To reach the elusive 10 year mark, a startup needs to be much more than just a good idea. It needs a team that can navigate the startup through economic headlines and changing customer demands. Brian Dally and Nick Bhargava, co-founders of Atlanta-based Groundfloor, have reached the 10 year startup milestone by creating new financial products within the ever-evolving world of alternative investing.
With its origin dating back to the 2012 Jobs Act and the new funding opportunities created through the law, the wealthtech platform has helped accredited and non-accredited investors put $1 billion into real estate investment loans with more “stable” and “predictable” returns. The team is now rolling out its latest product, Groundfloor Labs, to build new opportunities within real estate.
Labs is a new partnership program that helps entrepreneurs get the capital they need while giving investors more deal diversity, Dally told Hypepotamus. Labs is designed to bring Groundfloor’s “deep regulatory, underwriting and asset management expertise” to more real estate entrepreneurs looking to plug into the Groundfloor investor ecosystem.
Early partners include two financing startups Atlanta-based Nectar and Chicago-based Discount Lots. Labs opened in beta earlier this year and has reported $10 million in AUM (assets under management) to date.
Inside Groundfloor Labs
Labs is functioning somewhat like a “startup within a startup,” as the Groundfloor team has built out a specific team for the product and is actively recruiting new companies.
“Part of our ethos as a company is that you should be able to pick and choose your own risk. Labs is a great way to do that,” Dally added. “We have built 10s of 1000s of customer relationships and people have significant amounts of assets on the platform. They trust us. What we’ve realized is that investors want more products from us….In the long term, [Groundfloor Labs] is going to enable you to be as well diversified and as strategic as any institutional investor out there, just at a retail investor scale.”
Dally said that Labs is set up to work with entrepreneurs just starting out all the way up to established real estate companies looking to dabble in retail capital. Today’s macroeconomic climate makes growth more difficult for these businesses. But that creates more opportunities to look at more “flexible” retail capital options, said Dally.
“There’s a lot of innovation in real estate right now. And there should be, because capital is very scarce in an environment where interest rates are high. There’s more demand for capital than supply. At the same time, there’s a lot of opportunity to finance different types of real estate,” added Dally.
The launch of Labs comes on the heels of Groundfloor’s rollout of Groundfloor Notes, a new tool that allows users to invest in publicly issued, non-traded debt. The startup reports that Notes provides an annual percentage rate of return of 4-8%, a number that outpaces other investing and saving mechanisms.
Groundfloor has seen significant growth over the last ten years as enthusiasm for alternative investments has grown. Dally said that younger retail investors are looking for new ways to “build wealth, save for retirement, or take care of their financial health.”
To date, the Groundfloor team has attracted 230,000 registered investors and has repaid $500 million in principal and interest to those investors.