Crowdfunding has become a crucial practice in the startup industry and it has helped launch the likes of the Pebble Smartwatch, Exploding Kittens trading card game and many more. This form of fundraising is not always about success stories though as there are times of peril for the entrepreneurs who are behind crowdfunding campaigns.
San Francisco-based RealtyShares hoped to revamp the real estate industry in the area through the use of emerging technologies. It was launched with the help of $58 million venture capital raised by leading firms such as Menlo Ventures, General Catalyst and Union Square Ventures.
The online portal allowed people to easily find and crowdfund real estate projects which included hotels and apartments. It created a streamlined platform that will benefit both investors and property owners.
However, in an email sent to investors last week, RealtyShares said that it was unable to secure additional capital. It has even laid off most of its staff and it will no longer accommodate future deals. It will run up until it finishes handling its currently existing deals.
What went wrong?
The website started out strong. From 2014 to 2016, venture capital was pouring in from crowdfunding firms. However, investors became less interested in the portal as the investment minimum started to ramp up steadily. Company founder Nav Athwal, who had left the company’s board earlier this year, is still a minority shareholder. He also has no idea what happened to the company he helped found.
He, however, has a few words for startups. “Don’t let your burn rates get really large, strive for cash-efficiency or profitability sooner rather than later. Build a resilient business that can continue growing, regardless of where the venture capital markets are.” He adds that a startup should understand its investors and its growth limit as well.
What should have happened
RealtyShares had an idea of the audience it wants to attract but it did not establish a solid audience before launching. According to Forbes, creating an initial audience is vital for the long-term success of crowdfunding projects.
There are various ways to do this. These include creating a landing page, sending regular emails and keeping people updated on developments on the venture. Basically, it is vital to have a strong presence online. This creates a level of credibility for entrepreneurs and it increases their capacity to draw in more investors as well.
The crowdfunding industry may be several years old already but the fact remains that it is still a growing sector. Investors are dynamic and picky when it comes to ventures they want to support. If startups want to succeed, they must fully understand the field they are moving in and the investors they want to attract.
22 Million Euros and New Investors for Finleap Connect
Finleap Connect had ventured into other European countries early on. Specifically, the Berlin-based company is active in France, Italy and...
Dakhla: a New Project for the Valorization of Pelagics
The Department of Maritime Fisheries continues the implementation of the development plan of small pelagic fisheries in the South Atlantic,...
Gold’s 15 Count: How Low Can it go Next Week?
This week, the FOMC has “injected” an additional $54.20 billion dollars of “liquidity” into the financial system. This is far...
A Stock Market Correction Appears to be Underway
We note the huge rise in money supply although not in our opening piece that looks at the Fed its...
Roche is Awarded the Distribution of Reagents in Soria for Two Million Euros
Roche will be the company to distribute reagents in Soria. According to the budget application, the amount for the supply...
Featured6 days ago
The Fintech Ecosystem in Colombia Exceeds 322 Companies
Biotech6 days ago
Genomcore Finalizes its Entry into the United Kingdom after Increasing its Turnover by 73% in 2021
Business7 days ago
Cybersecurity Rising Among America’s Infrastructure Priorities
Crowdfunding6 days ago
Valsabbina Bank and Siav Purchase 25% of MyCreditService