Top 10 Private Equity Investment Platforms And How to Build One
Equity crowdfunding is one of the popular financing options for early-stage businesses and an opportunity for investors to access offerings that can increase in value over time.
Some crowdinvesting platforms accept accredited investors only while others enable non-accredited investors to fund some offerings, too. For competitive investment marketplaces, it may be interesting to assess all the investment opportunities offered by a platform, limitations if any, and tailor their own offering to provide better services to their clients.
And if you’re building your own private equity investment platform, these potential competitors are worth checking out. Here, we have made a list of the most popular private crowdfunding portals.
What you will learn in this post:
The best real estate investment platforms
Earlier, private real estate investment was available to the most affluent investors only. The majority of real estate investment portals still work with the accredited investors, however, they have lowered the entry level for this investment type. But not all platforms have done so, because the target audience of real estate investment platforms is still accredited investors mostly.
Let’s have a closer look at the best real estate investment platforms based on their investment offerings, account minimum, fees, and other relevant factors.
CrowdStreet is a platform that helps accredited investors diversify their portfolios by investing in commercial real estate. The platform enables investors to invest directly in a project, to invest in a fund, or get an investment strategy tailored to their needs.
An investor is required to have an Investing Account (Individual, Joint, LLC, IRA, and so on). To register one, they are required to provide their Taxpayer Identification Number, trust formation documents, or LLC agreement. The minimum that shall be held on the account is $25,000.
The fees charged by the private equity investment platform vary from 0.50% to 2.5% of invested capital depending on the project. The fee is charged annually.
ArborCrowd is a private equity investing platform launched by a real estate institution, The Arbor Family of Companies which includes Arbor Realty Trust, a leading mortgage real estate investment trust. That’s why ArborCrowd can identify real estate investments with strong potential. ArborCrowd invests in a project and then makes the project available for raising funds.
The platform collaborates with accredited investors only who are required to register an account and have at least $25,000 in it.
RealCrowd is another real estate investment platform that connects accredited investors with fundraisers. It offers over 250 commercial real estate opportunities for investors and provides capital raising options for sponsors.
RealCrowd has a separate platform ReAllocate that serves financial advisors and their clients. ReAllocate connects financial advisors and wealth managers to institutional-level private real estate investments. The platform charges a 1% annual management fee. Other custodial fees may apply, too.
To start investing, you need to register an account and have at least $25,000 on your balance.
EquityMultiple provides accredited investors an opportunity to invest in professionally managed commercial real estate in different markets. It offers equity, preferred equity, and senior debt investments.
The platform charges from 0.5% to 1.5% management fee, other fees may apply, too.
An investor shall have a minimum of $5,000 on the account but usually, projects require at least investing $10,000 and more.
OriginInvestments started as a real estate investing company, and later, it adopted the crowdfunding strategy and practices to attract more investors.
The platform collaborates with accredited investors only. To start investing, one is required to register an account and deposit at least $50,000 onto it.
OriginInvestments charges a 1.25% annual fee of net asset value. So, if an investor has $100,000, he is charged $1,250 for the first year. Along with the annual fee, the platform charges a one-time 2% administration fee if one commits to up to $250,000 of investment. For sums above $250,000, the administration fee varies from 1 to 0%. Other fees such as a setup fee, a performance fee, and an acquisition fee also can be charged.
The best private fundraising platforms for startups
Among private equity crowdinvesting portals, those that focus on startups take a special place. Here, we review some of the most popular startup investment platforms.
SeedInvest crowdfunding platform offers investors a wide range of investment opportunities including Reg D, Reg A+, and Reg CF investments. The platform works with both accredited and non-accredited investors.
The platform charges a 2% processing fee. Further, a 7.5% placement fee and a 5% warrant coverage are charged if the company reaches its crowdfunding goal. SeedInvest also charges from 0 to $10,000 for escrow services, due diligence, marketing, and legal expenses.
OurCrowd is one of the leading equity-based crowdfunding platforms that enables accredited investors to invest in startup funds.
Investors are required to have at least $50,000 in an account, and the minimum investment is $5,000. So, with this money, an investor can participate in up to 10 offerings.
If an investor has funds in the account, the platform automatically allocates them to a new investment option with a 7-day opt-out period. Investors who want to maintain individual preferences in creating their portfolios shall be checking their accounts constantly.
OurCrowd charges a 2% management fee, a one-time 4% administrative fee, and an interest fee that can vary from 20% to 25% on profits.
MicroVentures is a private equity startup investing platform open for accredited, non-accredited, and institutional investors. But the offers for each group of investors differ.
For accredited investors, the platform provides access to early- and late-stage private investments. An accredited investor needs to register an account to be able to invest. Accredited and institutional investors with a minimum balance of $50,000 on the account get access to secondary trading markets and purchase secondary shares or private companies that have completed the initial stages of fundraising.
Non-accredited investors can invest in all startup offerings (most of them have a minimum $100 requirement) and can see the current and previous campaigns. The platform doesn’t charge any fee to non-accredited investors.
FundersClub is one of the first players in the investment crowdfunding ecosystem. This private crowdfunding platform offers investing in single companies as well as multi-company funds.
The platform doesn’t charge investors any specific fees. But it collects a percentage of approx. 20% from the returns above the original investment amount. Around 10% of the raised funds are taken to cover administrative fees.
WeFunder is one of the young alternative investment platforms that are open to both accredited and non-accredited investors. The platform doesn’t require you to register an account, so, there is no minimum you shall have to start investing in offerings.
The platform charges a 2% fee (which can be higher if a credit card is used) with a minimum of $8 and a maximum of $100.
How to launch an equity-investing platform
Launching a private equity investing platform be it for startups or real estate is a complex and expensive process. Some platforms may need to comply with a set of heavy regulations, while others can conduct deals with easier requirements.
If you want to automate your private investment business and close twice as many deals with the same headcount, the best way is to use a white-label solution like those offered by LenderKit.
The LenderKit white-label investment solution can be customized to make your platform comply with European, the US, or Islamic regulations. Your equity crowdinvesting platform may have a single or multiple flows as per your request. An extensive range of out-of-the-box features enable you either to use the solution as it is or customize it depending on the needs of your business.