Then and Now: The First Five Years of RealtyShares
The Light Bulb
It started on a couch in Berkeley.
That’s where RealtyShares founder Nav Athwal got an idea that has the potential to change the face of real estate investing. A land use attorney and electrical engineer by trade, Athwal was also an active real estate investor. He saw firsthand how difficult it could be to get financing for projects and, by the same token, how many of these projects were inaccessible to the average investor.
“That was the light bulb,” Athwal recounts. “I realized, there’s no technology for investing in or raising capital for real estate, but there is demand for both.”
The idea was as powerful as it was simple. Through a curated online marketplace, individual investors would be empowered to directly invest in real estate projects around the country. Conversely, real estate sponsors could gain access to fast and efficient capital.
It was the idea that launched a company. RealtyShares was incorporated on April 26th, 2013, and accepted into incubator 500 Startups a few months later. Senior Software Director Tracy Gonzalez remembers those early days:
“Have you ever sat elbow-to-elbow with 30 startup founders? It was like an insane asylum. Everybody’s super smart; everybody’s working feverishly on their pitch. I remember, we talked about Twitter followers like they were currency.”
It was a heady first year, full of high-stakes phone calls and late-night Mongolian barbecue. Ultimately, on the strength of the concept and the team that Athwal had assembled, RealtyShares was awarded $1.9 million in seed funding from General Catalyst.
In those early days, transactions were small, and RealtyShares dabbled in different property types. The very first investment opportunity listed on the platform was just $39,000, a single-family home in Jackson, Mississippi. From there things only got bigger.
“Toward the end of 2013, we funded our first five deals,” remembers Athwal. “I was like, holy smokes. There’s some momentum here. Maybe this can work.”
Unlocking the Middle Market
Five years later, RealtyShares is growing up. Today our average investment size is $2.1 million. We have done more than 1,100 deals in 40 US states for a total of $750 million raised on the platform. Most important, we have narrowed our focus to areas where we believe we can provide unique value to both investors and real estate sponsors.
RealtyShares now focuses on the commercial middle market: real estate properties valued at under $50 million. According to data from Real Capital Analytics, it is both the largest sector of the commercial real estate market and the one most starved for capital.
“More than $250 billion* flowed through the middle market last year, but information about those deals is fragmented and opaque.” says CEO Ed Forst. “If RealtyShares can become a principal of that information, we have the potential to eliminate inefficiencies in the marketplace while creating enormous value for sponsors, investors, and shareholders.”
*According to data from Real Capital Analytics.
Historically, banks and institutional lenders have given the middle market short shrift, preferring higher-value transactions that generate larger fees. For that reason, there has been no single, programmatic lender in this sector. The challenge—and the opportunity—is to build a sustainable business model around these lower-value transactions.
The Future of Real Estate Investing
For RealtyShares, the answer is technology.
By automating elements of origination, underwriting, and reporting, we can increase deal flow and reduce human inputs. By offering enhanced transparency and performance data, we allow investors to build a personalized portfolio that aligns with their financial goals. Going forward, we aim to create value at every stage of the sponsor journey, helping source deals, finance them, and manage investor relations.
“You’re never going to change the world by working harder or longer hours,” says Brian Esquivel, Senior Director of Product Strategy. “At RealtyShares, we’re looking at a very scalable opportunity, and if we do it right, we can change the face of real estate investing.”
Even as our technology advances, RealtyShares remains grounded in core values and the customer experience. After five years and four offices, we are now a team of talented and driven professionals who, together, represent hundreds of years of experience in the real estate and technology industries. We stand with sponsors and investors throughout the project life cycle, and we don’t do deals we wouldn’t feel comfortable investing in ourselves.
The Road Ahead
We’ve come a long way in our first five years—and we have a long way to go. But we’re confident that we have the right team, the right technology, and the right values to face whatever challenges lie ahead. At RealtyShares, we connect capital with opportunity to unlock the growth potential of the middle market.
It’s a vision of the future we can’t wait to invest in.
“Customer experience is our competitive advantage,” says CEO Ed Forst. If we serve your clients incredibly well—if we do an exquisite job of that—at the end of the day, the company will be successful.”