This week we have some very concerning news relating to a few CrowdStreet offerings, some equity crowdfunding-related developments, and more.
CrowdStreet has recently found itself in the headlines for all the wrong reasons. It’s been discovered that some $63M of funds invested on the platform may have been misappropriated by a sponsor. A recently appointed independent manager for the projects in question reported barely over $125K of remaining balances.
CrowdStreet seems to be taking the position that it is just a marketplace – an eBay of real estate deals – and thus has limited fault in the incident. Furthermore, quotes released from the CEO seem to simply suggest they never imagined something like this could happen.
Basically, CrowdStreet listed the offering from the sponsor, Nightingale Properties, but the sponsor was bound by certain legal, operating agreements. They simply assumed that Nightingale would honor those agreements because it would be unlawful for them not to. Thus, when investors made commitments to the deal, the money was allowed to transfer directly to accounts managed by Nightingale.
Well, it turns out they did not honor those agreements and there’s now $63M missing.
Other platforms that host sponsor-based deals, such as RealtyMogul, have started to send communications to their investors seeking to explain why the safeguards and protections on their platforms would prevent a similar issue.
Kingscrowd has made several enhancements to their platform for finding, tracking, and evaluating equity crowdfunding deals.
First, they’ve consolidated their subscriptions. Previously they offered a $15 tier and a $50 “Pro” tier that added access to analyst reports. Now they’ve introduced the new “Edge” subscription for $30/mo. It includes all of the features of the previous Pro subscription, while adding in some new features.
Also, Kingscrowd launched three new features this week:
- Deal Explorer: A new interface for sorting through and finding open investment opportunities.
- Comparison Tool: An expansion to the new deal explorer, that allows you to compare up to 5 deals at one time.
- AI-Generated Analyst Reports Beta: Kingscrowd has had analyst reports for some time. However, manually created reports are time consuming to create and simply impossible for Kingscrowd to provide for every deal. With the AI-Generated reports, they’re hoping to have analysis content available for a much wider range of deals.
You can see the deal explorer and comparison tool here – no account required. There’s an example of the AI-generated analysis report here, however this does require a subscription or a one-time $10 purchase to see the content for that particular deal.
In an email to investors, EquityMultiple announced their newest upcoming investment product – the Ascent Fund. It will be an income-focused fund with investments in commercial real estate debt. EquityMultiple believes the current market conditions have created an attractive risk-reward for CRE debt. This sounds like a similar offering to Fundrise’s Private Credit Fund.
Forge Markets has shared a report on private company valuations. On their platform, Forge is seeing companies trade at valuations below their last funding round. Actually the values are almost in-line with the funding round before the last one.
In other words, the valuation growth that occurred over the last few years during the height of the low interest rate era has essentially been wiped out.Forge Markets
The report also has a variety of other interesting data points, so take a look!
Republic & Equity Crowdfunding
In a tweet (Xeet?), Republic shared news of a new successful exit. Janover, a fintech company focused on commercial real estate lending, had their IPO on Wednesday. Listed under the ticker JNVR on the NASDAQ, the company’s IPO price represented a 197% gain for equity crowdfunding investors over a 3 year holding period.
Arrived announced this week on Twitter that they had totaled over $1M in owner’s vacation rental revenue. That figure excludes various fees. The first vacation rental offering was from October, meaning the $1M milestone was crossed in under 1 year.
The company boasts a solid lineup of advisors and investors and has a unique partnership with Boxabl – and an upcoming investment fund around said partnership.
SongVest announced in a tweet that they would be doing another round of sweepstakes in collaboration with their next set of VIP auctions. Bidding for 3 different SongShares offerings from KrispyLife Kidd will open on August 7th.
On Twitter, the Farmfolio team announced an updated website design while also teasing further updates were coming soon. We will keep an eye on this as we’re looking forward to seeing more investment options for international farmland.