What started out as a fringe phenomenon, social investment networks where investors share opinions and make investments, has become a well-developed industry. The evolution and democratization of the internet has provided for an array of platforms across a multitude of sectors for the meeting of minds to take part in crowdfunding ventures. Currently the buzz for social investment networks is on the rise with the availability of new opportunities for investors is growing on a daily basis. According to Forbes, online crowdfunding accounted for $880 million in investments in 2010 and rose to $34.4 billion by 2015. It is believed to have surpassed the scale of the VC industry’s investments in 2016.
Equity crowdfunding has now been opened up to the masses with the passing of Titles III and IV of the US JOBS Act. Prior to this historic change in regulation, these types of investments were only open to institutions and wealthy investors. Today non-accredited investors can take part directly in the investment revolution, and have accessibility to purchasing ownership in investments that interest them. This has led to a ripple effect of epic proportions with more and more investment platforms opening up for asset based procurements.
The rise of the social investment network enables the common investor to seek the guidance of more sophisticated investors within platforms that conduct due diligence on deal flow for the network members. The empowerment that a social investment community provides for investors is a significant force multiplier for investors at all levels. The ability to discuss specific deals and utilize the experience and market knowledge of the network increases the potential of investors to maximize the potential of growing their portfolios. Research applied by the Aite Group has disclosed that investors who utilize social investment networks tend to earn higher profits by following successful investors. The power of collaboration and community in an era of the rise of the individual plays a big part in grouping likeminded individuals into active investment networks.
Industry experts predict that we will continue to see exponential growth in social investment networks in the years to come. The surge of investments has been driven by the influx of online investors into the expanding online real estate investment market, which has led to a rise in available platforms. There are stark differences between the real estate social investment networks in relation to deal flow, asset classes, investment periods and business models, levels of due diligence, transparency, education, minimum buy ins and charges, amount of registered investors and also on a technological level. As in every free market industry, there are far fewer high quality social investment networks than lower quality sites. The differentiating factors of competing platforms need to be evaluated carefully by investors prior to entering the social investment market.
Big institutional players will move to align themselves with the growing online social investment trend. A good example is Meridian Capital which is taking part in the online investment revolution as can be seen in their strategic partnership with iintoo, a leading social investment network specializing in exit-oriented real estate investments. The partnership creates a significant precedent in the real estate crowdfunding industry, providing iintoo’s investor network with higher leverage from Meridian Capital’s 30 years of industry experience, wealth of connections, intensive due diligence processes and strong reputation in the US real estate market. Meridian Capital has closed over $35 billion in financing, making it the most active mortgage broker in the United States today.
The ease of utilizing social investment platforms has reduced the levels of bureaucracy in online investments. Simple to use and secure platforms will continue to provide users with a low barrier of entry to a market with the potential to access high quality investments, while enjoying the benefits of accredited investors’ collective wisdom.