Republic is one of the top equity crowdfunding platforms. It has facilitated over $100 million in investments for more than 200 companies across 500,000 users. The company makes it easy for anyone to participate in alternative assets, with the average investment at only $230. But the company has been diversifying its offerings. For example, there is now Republic Real Estate.
There are certainly many benefits to real estate. These include include passive income, stable cash flows from recurring rentals, tax advantages, the potential for capital appreciation, inflation protection and low correlation among other asset classes.
So how can Republic Real Estate help out? Well, I had a chance to interview Janine Yorio, who is the co-head of the business. Before this, she served as the CEO of Compound, an equity crowdfunding site focused on apartments. Republic just recently acquired Compound.
Here’s what she had to say.
Janine Yorio Talks Republic Real Estate
Taulli: What is Republic Real Estate? How long has it been under development?
Yorio: Republic Real Estate is a digital investment platform that lets everybody, everywhere invest in global real estate in small-dollar increments. Our mission is to fundamentally reshape the fabric of real estate ownership by bringing access to high-quality real estate investments to ALL investors.
Republic Real Estate is the brainchild of Republic and the founders of Compound — an idea that was a few years in the making that came to fruition when the acquisition was completed in June 2020.
Taulli: Perhaps discuss more about the acquisition?
Yorio: The vision for Republic is big — we’re building the Amazon (NASDAQ:AMZN) of private market investing, and the acquisition of Compound and subsequent creation of a real estate vertical on Republic brings us one step closer to granting everyone access to an encyclopedic array of high-quality alternative investments previously only available to the ultra-wealthy.
The team at Compound has decades of real estate experience and a vision that stands to change the status quo in an extremely traditional asset class — one that fits right in with what we’re building at Republic.
The Rationale for Republic’s Real Estate Move
Taulli: Why the move into real estate? What is the opportunity?
Yorio: Real estate is the world’s largest asset class. To put the opportunity set into perspective, the global value of the real estate market is $228 trillion. This compares to $115 trillion for bonds, $8.5 trillion for stocks, $4.1 trillion for private equity, and $900 billion for venture capital.
And yet, it’s been difficult for so many to participate in the incredible wealth creation opportunity that is real estate investing.
Since 2016, Republic has evolved from a crowdfunding platform focused on startup investments to a full-fledged investment marketplace with a wide range of opportunities across asset classes. Our goal is to give our users the tools to build thoughtfully curated portfolios of private investments, and adding real estate to our platform seemed like a no brainer. In fact, Republic users had been asking for it for quite some time now.
From an investment standpoint, the return profile of real estate investing has historically been steady, which we believe is a natural complement to the higher-risk, higher-return startup investments on Republic’s platform.
Taulli: What has been the growth in crowdfunding for real estate?
Yorio: The online direct investing industry has matured and improved tremendously since the JOBS Act was passed eight years ago. Though several of the high-profile early entrants into the field have gone belly-up, some true winners have emerged and are gaining noteworthy traction.
Real estate platforms have raised hundreds of millions of dollars for vetted sponsors and demonstrated that meaningful amounts of capital can be raised in a way that is attractive to sponsors who have good access to more traditional forms of capital. And, to be clear, the real estate sponsors who have embraced direct retail capital raising aren’t struggling for capital — they’re prestigious firms with legitimate track records who are using this as a competitive edge.
It’s been surprising, but investment volumes through online platforms have been explosive throughout the pandemic. Republic has experienced its best months ever in terms of new customer accounts and investment volumes in the past three months, which has been exciting to see. We believe this trend is a function of both pent up demand for investment alternatives to the stock market and a new-found love of investing on the part of new, younger investors due to the recent market volatility, which has been a bit like playing the slot machines.
And we see no sign of this trend slowing down.
Tom Taulli (@ttaulli) is an advisor and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s. As of this writing, he did not hold a position in any of the aforementioned securities.
Investing through equity and real estate crowdfunding or asset tokenization requires a high degree of risk tolerance. Despite what individual companies may promise, there’s always the chance of losing a portion, or the entirety, of your investment. These risks include:
1) Greater chance of failure
2) Risk of fraudulent activity
3) Lack of liquidity
4) Economic downturns
5) Dearth of investor education
Read more: Private Investing Risks