Earlier this year, Fundrise’s CEO Ben Miller, was featured in an extensive profile by Fortune, where the publication examined the outlook of the business, Ben’s philosophy about investing in current market conditions, and the experiences that have helped hone Ben’s ability to navigate a company that is transforming how people across the industry think about real estate investing… and private equity in general.
Until recently, Fortune’s profile of Ben was limited to Fortune subscribers only, but, recently, it was made available for all readers. As the article now reaches a new audience, we wanted to take a moment to highlight some of the most important takeaways of the piece, as they help paint the full picture of Fundrise’s mission, history, advantages, and vision for our financial system’s future. (Please note, the Fortune profile was originally published on July 9, 2022, and all quotes below reflect that date.)
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1. Fundrise has quickly grown into a real estate player on the global level, giving it an opportunity to work with nationally renowned homebuilders, and access to sophisticated, advantageous deal structures.
From the profile:
“Since the start of 2021, the equity portion of [Fundrise’s] portfolio has more than doubled from $1.5 billion to well over $3 billion — total dollar holdings, including project debt, stand at around $6 billion. It’s now attracting investors’ dollars into its funds at a rate of $1.3 billion to $1.5 billion a year. According to Miller, that dollar pace puts Fundrise among the world’s top 20 private equity real estate firms. ‘We wouldn’t have made the top 100 three years ago,’ he tells Fortune.”
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2. Rental homes — like those that form the foundation of the Fundrise portfolio — are positioned to perform well in the current economic climate.
From the profile:
“There are many reasons rental properties tend to thrive in a downturn: Families can cut back on vacations and restaurant meals in tough times, but they still need a place to live. They’re more likely to delay plans to buy, opting to rent a home or apartment or renew a lease instead… It’s precisely the trend that Fundrise hopes to capitalize on. Fundrise doesn’t buy or build houses to sell. It’s centered on the residential rental business. With rates rising and the economy shaky, Miller says, people moving to fast-growing regions who can no longer cover the monthly nut it would take to buy a ranch or colonial. ‘So they’ll rent instead, because they still want the space to work from home,’ say Miller. Fundrise now owns around 17,500 apartment units and 3,500 single-family rental homes, with a combined equity value of over $2.5 billion.”
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3. Fundrise is sitting on a potent supply of “dry powder” — that is, cash ready to be deployed when the moment is right — eager to make acquisitions at great value in a downturning market.
From the profile:
“The looming downturn, says Miller, could hand Fundrise an opening to purchase big packages of new houses at steep discounts. ‘We’ve accumulated over $450 million in cash to make opportunistic purchases,’ he says. He also notes that real estate developers are increasingly eager to forge deals where Fundrise agrees in advance to acquire new homes in bulk. ‘The homes are already in the pipeline,’ says Miller.”
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4. Fundrise and Ben’s preparation for economic turbulence comes from first-hand experience from living through past downturns.
From the profile:
“Miller’s conviction that navigating tumultuous periods is the key to real estate success arises from hard-won experience. As a teenager, he says he watched his developer-father ‘get ulcers’ in the 1991 downturn, and he later helped rescue the family business when its lenders collapsed in the Great Financial Crisis… Miller discussed how the banking collapse of 2009 inspired him to build a business with a stable, low-cost-to-investors model that he believes could grant middle-class investors the kinds of gains usually reserved for bluebloods.”
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5. Fundrise’s performance in 2022 has significantly beaten the public markets.
From the profile:
“As impressive as 2021 was, 2022 so far this year is suggesting that Fundrise can fulfill Miller’s goal of beating competing asset classes in hard times. Last year, despite notching 22% returns across all its funds, Fundrise underperformed both the S&P 500 and publicly traded REITs that largely track the stock market. But this year, Fundrise has waxed the public markets by double digits.”
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6. Ben’s experience taught him the importance of acknowledging tough realities, especially in how the market behaves, and the surprising value of pessimism.
From the profile:
“[In living through his past experience at a startup,] Miller got a PhD course in how not to operate. ‘The startup had about seven former CEOs and COOs who thought applying the pattern that made them successful in the past would make them successful in the future,’ Miller recalls. Those former stars had the mindset of blaming the venture’s failures not on their flawed strategy, but the market. ‘I learned that you have to stare reality in the face,’ says Miller. ‘The optimistic, ‘this will work out’ view is not as helpful as facing the ugly, unattractive stuff.’”
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7. Fundrise’s success comes partially from a willingness to do the work to use strategies and tools nobody else has mastered.
From the profile:
“[SEC former general counsel Marty Dunn] told Miller that he’d drafted a never-used rule called ‘Regulation A’ years before that could cover direct private real estate investments via the internet. Miller was trying to raise funds for his first project, a dilapidated office building, a few blocks from SEC headquarters. ‘The SEC people knew the building,’ Miller recalls. ‘That took the project from the abstract to the familiar for them. Plus, they were looking for ways to encourage capital formation.’ In 2012, Miller and Dunn secured the regulatory approvals that enabled Fundrise’s precursor to become the first platform ever to raise private equity dollars over the internet.”
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Of course, these quotes and takeaways are only a small sample of Fortune’s in-depth exploration of Fundrise’s growth to-date. Be sure to check out the entire article to read more, and, as always, if you have any questions don’t hesitate to reach out to our team at support@fundrise.com.
Ps. Our gratitude to Zappa, Ben's pup and true Fundrise mastermind, pictured above, for his permission to allow Ben to appear in this piece.
