Renren Leads $31mn Round in U.S. Real Estate Crowdfunding Site Fundrise
Chinese social networking platform Renren (NYSE: RENN) led a $31 million financing round in Fundrise, a U.S. crowdfunding startup that finances commercial real estate projects for investors. Other investors of the landmark round include execs from New York developer Silverstein Properties, the Collaborative Fund, among others.
With this financing, Fundrise intends to expand its offerings to institutional investors interested in direct exposure to real estate. It also planned to increase presence in more major U.S. cities.
Founded in 2010 by brothers Ben and Daniel Miller, Fundrise allows both high net worth and small-scale investors to invest in properties for as little as $100 per share. According to the company, it has funneled more than $15 million investments to date from more than 1,000 investors online.
As one of the most popular Chinese social networking services in the web age, the market share of Renren was snapped up by other services like Sina Weibo and WeChat with the arrival of mobile age. In addition to the struggling social networking unit, the company has sold unprofitable service, like group-buying service Nuomi, to cut losses. Moreover, its revenue from Renren Games, the only profitable business, is also declining.
Renren’s total net revenues for the first quarter of 2014 were $24.9 million, representing a 39.9% decrease from the corresponding period in 2013. Net income attributable to the company was $32.3 million, compared to a net loss of $3.1 million in the corresponding period, according to Q1 fiscal report of Renren.
Despite the declining main business, capital operation is a major source of Renren’s revenue. The company’s gain on short-term investments were $27.1 million in Q1, compared to $15.1 million in the corresponding period in 2013. The gain was primarily derived from the sale of marketable securities. As a capital operation expert, China InterActive Corp, the parent company of Renren, has raised funds from Accel Partners, TVC and Softbank, etc.
Real estate crowdfunding sites are chased by investors. Similar sites like Realty Mogul, RealCrowd, Groundfloor all received funding this year.
Joseph Chen, Chairman and CEO of Renren Inc., commented “We have seen crowdfunding sweep through large verticals of consumer finance, including student loans and credit card debt. We believe that the real estate market is the newest frontier for crowd-based financing.” He added that a common point between Renren and Fundrise is community culture.