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Crowdfunding startup RealtyShares to cease investing, faces mass layoffs

Nav Athwal and Alexis de Belloy (Credit: iStock, Twitter, and RealtyShares)

Real estate crowdfunding company RealtyShares is set to lay off the vast majority of its staff and faces an uncertain future following a failed attempt to secure more funding, according to multiple sources familiar with the matter.

The startup has raised more than $63 million from venture capital players like Union Square Ventures, Cross Creek, Hone Capital and Blue Mountain, as well as Starwood Capital’s Barry Sternlicht and Chinese firm Danhuan Capital. Its downfall would be a heavy blow to the young crowdfunding industry, which still harbors ambitions to revolutionize real estate finance.

A source close to the firm said that last-ditch efforts to find a buyer for the company last week failed. The source said RealtyShares, formerly led by ex-Cushman & Wakefield CEO Ed Forst, still has some money in the bank and will ensure that customers who invested in real estate projects through its platform will be paid back.

“Over the past six months, RealtyShares aggressively pursued a number of financing options to continue growing the business,” RealtyShares wrote in an email to customers on Wednesday. “Unfortunately, despite our best efforts, we were unable to secure additional capital. As a result, we will not offer new investments or accept new investors on the RealtyShares platform.” The email noted that RealtyShares will keep a team to manage existing investments through its platform and that the “transition will have no impact on the underlying real estate investments.”

Founded in 2013, the California-based company claims to have raised more than $870 million for more than 1,160 real estate projects. RealtyShares is part of a wave of crowdfunding startups, along with companies like Cadre, Fundrise and RealtyMogul, launched in the wake of the 2012 JOBS Act, which made it legal to advertise private investments online under certain conditions.

RealtyShares’ co-founder and CEO Nav Athwal left the company in November 2017 and Forst took over as his interim replacement. The current CEO is Alexis de Belloy, a former vice president at Homeaway.

ICO Regulations Guide: World’s Initial Coin Offering Country By Country 

Cannot speak to the veracity of the research but does seem a useful bird's eye view of the world and ICOs. 

https://bitcoinexchangeguide.com/ico-regulations-guide-worlds-initial-coin-offering-country-by-country/ 

Circle Internet Financial Ltd., one of the most valuable U.S. cryptocurrency marketplaces, agreed to acquire crowdfunding firm SeedInvest as it seeks to help startups issue digital tokens and allow its own customers to trade a wider variety of coins. 

Highlights: 

Mainstream trading platforms have been reluctant to list many assets from so-called initial coin offerings because the tokens could fall under securities rules.

“It’s not just ‘how do we let companies do ICOs?”’ Allaire said. “It’s ‘how do we support the tokenization of everything?”’ 

Full article: https://www.bloomberg.com/news/articles/2018-10-05/circle-to-buy-seedinvest-to-help-startups-raise-cash-with-crypto 

U.S. Rep. Warren Davidson, R-Ohio, said he wants to see “regulatory clarity” in the cryptocurrency market during a discussion with industry experts and lawmakers. 

http://www.govtech.com/policy/Lawmaker-Says-Cryptocurrencies-Need-Light-Touch-Regulation.html 

Some key takeaways: 

(TNS) — U.S. Rep. Warren Davidson said he wants to see “regulatory clarity” in the cryptocurrency market after a discussion with industry experts and lawmakers.

Davidson, R-Ohio, indends to introduce a House bill that would offer what he calls a “light-touch” regulation of the burgeoning and complex cryptocurrency market, which he discussed at Tuesday’s “Legislating Certainty for Cryptocurrencies” roundtable with fellow lawmakers and representatives from nearly 50 from finance firms and cryptocurrency businesses. ...

Davidson said offering regulation will offer foresight — which will solve problems and avoid harm — in an industry where innovations in the cryptocurrency technology blockchain “have outpaced current law and court decisions.”

“With a thoughtful, bipartisan approach that protects consumers, advances free market solutions, and defines safe-harbors for the earliest stage innovators, Congress can send a powerful message around the world that the U.S. is the best destination for ICO markets,” he said.

Europe has become a haven for cryptocurrency companies as they’re locating to regulation-friendly countries, like Malta and Switzerland, which are writing the rules for the industry to operate, according to Bloomberg.com. The market in the United States right now is small, but Davidson said it’s roughly a $500 billion industry where “Bitcoin itself is almost half of that.”

“The Swiss have put a framework in place that is driving capital flows there, so there’s certainty,” he said.

The concern in the United States, Davidson said, is fraud. There’s uncertainty if what these ICOs are going to be securities, or if they are actually commodities.

“We have to protect consumers,” he said.

Fully article: 

http://www.govtech.com/policy/Lawmaker-Says-Cryptocurrencies-Need-Light-Touch-Regulation.html 

Some data driven conclusions about the state of the ICO  

Collectively, ICOs of 2018 have already raised $11,690,981,663 of investments, which is 10 times bigger than the cumulative sum of investments from ICOs of Q1-2 2017. Excluding EOS, the cumulative amount of funding received from ICOs of Q1-2 2018 is 6.4 times bigger than the one of Q1-2 2017 ....

Read full article on Forbes...

https://www.forbes.com/sites/jeffreytucker/2018/08/18/despite-what-you-hear-the-ico-is-not-rip/#537d24033192