Crowdfunding: the revolution that is just beginning
Crowdfunding platforms are digital environments where people who need money to invest in a project connect with the people who have it.
Crowdfunding platforms are digital environments where people who need money to invest in a project connect with the people who have it. Entrepreneurs publish their projects in search of funding from investors, who can participate and monitor their properties and yields in a single web portal.
Unlike REITs, this type of investment allows you to lend capital or obtain equity in specific projects, and not necessarily in entire portfolios.
The main feature of crowdfunding is that it both integrates and democratizes. With its arrival, the investment in the real estate sector ceases to be part of an exclusive club, since the interested parties do not need to be affiliated to institutions, be accredited or have large sums of capital to participate.
Since the nature of crowdfunding is to facilitate and connect players to join in voluntary transactions, one of the greatest challenges lies with governments, which must both create a fertile environment for these platforms and make them safe for the investors who use them.
The revolution is already a fact, but also a great promise. Investment via crowdfunding in general has more than doubled each year. According to World Bank data, it will rise to more than $93 billion by 2025.
The inertia of the crowdfunding of stock participation is so strong that it will even surpass this same decade the sums raised via venture capital or angel investors.
In the realm of real estate crowdfunding, there were estimated operations close to $3.5 billion dollars in 2016. With the forecast that the niche crowdfunding is about to explode, the results of its application in real estate do not seem to have a defined ceiling. We are just about to witness its true potential.