Fundrise invents, runs ‘Internet Public Offering’

Fundrise, D.C.’s crowdfunding platform for real estate investment, opened itself up to direct investment by its members last week. The company raised $14.6 million via what it is calling an “iPO” (Internet Public Offering) — the first of its kind, apparently.

A press release about the oversubscribed iPO describes the difference between this model and a traditional IPO like this: “Unlike a traditional IPO where an investment bank acts as a middleman selling shares solely to its top clients, investors in The Fundrise iPO were able to buy shares offered directly through the Fundrise website.”

The release goes on to say that over 2,300 Fundrise members participated in the iPO, and the company raised $14.6 million (or 146 percent of what it had initially hoped to raise) in just 24 hours.

From the Fundrise perspective, the iPO means investors are not only invested in the kinds of opportunities Fundrise offers, but actually in the company itself. It aligns the interests of the company with the interests of the users. “We’ve made our users partners in our future and we look forward to sharing in our success together,” cofounder and CEO Ben Miller said in a statement.

As this Yahoo Finance article points out, the iPO is also Fundrise’s attempt to create an alternative funding model. Fundrise has always been all about “democratizing” investing — an ethos aided along by Title III of the JOBS Act which legalized equity crowdfunding for non-accredited investors (ie, basically anyone).

From this perspective, the iPO is all about that open opportunity.

“From day one, our mission has been to use technology to create a true alternative to today’s financial system where investors can earn potentially better returns,” Miller said. “The Fundrise iPO is a revolution in how the investment industry works, giving public access to private investments previously only available to institutional funds and the ultra high net worth.”