I’ve spoken before about crowdfunding and how we use it to make real estate deals, but I realized that I’ve never actually explained what crowdfunding is.
Crowdfunding is the concept of raising large sums of money by appealing to a large group of people. Typically this is done over the Internet in order to reach the size we need. In 2013, more than $5 billion was raised through various crowdfunding campaigns. It’s a powerful tool.
Crowdfunding is a spinoff of the fundraising industry. Depending on the type of organization, some fundraisers will seek smaller donations from large groups of people, rather than fat checks from financial heavyweights.
In most cases, there are three parties to a crowdfunding campaign: the project initiator (aka sponsor), the supporters, and a third-party who brokers the transaction. If you have ever participated in a Kickstarter or Go Fund Me campaign, you would be a supporter. In the case of Mascia Development, we act as the sponsor of the transaction (it’s simpler that way and lower third-party costs than the traditional way of raising money).
Crowdfunding helps businesses raise money they need for growth, investment, product development, etc. In nearly all cases, the crowd is rewarded for their contributions with some sort of prize. This is called Reward Crowdfunding.
Our system, however, is called Equity Crowdfunding. In exchange for your pledge, you receive distributions of cashflow as a shareholder of a company that owns an investment property.
We aren’t your typical crowd
The word “crowd” might be a bit primitive in our case. We aren’t asking people to donate so we can make a hip new iPhone case. We work with investors of all sizes and we’d love to hear from anyone who wants to be a part of our system, but to be invested in any of our real estate projects or funds, you have to meet the “accredited investor” requirements set by the SEC.
(In 2012, the JOBS Act was amended to allow a larger pool of investors into these types of deals. Contact us to check your eligibility and see if you can be a part of our fund.)
That means our crowd is usually a bit older, financially stronger and looking toward the future, rather than seeking a quick reward next week. It also makes our funding more stable. Our investors get in and stay in for long periods of time.
It’s a beautiful system
The beauty of crowdfunding is that it’s a fantastic way to hear directly from your customers what they want. In our case, the types of investments we offer are directly driven by the feedback and interest we receive from the crowd. It is a win-win type of feedback loop.
Written by Mark A. Mascia, President and CEO of Mascia Development
Mark manages the investment and operating activities of Mascia Development, a diversified value real estate investment firm that acquires, owns and manages retail, medical office, family offices, multi-family, and industrial real estate properties in the most promising long term growth areas nationwide. Through crowdfunding, they create powerful real estate opportunities for high net worth individuals.
A fully integrated real estate company, Mascia Development has in-house capabilities in acquisitions, financing, re-development, and construction; and their principals have experience in property and portfolio management, leasing, and maintenance.
Mark has a strong career in real estate, previously managing a property of portfolios valued over $1.1 billion. Mark has worked at Archstone-Smith (a former publicly traded REIT) and Monument Realty, one of the largest office real estate developers in the Washington, DC metro area. Mark teaches real estate development and finance at New York University.
For more information, visit www.masicadev.com.