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Crowdfunding Platform RealtyShares Will No Longer Offer New Investments

RealtyShares, the San Francisco-based crowdfunding startup, plans to stop investing and lay off a large number of its employees, The Real Deal reported Wednesday.

RealtyShares board member and former Cushman & Wakefield CEO Edward Forst

Citing sources familiar with the company, TRD reports RealtyShares was unsuccessful in raising more funding. RealtyShares had previously raised more than $60M in funding from VC firms, including Cross Creek Advisors, Danhua Capital, Unions Square Ventures and Starwood Capital Group Chairman and CEO Barry Sternlicht.

The company has invested more than $870M across more than 1,160 projects, according to its website. As recently as August, Inc. Magazine named it one of the city's 10 hottest startups. At that time, the company had 85 employees.

When RealtyShares could not raise more venture capital, sources said it unsuccessfully sought a buyer, TRD reports.

In an email to investors, the company said it would continue to manage existing investments, but would not offer new investments or accept new investors.

RealtyShares stepped into the crowdfunding space in 2013 with its first investment property: a $39K single-family home in Mississippi. By 2018, its average investment was $2.1M. In 2016, the company expanded into funding commercial debt.

RealtyShares co-founder and CEO Nav Athwal left the company in November 2017. Former Cushman & Wakefield CEO Ed Forst, who had joined the company's board in May 2017, took over as the crowdfunding company's CEO after Athwal's departure. Forst brought on Alexis de Belloy as CEO in July. Forst, no longer CEO, remains board chairman, according to RealtyShares.

In the past year, the company made the decision to focus on the middle market with properties valued at less than $50M. It also sought out new ways to grow.

Earlier this year, RealtyShares launched a partnership with Airbnb, offering itself up as a financing resource for multifamily building owners and operators that allow short-term rentals by tenants and are seeking to buy, refinance or renovate their buildings.

Tore Steen, CEO of crowdfunding platform CrowdStreet, weighed in that RealtyShares' challenges were not reflective of the crowdfunding approach overall.

"We were saddened to see the news about RealtyShares. It is common in rapidly evolving, disruptive spaces to see things like this happen as different business models are changing quickly," Steen said in a statement. "We are seeing a thriving crowdfunding market around commercial real estate here at CrowdStreet. We are growing fast, hiring across most teams and, in fact, just last week launched a new investment product. We could not be more optimistic about our approach to democratizing commercial real estate investing, and making it as easy and effortless as possible."

CORRECTION, NOV. 9, 8:30 A.M. PT: A previous version of this story had outdated information about RealtyShares' leadership. Alexis de Belloy is the company's CEO and Ed Forst is the board chairman. The story has been updated.