 billion target through existing clients and new users.

Regarding Fundrise’s capacity to source attractive transactions, Miller believes that creating the fund now is good timing because many firms are in desperate need of cash, and venture capital dealmaking has slowed dramatically due to concerns about an economic downturn.