EquityMultiple

EquityMultiple

Growth Stage

Real estate investing simplified

Real estate investing simplified

Overview

Raised this Round: Raised: $202,946

Total Commitments ($USD)

Platform

Wefunder

Start Date

01/25/2024

Close Date

04/29/2024

Min. Goal
$50,000
Max. Goal
$3,500,000
Min. Investment

$100

Security Type

SAFE

Series

Series A

SEC Filing Type

RegCF    Open SEC Filing

Early Bird Val. Cap

$75,000,000

Valuation Cap

$90,000,000

Discount

0%

Year Founded

2015

Industry

Financial & Insurance Products & Services

Tech Sector

Fintech

Distribution Model

B2C

Margin

High

Capital Intensity

High

Location

New York, New York

Business Type

High Growth

EquityMultiple, with a valuation of $90 million, is raising funds on Wefunder. The company has developed a platform for accessible and transparent real estate investing at scale. EquityMultiple’s intuitive online platform helps its customers build wealth through streamlined access to diverse real estate investment products that are pre-vetted. The business reported over $170 million in transaction volume in 2022 and a 60% revenue CAGR from 2018 to 2022. Charles Clinton founded EquityMultiple in February 2015. The current crowdfunding campaign has a minimum target of $50,000 and a maximum target of $3.5 million. The campaign proceeds will be used for marketing, growth operations, and improving and scaling technology for backend systems.

Summary Profit and Loss Statement

FY 2022 FY 2021

Revenue

$9,656,792

$8,493,486

COGS

$2,566,609

$925,132

Tax

$14,680

$5,176

 

 

Net Income

$-5,565,754

$-861,431

Summary Balance Sheet

FY 2022 FY 2021

Cash

$3,669,981

$7,596,755

Accounts Receivable

$4,531,269

$3,402,356

Total Assets

$38,794,622

$21,615,372

Short-Term Debt

$31,628,761

$16,896,260

Long-Term Debt

$1,331,453

$0

Total Liabilities

$32,960,214

$16,896,260

Financials as of: 01/25/2024
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Raise History

Offering Name Close Date Platform Valuation/Cap Total Raised Security Type Status Reg Type
EquityMultiple 04/28/2024 Wefunder $90,000,000 $202,946 SAFE Funded RegCF
EquityMultiple 04/29/2023 Wefunder $90,000,000 $1,399,777 SAFE Funded RegCF
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Revenue History

Note: Revenue data points reflect the latest of either the most recent fiscal year's financials, or updated revenues directly from the founder, at each raise's close date.

Valuation History

Price per Share History

Note: Share prices shown in earlier rounds may not be indicative of any stock splits.

Employee History

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Synopsis

EquityMultiple is a company that aims to democratize access to commercial real estate investing, a market traditionally dominated by institutional investors and affluent individuals. The company operates an online platform designed to simplify real estate investing, offering its users a range of pre-vetted investment opportunities. With the promise of making real estate investment more accessible and transparent, EquityMultiple provides an avenue for investors to diversify their portfolios and build wealth through real estate.

The company's platform serves as a bridge, connecting investors with various real estate investment products that might otherwise be out of reach.

The current fundraising campaign on Wefunder, with a valuation cap of $90 million, is intended to fuel further growth. The proceeds are earmarked for marketing initiatives, operational expansion, and technological enhancements, particularly for backend systems that support the platform's scalability. Such strategic investments are designed to bolster EquityMultiple's market position and enhance the user experience, potentially leading to increased transaction volumes and revenue growth.

EquityMultiple's value proposition is grounded in the belief that real estate investing should not be exclusive to a select few but rather an accessible option for a broader audience seeking to achieve their financial goals. EquityMultiple is positioned to capitalize on the growing interest in alternative investment platforms, particularly within the burgeoning US crowdfunding real estate market by focusing on user-friendly technology and a transparent investment process.

Next Section: Price

Price

EquityMultiple is currently raising funds through SAFE on Wefunder with a valuation cap of $90 million. This valuation is anchored by the company's solid performance, including a $10 million revenue over the last twelve months (LTM) and a revenue multiple of 9.00x, which is reasonable within the financial services and crowdfunding industry.

Next Section: Market

Market

EquityMultiple operates within the U.S. crowdfunding real estate market, a sector with a significant growth trajectory.

This market has been expanding rapidly, with an addressable market size valued at $4.6 billion and a remarkable growth rate of 45.9%. Such growth indicates a robust demand for alternative investment platforms that offer a range of real estate investment products. Despite the high regulatory environment that governs financial and insurance services, which includes EquityMultiple's operations, market acceptance of these investment platforms remains high. This suggests that investors increasingly seek out these products, driven by the desire for portfolio diversification and potentially higher yields than traditional investment avenues.

EquityMultiple faces stiff competition in a market shared by other crowdfunding platforms like Fundrise, Yieldstreet, RealtyMogul, Roofstock, and Arrived Homes. These competitors provide similar offerings and have their unique value propositions. Thus, EquityMultiple's differentiation through a user-friendly platform and pre-vetted investment opportunities is key to its continued growth.

The company's distribution model is primarily B2C, focusing on individual investors rather than institutions. The transactional revenue model aligns with its mission to make high-quality commercial real estate investments more accessible to a broader population. EquityMultiple's strategy to use the funds raised for marketing, operations, and improving and scaling backend technology indicates a growth-focused approach that could further strengthen its position in this competitive landscape.

Next Section: Team

Team

EquityMultiple is steered by a duo of co-founders with substantial experience in the real estate and finance sectors. As the CEO, Charles Clinton co-founded EquityMultiple with a vision to democratize access to commercial real estate investments. Clinton's background as a real estate attorney at Simpson, Thacher & Bartlett, where he worked on transactions totaling over $10 billion, including significant deals for Blackstone and Hilton, has endowed him with a deep understanding of the real estate investment landscape. His role at EquityMultiple involves shaping the strategic vision, overseeing daily operations, and sitting on the firm's investment committee and board of directors.

Marious Sjulsen, the CIO of EquityMultiple, brings a wealth of experience from his tenure in the finance industry. His career includes a year as an analyst at Lehman, an Associate at D.B. Zwirn & Co, and 7.5 years as a Vice President at Brickman before venturing into entrepreneurship with EquityMultiple. Sjulsen's financial acumen and real estate investment expertise are integral to the company's product development and operational strategies.

Next Section: Differentiation

Differentiation

EquityMultiple stands out in the crowded field of online real estate investing for several reasons. Firstly, its partnership and investment from Marcus & Millichap, a leader in commercial real estate brokerage, provides it with a unique competitive advantage in terms of market insights and access to potential deals. The company's impressive traction, with $10M in LTM Revenue as of November 2023 and $22M+ previously raised, indicates strong market confidence and growth potential.

 Additionally, introducing innovative investment vehicles like Alpine Notes and the Ascent Income Fund reflects EquityMultiple's commitment to providing diverse and attractive options for investors.

The company faces strong competition from platforms like CrowdStreet, which offers a similar range of properties and has substantial capital deployed. CrowdStreet does not charge investors a fee on direct investment but instead has a 1% to 5% fee for sponsors and a 0.25% to 2.5% fee on tailored portfolios. Republic also has real estate investing opportunities, though real estate is not its focus. Many Republic offerings are, however, open to non-accredited retail investors. Fundrise and Yieldstreet are two other big players in online real estate investing. Fundrise does not require accreditation, and investors pay a 0.15% annual investment advisory fee plus an annual management fee of 0.85% to 1.85%. REITs are also an option for non-accredited real estate investors. By offering investments in a bulk of properties, REITs offer real estate investments at lower returns than Equity Multiple but also at lower risks.

Despite its differentiation on product offerings, pricing, and partnerships, EquityMultiple must continue to innovate and possibly expand its investor base to non-accredited investors to maintain its competitive edge. The highly competitive landscape, with key players like RealtyMogul, Roofstock, and Arrived Homes, demands continuous improvement and market differentiation. EquityMultiple's future success will hinge on its ability to leverage its current growth, expand its product offerings, and potentially tap into the wider market of non-accredited investors while maintaining the quality and transparency that its current user base values.

Next Section: Performance

Performance

EquityMultiple's financial performance has been mixed. While EquityMultiple achieved a Last Twelve Months (LTM) revenue of $10 million as of November 2023, its revenue only grew by 3.4% since 2022, and it has also seen its burn rate increase significantly, from -$861,431 in 2021 to -$5,565,754 in 2022. This suggests that while the company is growing its top line, it is doing so at a substantial cost.

EquityMultiple's product development has shown good progress, with the launch of innovative investment products like Alpine Notes, which already attracted $90 million, and the Ascent Income Fund, the latter of which made $19.5 million of investments since its September 2023 launch. With over 3700 actual investors averaging approximately $130,000 across 5+ investments each, the platform demonstrates a strong user base with high engagement.

Despite these achievements, the company has faced challenges, including a small decline in team growth since the last round and stagnating revenues. EquityMultiple's cash on hand as of the most recent fiscal year-end was $3,446,285, which, when compared to a monthly burn of $221,928, suggests the company has a runway of approximately fifteen months, assuming that no additional revenue or fundraising occurs and that doesn't company doesn't increase its spendings.

Investors have committed $600 million through the platform to date. This demonstrates the platform's ability to facilitate significant transactional volume, a key performance indicator for its business model.

The company's strategic partnership with Marcus & Millichap, a leading commercial real estate brokerage firm, provides a corporate endorsement and potential deal flow that could benefit EquityMultiple's growth.

Next Section: Risk

Risk

EquityMultiple operates in the real estate investment space, which is subject to various risks that could potentially affect the company's growth and profitability.

Firstly, as a platform operating under a transactional revenue model, EquityMultiple is susceptible to fluctuations in the real estate market. Downturns or even moderate slowdowns in the market could result in reduced transaction volume on their platform, thereby impacting their revenue stream.

The company faces significant competition from established players like Fundrise, Yieldstreet, RealtyMogul, Roofstock, and Arrived Homes in the online real estate investment platform industry. This competition could lead to challenges in acquiring new users and retaining existing ones, potentially necessitating increased expenditure in marketing and customer acquisition.

Despite a high market acceptance, the company is still in a growth phase and has yet to prove long-term profitability. As with any growing company, there is a risk that EquityMultiple may not manage to achieve or sustain profitability, which could impact the return on investment for shareholders.

Additionally, the company operates in a field with high regulatory oversight. Changes in crowdfunding or real estate investment regulations could impact the company's operational model and compliance costs.

Lastly, the absence of patents for EquityMultiple's platform could leave it vulnerable to potential competition copying or improving upon its business model, which may lead to intensified competition.

Next Section: Bullish Outlook

Bullish Outlook

While competitive, the U.S. crowdfunding real estate market presents a significant opportunity for growth, and EquityMultiple has positioned itself advantageously within this space. The company's model of providing pre-vetted, diverse real estate investment products aligns with the increasing demand for such services among retail investors who previously had limited access to commercial real estate ventures.

With a valuation of $90 million and successful previous fundraising rounds totaling $22 million, EquityMultiple has demonstrated the confidence of notable investors, including Kenneth D. Pasternak and Marcus & Millichap. The company's ability to attract such high-profile investors speaks volumes about its potential and market credibility.

EquityMultiple's plans to utilize the proceeds from its current crowdfunding campaign for marketing, operational growth, and technological improvements are strategic moves that could amplify its platform's reach and operational efficiency. This foresight suggests a clear vision for scalability and an understanding of the importance of continued innovation within the fintech space.

In conclusion, EquityMultiple's intuitive platform, strong growth indicators, and strategic planning position the company as a bullish investment opportunity within the rapidly evolving real estate crowdfunding industry.

Next Section: Bearish Outlook

Bearish Outlook

EquityMultiple operates in an extremely competitive market of online real estate investment platforms, contending with established players like Fundrise, Yieldstreet, RealtyMogul, Roofstock, and Arrived Homes. These direct competitors have already carved out substantial market share, potentially limiting the growth opportunities for EquityMultiple, especially considering the high barriers to entry in the financial services industry. This could become a concern for investors considering the long path to profitability and the significant net income loss of $5,565,754 in 2022.

While the reported 60% revenue CAGR from 2018 to 2022 and a transaction volume of over $170 million in 2022 may seem promising, Equity Multiple's revenues stagnated between 2022 and 2023, indicating that the company is struggling to grow in current market conditions.

Given these factors, investors should consider whether EquityMultiple's growth strategy can outpace its cash burn and effectively compete against well-funded and more established companies in the crowded and capital-intensive real estate crowdfunding market.

Next Section: Executive Summary

Executive Summary

EquityMultiple is a financial services platform that provides an accessible avenue for individuals to participate in commercial real estate investment opportunities. With a strong track record of growth, EquityMultiple reported a 60% revenue CAGR from 2018 to 2022 and over $170 million in transaction volume in 2022 alone. The platform has facilitated more than 200 real estate transactions with $600 million invested through it, showcasing the trust and traction it has gained among investors.

However, the company's revenues stagnated between 2022 and 2023. The current investment market could make it difficult for the company to grow quickly in the short term. Equity Multiple operates in a highly competitive market. As an intermediary, many customers have complained about its customer service's lack of transparency and responsiveness.

The company has expanded its offerings and attracted significant investment capital by introducing innovative products like Alpine Notes and the Ascent Income Fund. EquityMultiple's partnership with Marcus & Millichap, a commercial real estate brokerage leader, and the backing of notable investors such as Kenneth D. Pasternak further strengthens its market position.

The company is currently in a growth phase and is seeking to raise additional funds to fuel its marketing efforts, operational growth, and technological advancements. With a valuation cap of $90 million, this crowdfunding campaign aims to secure between $50,000 and $3.5 million. These funds will be critical in enabling EquityMultiple to scale its platform and continue to democratize access to commercial real estate investments.

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EquityMultiple on Wefunder 2024
Platform: Wefunder
Security Type: SAFE
Valuation: $90,000,000

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