Believe it or not, this year marks the tenth anniversary of Fundrise’s very first online real estate offering. In some ways it seems like we’re just getting started. Despite our remarkable growth in recent years — including surpassing 300,000 investors in 2022 — we still have big plans for how we can transform the worlds of real estate and, more broadly, private equity.
To celebrate our 10 years of operation, we’re sharing a few highlights and milestones that have shaped Fundrise over the past decade:
In 2012 we sponsored the first ever online real estate offering under Regulation A of the Securities Act for a property at 1351 H Street NW, Washington, DC.
What made it possible: From the start, we’ve rooted Fundrise’s innovation in exploring and making strides in three key areas: the real estate industry, modern tech, and a shifting regulatory landscape. In 2012, Reg A under the Securities Act ushered in a new regulatory regime, making it possible for us to offer a specific private real estate investment — a property that we’d identified as possessing high potential, now famous to Washington, DC, locals as the hip destination Maketto — through a fully tech-powered platform, to a wider range of investors.
Why it mattered: To our knowledge, when we launched this offering, we invented online real estate investing. By bringing real estate investing into the world of modern tech, we took a crucial step toward making it more widely accessible, more affordable, and generally more useful to far more people.
In 2015, Fundrise sponsored the first ever eREIT — an online real estate investment trust, available to virtually anyone in the U.S.
What made it possible: In the several years following our first offering at 1351 H St NW, we offered an increasing number of “crowdfunding” opportunities on our platform. However, it became clear that a better model was possible: a real estate investment trust, a fund wherein we would be able to let investors acquire not only one property at a time, but potentially dozens in a single transaction. Our ability to start our own fund was dependent on our ability to build and operate an in-house team of real estate professionals — every asset in the fund would need to be identified, underwritten, and acquired under the guidance of our own professionals. Thanks to our team’s own extensive real estate experience, we were able to launch a fund that offered private assets at scale.
Why it mattered: By pivoting our offerings from single properties to entire funds, we leveled up the potential of what Fundrise could offer each individual investor, like you: instead of a unique, one-off investment — a lark, perhaps, for some — we could provide deep, diversified way for you to add a new dimension to your portfolio. Now Fundrise wasn’t just a real estate outlier — we were a robust option for deepening your big-picture investment strategies.
In 2017, we launched our Registered Investment Advisor.
What made it possible: Following the launch of our first eREIT, the number of our funds multiplied relatively swiftly, partially a byproduct of each fund’s regulatory limit on annual fundraising — meaning as our funds hit their capacities, we needed to launch new ones — and partially due to our interest in investing in a variety of real estate asset types, giving us an opportunity to dedicate certain funds to particular strategies and return profiles. Simultaneously, our platform and the technology driving it became more sophisticated. Once we had a stable of funds that could support a bonafide range of investment strategies, and a technology foundation that could provide a service akin to robo advisors, we were able to launch our Registered Investment Advisor. This tech-driven model is what allows each Fundrise investor, like you, to select an investment strategy that suits your personal interest and goals — and then receive a portfolio allocated specifically to match that preference.
Why it mattered: Through our technology, we were able to give investors a personalized, strategy-focused investment product, at scale, without the exorbitant overhead cost a traditional investment advisor would command. At the same time, this was a bellwether moment for the world of real estate: with the RIA, the Fundrise platform matched the level of customization and tech-driven solutions that were simultaneously transforming traditional investment options across the financial world in 2017; with Fundrise, private real estate was keeping pace with the rest of fintech world.
In 2019, we launched the Fundrise iOS app (with our Android app arriving the following year).
What made it possible: Building a robust app would have never been possible if our platform hadn’t already reached a stage that offered a unique, valuable, unprecedented experience — in this case, offering the ability to invest in a diversified selection of real estate assets at the click of a button; exploring the exact allocation of your portfolio across individual properties with a dynamic user interface; and managing your portfolio entirely online. (For instance, in 2018 we launched the real-time performance reporting, with which we were the first to provide a new level of software-driven, real time reporting for private equity real estate investments.) With those capabilities established, building an app was “merely” a herculean engineering feat — which our outstanding engineering team pulled off beautifully.
Why it mattered: Before the Fundrise iOS app, there had never been a dedicated solution to investing or managing real estate assets from anywhere. While our platform had already made it possible to become a real estate investor at virtually any hour, for remarkably low costs (while our investment minimum is now $10, when the app launched it was $500, which was still essentially unheard of for private real estate), the emergence of the app meant that you could easily browse your asset updates while riding the bus, reinvest while in line at the pharmacy, or show off your quarterly dividends to friends while out at Sunday brunch. That kind of flexibility and ease — the kind that you expect from every public asset class — had never before existed in the world of private market real estate investing. With the Fundrise app, suddenly it did.
In 2020, we introduced a new vision for investor goals.
What made it possible: Our development of investor goals represented an evolutionary leap in Fundrise’s growth — with this development, we entered a new world, going beyond the raw technological, regulatory, and real estate solutions. In this case, “Investor Goals” is the result of our team’s focus specifically on product and investor experience: building a tool that recognizes the unique relationship and priorities of you, the investor, and answering the question, what do you value and need, beyond the obvious (great investments and strong returns).
Why it mattered: “Investor Goals” is an interactive platform tool that lets you do more than simply invest toward “growth,” in a broad, imprecise sense. Instead, it helps you determine exactly why you’re investing, taking into consideration your time horizon and your capacity for ongoing investment. College fund? Home purchase? New car? Investor goals can shepherd your account in the right direction, whether your intended destination is relatively modest, or life-changing. If you never before had an opportunity to imagine real estate investing as an integral part of your long-term future, this kind of tool serves as an invitation to seriously incorporate real estate investing as part of your overall financial lives.
In 2021, we launched the Flagship Fund and lowered our minimum investment to just $10.
What made it possible: Without getting too far into the weeds… our ability to launch the Flagship Fund was a result of the continued evolution of financial regulations, and our pioneering legal team who were willing to undertake the considerable work to make it possible. Ultimately, that effort was worthwhile, as we were able to deliver a new kind of fund that would better serve our investors and further push private real estate into the realm of modern financial options.
Why it mattered: Up until our introduction of the Fundrise Flagship Fund in 2021, our eREITs were legally constrained in some significant ways, due to their classification: They had a cap on how much they could raise in a given period, and they had limited ability to redeem investors’ shares in specific time periods. While our eREITs remain a critical and valuable part of our investment offerings, the regulatory framework of our Flagship Fund means that it doesn’t have a fundraising cap and it offers significantly more flexible liquidity. With the growth the new fund unlocked, we’ve been able to pursue new, more ambitious kinds of investment strategies, deploy funds with more agility, and ultimately lower our minimum to just $10, truly opening the doors to real estate investing to more individuals than ever before.
Now, in 2022, ten years after our first offering, we’ve launched the Fundrise Innovation Fund.
What made it possible: You can read much more about the recent launch of the Innovation Fund in a letter from our team here, and check out a recent episode of Onward, a Fundrise podcast, for an in-depth explanation of the fund from Fundrise CEO Ben Miller. In short, we’ve observed an opportunity to use regulatory shifts, technological solutions, and financial expertise to apply the same breakthroughs to the closed world of venture capital as we have to private real estate. Stay tuned for additional info in the coming weeks and months, or go directly to the offering page to learn more.
Why it matters: As we wrote in our letter, “[The Innovation Fund is] our first significant expansion outside of private real estate… a first-of-its kind, $1B growth equity fund aimed at democratizing access to investments in top private technology companies...Our decision to expand into high-growth technology companies is multi-factored. First, as an asset class, high-growth tech (i.e. venture capital) has proven to be one of the best performing investments,1 while simultaneously being one of the most exclusive, with individuals effectively barred from investing until companies go public.” In short, when it comes to building a better financial system for you and all Fundrise investors, our ambitions don’t stop at real estate.
The investment performance that has accompanied our innovation
Finally, we always try to take a moment to reiterate that all the work we do is on behalf of you, our investors. And one of the perennial, most central concerns we’ve heard from you is how Fundrise’s work and innovations ultimately manifest in the form of your portfolio’s performance.
With that in mind, to wrap up our review of our product evolutions over the years, we’re pleased to share our most recent performance figures at the time of our 10 year anniversary:
With this most recent data, the platform portfolio has now delivered 22 positive quarters and zero negative. Through the first half of 2022 we’ve now produced our strongest ever relative performance, beating the S&P 500 on an absolute basis by nearly 25%.
For a more complete picture, here’s a look back at Fundrise client annual returns since we launched our Registered Investment Advisor in 2017 (you can also view our performance information in even more depth on our Client Returns page):
Now, looking ahead…
While ten years might seem like a lifetime for some companies — or, for that matter, entire business sectors or industries — we believe the past decade is just our foundation, the first stage of something we’re building that’s even bigger. Stay tuned to see what’s next and thank you for being a part of this journey. As always, onward.
On "Risk and reward for asset classes, 1984 - 2015"
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Source: Robert S. Harris, Tim Jenkinson, and Steven N. Kaplan, “How Do Private Equity Investments Perform Compared to Public Equity?” Journal of Investment Management, Vol. 14, No. 3, Third Quarter 2016, 1-24; Steve Kaplan, “What Do We Know About Private Equity Performance?” Guest Lecture at Miami Herbert Business School, January 31, 2020; Steve Kaplan, “What Do Venture Capitalists Do? How Well Have They Done?” University of Chicago Booth School of Business; FactSet; NAREIT; Refinitiv; and Aswath Damodaran.
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Note: Past performance is no guarantee of future returns; All asset classes reflect 1984-2015 except for VC, which reflects 1984-2013; Return for Buyout and VC is measured by weighted average internal rate of return (IRR); All asset classes are for the U.S. except for Non-U.S. Equities and Commodities (Buyout and VC have a North American focus).
On the assumptions in the “Annual returns of client account”
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Figures represent the weighted average aggregate performance of all client accounts during the periods indicated, including any shares acquired as a result of the reinvestment of dividends, and net of a 0.15% advisory fee, if applicable. Commissions are not considered since clients of Fundrise Advisors are not charged trading commissions or any other transaction-based fees. Returns were calculated using the Modified Dietz method. This information is presented for informational purposes only. Past performance is not indicative of future results, and any investment carries with it the risk of loss.
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Specifically, the S&P 500 index total return, which includes both dividends and capital gains / losses, for the period indicated. The index includes 500 leading companies and covers approximately 80% of available market capitalization of US publicly listed stocks. As an index, the S&P 500 is inherently not investable, and is presented for informational purposes only.
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Specifically, the National Association of Real Estate Investment Trusts (NAREIT) All US REITs index total return, which includes both dividends and capital gains / losses, for the period indicated. This index covers all publicly listed US REITs and is designed to present investors with a comprehensive family of REIT performance indexes that spans the commercial real estate space across the US economy, with exposure to all investment and property sectors. As an index, the FTSE NAREIT All REITs index is inherently not investable, and is presented for informational purposes only.
See the full disclosure here.
