Joanna Schwartz, CEO of EarlyShares, talks with team members Heather Schwarz-Lopes, Mark Gillanders and Madelyn Young. On the EarlyShares platform, entrepreneurs can crowdfund their company or real estate venture to accredited investors. Photo by CHARLES TRAINOR JR/Miami Herald
As interest in equity ‘crowdfunding’ heats up, real estate is the next frontier. Miami-based EarlyShares and other platforms provide a look at how this new way to invest is shaping up.
You can support entrepreneurs’ apps, gadgets, clothing creations, restaurants — you name it — through the exploding phenomenon of “crowdfunding.” But what can you show for your investment? A drawer full of T-shirts, tote bags and other tokens of appreciation.
Not the kind of rewards most serious investors are looking for.
For wealthy funders — so-called “accredited investors” — some crowdfunding platforms offer an ownership piece of the startup venture they are funding. If the concept becomes the next big thing rather than the next big flop, they could reap a giant return.
Increasingly, those wealthy crowdfunders are turning to a tried-and-true investment class they can see, feel and understand: real estate.
Before crowdfunding platforms came along, only a small fraction of the nine million U.S. accredited investors — those with a net worth of at least $1 million or $200,000 in annual income — had participated in private-investment opportunities, said Joanna Schwartz, CEO of EarlyShares.com, a Miami crowdfunding platform aimed at those very investors. Typically, she said, “they didn’t have access to them unless they knew someone [in the deal], and this is especially true in real estate. This really is about giving direct access to investors in ways they never had before.”