Food meets fashion meets crowdfunding: The new H Street space Maketto combines restaurant and retail with the added distinction of being born from the first real estate crowdfunding project in the country.
When the original founders of D.C.-based Fundrise bought the property in 2011, “it was a vacant building [that] hadn’t had a certificate of occupancy for fifty years,” said founding member Brandon Jenkins.
At the time, H Street “was very nightlife driven,” he added. “During the day most of the bars and restaurants were closed.” So, they envisioned “this 24/7 kind of atmosphere that we felt would be something that would be entirely unique for D.C.”
Tell that to the institutional investors.
“It was very challenging,” said Jenkins. The neighborhood “was new, it was still growing. It was not the cookie cutter box.”
Instead, they went to the public with their project. “We could raise more money, faster and more efficiently by going out to the crowd,” he said.
That’s how Fundrise undertook its first crowdfunding campaign, filing paperwork with the District of Columbia, the Commonwealth of Virginia and the SEC. The process took almost a year.
“They’d never seen or heard anybody who wanted to take a physical property and essentially make ownership of the property available to the public,” said Jenkins.
When it kicked off, the H Street space raised $325,000 from 175 unaccredited investors, who each chipped in $100 to $10,000 each. “Those investors became actual equity owners,” explained Jenkins. The company, Fundrise, was both equity owner and developer.
After two-and-a-half years of development, powered by the crowdfunding round, bank loans and direct investment from Fundrise, a sleek new space opened earlier this month.
Fundrise leased the property, located at 1351 H St. NE, to chef Erik Bruner-Yang and streetwear designer Will Sharp. The two decided to join their talents for a combined retail-and-dining experience.
Spurred by that first project, Fundrise launched in August 2012, with CEO Benjamin Miller and president Daniel Miller at its helm. The two brothers — former partners at real estate development firm WestMill Capital Partners — were joined by a third developer, Jenkins, and a CTO Kenny Shin.
Their second crowdfunded property was also on H Street. The third one was in Shaw. All in all, the company has overseen investment rounds for about 10 properties in D.C., and about 50 nationwide.
Since 2013, Fundrise has also begun underwriting investment deals for other real estate companies and pushing them onto the platform.