The Fundrise iPO is Back! (Updated October 2023)

The Fundrise iPO (internet public offering) is back!

Our opportunity to invest in the Fundrise iPO began Wednesday, October 25th, and will remain open until 12:00 pm ET on Wednesday, November 8th, or until the offering is sold out.

If you intend to invest, DO NOT WAIT. Fundrise is telling us in the email it may sell out. Last time, in 2017, it was heavily oversubscribed. 

Full Disclosure: I place my order for 125 shares (about $2,000) on October 25th at about 3 pm ET.

Read more: Fundrise Innovation Fund Review

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Fundrise published a the first blog post on October 11th, 2023, and emailed investors the next day. 

The blog post told us that some platform investors will have another opportunity to invest in the Fundrise iPO in “just a couple of weeks”. We now know the date. 

I missed the opportunity in 20127. But this time, I placed my order as soon as I remembered.

The email came out to investors around 1 pm ET. Invited investor can now place an order to own the Fundrise iPO 2023. 

This article outlines what we know so far. The SEC filing is now available. Read the Offering Circular (from October 3rd, 2023) before investing. 

The Fundrise iPO

The Fundrise iPO is a unique offering that allows ordinary investors to be an owner of Fundrise itself.

Fundrise has, in the past, used its platform to raise money to fund itself instead of accepting venture capital money (and the baggage that comes with it). 

The company has become a venture capital investor itself, investing on behalf of its customers (me and you), so it makes sense it can rely on its satisfied investors to raise capital. 

Fundrise venture capital investors can own pre-IPO startups such as Databricks and Canva. The Fund is only a year old, and we already have some excellent holdings. 

It appears this will be a separate fundraising opportunity not included in the Innovation Fund. 

I’ve been a happy Fundrise investor since 2017 but missed the first opportunity to invest in Fundrise. Because I’m such a firm believer in management and their philosophies, I’m eager to own part of this company. 

Fundrise iPO Terms

Terms of the iPO can be found in the Offering Circular which was published on February 14th, 2023 and updated October 3rd. Download a copy here. 

Here are the terms, assuming this is the latest version:

• 3,085,000 Class B shares offered to the public
• Cost: $15.90 per share
• Total Raise: $49,100,000
• $500 minimum investment

The total raise has been increased since February 2022. Despite the larger pool, investors should move quickly if decided to invest. 

The Fundrise iPO Offering Page

Access the Fundrise iPO offering page here. 

This page gives investors some data from which to determine if they wish to invest. It includes active investors and equity AUM, 2014 – 2022 and the Fundrise historical share price. 

Annual revenue has grown from $15.1 million in 2019 to $58.6 million in 2022. 

The offering is set at $15.90, that’s up 218% since the 2017 funding round. 

The page sets the minimum and maximum investment amount for each in investor. 

The Fundrise iPO investment minimum is $508.80 (32 shares). The maximum varies per customer. 

Your maximum iPO investment is limited to 100% of your settled non-iPO investments – less the amount already invested in the iPO.

Note: Settled non-iPO investments is the cost basis of invested funds on the platform. This means only the value of your settled funds will count toward the investment maximum, not gains. 

For example, if you invested $20,000 into a real estate eREIT, and it’s now worth $22,500, your Fundrise iPO maximum investment is $20,000. 

Investors are able to invest more money into non-iPO investments on the platform to be eligible for a higher investment amount. The offering page has a calculator to estimate higher eligibility when you make a new investment. 

Key Takeaways from the Fundrise iPO Blog Post

The blog post was vague. It didn’t discuss the iPO itself. It was more about how it is a disruptor and where it is headed. 

Here’s the section I felt was the most informative:

It’s become clear to us that we are building a much different company than most in the financial industry appreciate (something we think is a good thing). This is probably because most fintech companies to date have been more hype than substance.

Case in point, nearly every traditional investment manager we’ve talked to over the years has suggested the “brilliant” idea that we simply hand over to them, the money our investors have entrusted to us, so that they could put it into their own intermediated funds or investments — and, of course, charge a healthy markup and fee load along the way. These institutions see our investors as unsophisticated easy prey, someone that can be taken advantage of because (they believe) our investors wouldn’t know any better.

This is largely why we never raised growth equity from traditional financial organizations. The ring of power is too great a temptation.

And again why we created the Fundrise iPO, giving that opportunity instead to our investors, so that we could align the interests of investors on the platform with shareholders in the company (because they are largely one and the same).

Read the full version of the blog post here. 

Please note: This is a testimonial in partnership with Fundrise. We earn a commission from partner links on AccessIPOs.com. All opinions are my own.

Fundrise iPO — What’s Next?

Looking back at the previous iPO, the company submitted filings to the SEC offering 2 million shares to investors. 

Fundrise filed the Fundrise iPO offering circular on February 14th, 2023 and updated it October 3rd. Read it here before investing.

Also, monitor your emails and log into your Fundrise account every few days to see if the offering is live (if you don’t have one, sign up here).

The window to invest will likely be short, one to two weeks. Demand will almost certainly be high, so interested investors must follow the instructions carefully and timely. 

Fundrise disclosed its minimum and maximum investment amount in an email to eligible customers on October 18th. 

In the previous fundraise in 2017, 8,327 customers expressed $93,000,000 in interest in the Fundrise iPO. They ultimately raised the raise to 3,000,000 shares at $5/share for a total of $15,000,000.

Many investors requested more than the minimum. This time around, we should expect (and hope for) a higher fundraise so that more investors can invest. Fundrise has grown substantially over the past six years. 

Shares are priced significantly higher than $5 per share, now $15.90, giving previous investors significant gains (though no liquidity). 

Stay tuned. I’ll update this page as we learn more. Remember to act fast if you are presented with the opportunity to invest. Perform due diligence by reading the filing before investing. 

Craig (October 12th, 2023)

Note: The sections below were written in 2017. I’m leaving it for historical purposes. There are links to the previous filings that are helpful to review. 

Fundrise IPO FAQs

The following information is provided verbatim from an October 16th email to Fundrise customers:

We recently introduced you to the Fundrise iPO (internet public offering), a wholly unique ownership model whereby individual investors on Fundrise are given the opportunity to become investors in the company itself.

Because this type of early-stage investment is not typically available to most investors, it is common to have some questions. Below are answers to some of the most frequently asked questions we receive about the Fundrise iPO:

What exactly am I investing in?

When you invest in the Fundrise iPO, you are purchasing shares of Rise Companies Corp., the parent company and owner of Fundrise.

How is the Fundrise iPO different from a traditional IPO?

The Fundrise iPO is an internet public offering (not an initial public offering) where we are selling shares in the parent company as part of an early stage investment. This is different from a traditional IPO (initial public offering) in that Rise Companies Corp. is a private company that is still in its high-growth, start-up stage, making this investment more akin to a venture capital or growth equity investment. The shares are being sold directly to investors and will not be listed on a stock exchange or publicly traded.

How do I make money?

Your returns will be based on the change in the value of the company over time and will only be realized if and when the company experiences a liquidation event such as “going public” through a traditional IPO or the sale of the company.

While we believe the long-term market potential for Fundrise is substantial and our traction to date demonstrates our performance trajectory, it’s important to remember that this is an investment in a high-growth technology company that is not cash-flow positive. Investors should not expect to receive any distribution or current return, there is no guarantee of profit, and investors may be subject to a partial or total loss of their investment.

How long should I expect to hold this investment?

The Fundrise iPO is meant to be a long-term investment and is illiquid. Unlike our real estate funds and the Innovation Fund, the Fundrise iPO does not expect to provide the possibility for redemption, and investors in the Fundrise iPO should be prepared to hold the investment indefinitely until such time as the Company experiences a liquidation event (which liquidation event is not guaranteed), as described previously.

Where can I learn more about the company’s historical performance?

Similar to the reporting structures of public companies, Rise Companies (the parent company of Fundrise) provides regular, ongoing public reporting on its operations, including semi-annual financial reporting and annual audits. As part of this reporting, the company provides detailed financial reporting, as well as a summary of key business metrics related to overall performance. All of the company’s public filings, going back as far as 2015, are available publicly here on the SEC’s EDGAR website.

When and how can I invest?

Over the coming weeks, we’ll provide you with all of the information you’ll need to invest. We expect to make the iPO available to you for investment later this month.

Who Is Fundrise?

Fundrise is a Washington, D.C.-based real estate crowdfunding and venture capital investing platform. 

Fundrise finds and vets compelling real estate deals and then invests in them with money raised through its investor base. Investors buy shares in the various Fundrise eREITs. Then the company uses the proceeds to partner with regional developers and property managers.

REITs (real estate investment trusts), are common equity holdings known for their low-tax structure and healthy dividends. They trade on exchanges like normal stocks.

The eREIT, on the other hand, is an innovative product created by Fundrise to empower ordinary investors to invest in commercial real estate deals from the comfort of their home office or smartphone. eREITs don’t trade on open markets. They’re only available to investors with a Fundrise account. Fees are up to 90% lower than traditional REIT fees.

Fundrise was an early innovator in real estate crowdfunding. What sets this company apart from other real estate crowdfunding sites is the eREITs are registered securities with the SEC. This distinction allows non-accredited investors to invest as little as $1,000 in an eREIT. Most other real estate crowdfunding sites require the investor to be accredited.

I recently opened an account and bought my first eREIT. The investment is expected to provide quarterly dividend income for the next 4-6 years. Any capital gains will be paid out toward the end of the investment time horizon.

Read this comprehensive Fundrise review to learn more about the platform.

As of February 2017, the company has created five eREITs. Two are sold out and three are currently taking on new investors. At last count, they have 123,000 members and sponsored about $210 million in debt and equity investments.

But I didn’t buy soon enough.

Please note: This is a testimonial in partnership with Fundrise. We earn a commission from partner links on AccessIPOs.com. All opinions are my own.

The First Fundrise iPO (Circa 2017)

In late January, I came across a 1-A filing on the SEC website while scanning the SEC Feed on Access IPOs. The filing was for Rise Companies Corp., the parent of Fundrise.

I knew of Fundrise because it’s a D.C.-based crowdfunding startup in the same space as RealtyShares and PeerStreet, all of which I’m an investor on their platforms. All three are leaders in the real estate crowdfunding space, taking advantage of the 2012 JOBS Act. Real estate crowdfunding is a way for income investors to add risk and higher yields to build diverse passive income streams through real property ownership and lending to developers.

The Fundrise iPO is not a traditional IPO. The company is only offering shares to its customers currently invested in one or more of its eREITs.

What makes this so innovative is the company is essentially crowdfunding itself. They’re calling it the first of its kind.

It appears the IPO will be administered through the Fundrise platform, not by underwriters or online brokers. Fundrise’s platform can already handle the eREIT securities, so it should be easy for them to administer the distribution of shares.

In the days leading up to the IPO reservation period, the Co-Founder and CEO of Fundrise, Ben Miller, teased investors about new innovation on the home page. A few days later, reservations for the Fundrise iPO became available to existing Fundrise eREIT investors.

Explaining why the company is choosing to raise funds from its customers instead of traditional funding or an IPO, the SEC 1-A says this:

We believe that having our customers become “investor-owners” of the Company will increase our brand equity, transforming our customers into champions of our business, and energizing our model in a way that will drive significant value to us, and therefore our investor-owners.

This explanation is similar to what we often hear from Loyal3. Offering shares of the company to existing customers increases engagement and brand loyalty, turning customers into ambassadors.

Missed Opportunity

Sniffing this opportunity out a few days before it was live, I contemplated alerting Access IPOs subscribers. However, since this wasn’t a traditional IPO and was more of a crowdfunding opportunity, I decided against it.

On top of that, investing required multiple steps. First, you needed to open a Fundrise account and start investing in eREITs. If completed in time, then you’d have the opportunity to invest in the Fundrise iPO.

There’s also no immediate exit. These shares won’t trade on the open markets, so the money is illiquid, at least for now. Most IPO investors are looking for a quick buck.

Before I learned about the Fundrise iPO opportunity, I had already opened an account because I was planning to invest in an eREIT to diversify income streams. But I wasn’t in a hurry, so I didn’t complete my due diligence and invest until a few days ago. I never received an email alert on the IPO opportunity, and thus, didn’t find out until it was too late.

As I write this, reservations have been paused. The demand for IPO shares was very high. As of 02/05/2017, 8,327 customers expressed interest in the Fundrise iPO. The dollar amount of interest was a whopping $93,000,000!

The SEC Form 1-A disclosed that the offering was for just 2,000,000 shares at $5/share, and a $1,000 minimum investment per investor. The original maximum offering was $10,000,000.

UPDATE: An amended SEC 1-A filing late Friday bumped the offering up to 3,000,000 at $5/share for a total of $15,000,000.

Clearly, nine-fold demand was higher than expected. That’s likely why they paused the investment window.

The company will have to sort out how to allocate shares, and perhaps decide to issue more shares. Unless they do, it looks like new investors will be unable to participate. I did reach out to customer service and they left open the possibility more shares would be offered, but certainly made no guarantee.

Future Regulation A+ IPO Opportunities

I’m disappointed I probably won’t be able to participate in this exciting IPO. It’s a lesson in being nimble. I should have invested once I learned of the opportunity.

The purpose of bringing this event to your attention is that the future of IPOs is rapidly changing.

Remember, this is new territory. Companies and their underwriters need to figure out how to price and administer these within the constraints of a highly regulated industry.

Now that we’ve seen this innovative self-administered IPO in the works, more companies could choose to do something similar. For all we know, Fundrise might be experimenting with its own IPO today with future plans to provide Reg A+ IPO assistance services to other growing companies looking to raise money.

With demand for this IPO through the roof, other companies will take note.

Disclosure: I own several Fundrise real estate funds and the Innovation Fund. I’m also a long time affiliate partner of Fundrise. If you use any links in this article to open an account with Fundrise, I may receive a commission at no cost to you. This article is not a recommendation to buy or sell real estate or eREITs.