Stephanie Speer, NAR’s Commercial Regulatory Policy Representative would like to let you know that Uncle Sam is grappling with all the implications of the 2012 passage of the Jumpstart Our Business Startups (JOBS) Act. But this isn’t another case of “the government bureaucracy expanding to meet the needs of the expanding government bureaucracy”. This is about legally raising capital using crowdfunding techniques on the internet, a topic near to the heart of every dealmaker faced with stiff credit availability in a banking environment dominated by, well, banks. Enjoy Stephainie’s guest post on a pair of SEC events on crowdfunding. – WG
I’ve written here before about the phenomenon of crowdfunding in the commercial real estate market. A fast-growing new source of investment capital enabled by a last year’s relaxation of SEC regulations, crowdfunding in commercial property might conjure up images of a “wild west”-style marketplace, where dubious solicitations sent to any Tom, Dick or Harriet hide giant risks, buried in promises of glittering payoffs announced over a bullhorn to whoever shows up to participate.
As it turns out, that would be the wrong image, at least in one case. Reaching out to the crowd for capital can go hand in hand with prudence, caution and expertise, as exemplified by a recent equity deal financing a 62,000 sq. ft. shopping center outside of Kansas City.
It’s not especially well known that the retail / e-commerce juggernaut Groupon started life not as a provider of retail savings to consumers but as a nonprofit crowdfunding platform for communities called The Point. Groupon founder and former CEO Andrew Mason’s original software project let communities pool their money online to, for example, get a park built in their neighborhood or to solve some other community problem together. It was only later, after a nudge and a million-dollar check from a venture capital latecomer that Mason applied the same crowdfunding idea and software to coupons. The rest, as they say, is retail history.