FintekNews is pleased to offer our weekly feature column 3 Questions. Each week, we feature a thought leader within a unique sector of fintech and ask them to answer just 3 questions for our audience in their vernacular. This week, we’d like to introduce you to Brian Dally, Co-Founder & CEO & of Groundfloor, the first issuer qualified by the U.S. Securities & Exchange Commission to offer real estate based payment dependent notes that are available to non-accredited investors.
NAME: Brian Dally
TITLE:
Co-Founder & CEOCOMPANY:
GroundfloorWEB ADDRESS:
www.groundfloor.usHow did you personally become involved in fintech?
I was pulled into it by a very persistent allergy to the type of incumbent power structures that are on glaring display in finance. Arriving at them from two very different backgrounds, my co-founder Nick Bhargava and I found that we shared some very provocative ideas about capital formation. We thought it could and should be reformatted to be highly decentralized, hyper efficient and radically open like the Internet itself. Nick had just come off his work helping to draft and pass Title III (the equity crowdfunding part) of the 2012 JOBS Act. He had a background with FINRA and the SEC. To make our vision happen, we realized there was a huge opportunity to create a mass market financial product that would give people direct access to high-alpha private investments on a highly fractionalized basis.
What does your firm do/offer within the fintech sector?
Groundfloor has opened up an entirely new class of private security to public access. The innovation is one part regulatory, one party financial and one part technological. We originate first-lien bridge loans to real estate entrepreneurs. They use the financing to acquire and renovate single-family residential real estate. This is our beachhead market—and it works well for our larger purposes. The loans are ultimately financed via a novel payment-dependent note type structure. The investment product allows any investor to build their own portfolio of high-yield, short-term real estate loans that they choose, starting at a unit price of $10. That’s the key. Our investors choose, and the product is engineered for anyone with about $200 to invest to be properly diversified, based on empirical data from our first 3,000 investors.
Our greatest success has been Groundfloor’s vision of democratizing and leveling the playing field of investing by opening private markets to the public is working. Over the past three years, our loans have returned over 12% annually on a 6 to12-month term. Thousands of regular Americans have invested tens of millions of dollars in Groundfloor's real estate loans and are earning substantial returns, whether their portfolio is $100 or $100s of thousands. We’re proud of that.
What fintech leader do you admire the most and why?
Chris Larsen, founder of Prosper and Ripple. I don't know him yet, but I admire his track record on the bleeding edge of democratizing investing and fintech more generally.
How do you feel consumers (or if more relevant for your firm – businesses) are adapting to the facet of fintech that your company operates within?
Demand for investment in private securities offerings in a wide variety of asset classes has surged in recent years as more people look to diversify their portfolios with strong risk-adjusted annual returns. Historically, however, most private investment opportunities not structured as a fund have been restricted to accredited investors. We think all people have a brain and ought to be able to use it to choose and invest for themselves. Investors respond when given access, control and transparency in a category they recognize like real estate. In the world of investing generally, unfortunately all dollars aren’t equal. With Groundfloor, they are. A growing number of people are waking up and getting it.