Earlier this year, Phoenix Development Partners was putting together its biggest project to date, the redevelopment of a historic downtown Chicago property into hotel space. It decided to take an experimental route: raising some of the necessary funds online.

The market teemed just a few years ago with scores of online investment platforms, but many struggled to complete deals or attract funding. But Phoenix found crowdfunding can bring in hundreds of investors for the right deal, and CEO John Mangel believes it’s an idea that has arrived.

“I think it’s becoming more and more mainstream,” he said.

The company last week closed the $32.7M acquisition of 226 West Jackson from City Colleges of Chicago, near the Willis Tower. It raised nearly $10M online for the purchase through an offering on CrowdStreet, a Portland-based crowdfunding platform.

Phoenix plans to reopen the building in 18 months as a dual-branded hotel, with a 135-room Hilton Garden Inn and a 214-room Canopy by Hilton, after finishing a $136M redevelopment project, which includes the purchase price.

“We spent a fair amount of time considering more typical L.P. partners, but we also looked at CrowdStreet’s track record, and they’ve had significant success,” he said. “We also thought a wider group of individual investors would find this project attractive, with its superior location, superior product with Hilton, and historic tax credit component.”

“We had to go through a rigorous due diligence process with CrowdStreet before we were allowed to pitch their 10,000 subscribers,” according to Mangel, but after that, things moved fast.

More than 200 investors made financial commitments to the project, raising the necessary funds in just two days.

Individuals have invested more than $800M in roughly 300 deals through CrowdStreet, according to the firm, including one earlier this year for The Huron, an 11-story, new construction office building in Downtown Milwaukee.

J. Jeffers & Co. raised $14M for the $60M project, and broke ground on April 22, after securing an anchor tenant for nearly half its 163K SF, as Bisnow previously reported.

“Traditional real estate fundraising connections have typically been built from direct mail, and a lot of lunches, dinners, golf and presentations," founder Josh Jeffers said. "What’s really amazing about this crowdfunding platform is it’s still fundamentally the same thing. It’s still connecting a sponsor with a pool of accredited investors, but in a much more efficient way.”

Mangel said individual investors found online may also provide another advantage.

“The return expectations of the CrowdStreet investors are slightly less than the more traditional partners we were talking to.”