LOS ANGELES—Last week, GlobeSt.com reported on our conversation with severalexecutives familiar with the subject about both the positives andnegatives to crowdfunding. Here, we speak with afresh crop of financing and crowdfunding expertsabout the pros and cons of this method offundraising. And stay tuned for an upcomingfeature on crowdfunding's progress in our sister publicationReal Estate Forum.

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GlobeSt.com: What are the pros and cons tocrowdfunding in CRE, as you see them?

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Dan Miller, co-founder and president,Fundrise: Through a crowdfunding platform, firms areable to raise funds more quickly without having to use a broker andpay the high fees traditionally associated with that process.Electronic systems employed by crowdfunding firms can also speed upthe underwriting and fundraising process, while allowing fortransparency not often seen in commercial real estate deals,allowing for the ideal competitive situation when trying to achievea transaction.

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Real estate investment has traditionally taken place offline, sothere is a bit of a learning curve for some companies as onlineorigination, fundraising and management start to move online.Additionally, as with any new capital source, there is a level offamiliarity and trust that needs to develop before it really startsto scale. I would say that crowdfunding is right on the cusp, butnot fully there yet.

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Judd Hollas, CEO, EquityNet: Pro:Quick and effective access to capital. Crowdfunding providesentrepreneurs with access to investors that they would notordinarily have if they were to pursue funding through traditionalmeans. Entrepreneurs can easily sort through thousands of investorsto find those who want to commit their investment dollars tocompanies operating in the CRE industry in a very short timespan.

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Con: At this time, only accredited investors can participate incrowdfunding. Rules that would allow almost anyone to participatein crowdfunding are still pending. Once those rules pass, however,we will see an influx of capital available to those in the CREindustry.

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Daren Powderly, CCIM, co-founder,CrowdStreet: Pros: It works. Simply put, onlinefundraising via CRE crowdfunding portals has proven to be a viablemethod of raising capital. Today, the capital amounts are in the$500,000 to $2-million range, yet those numbers are steadilyincreasing. With more accredited individual and institutionalinvestors joining portal networks, the capital amounts willsignificantly increase in the months and years to come.

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Cons: Timing and certainty of capital, particularly during anacquisition situation, are the biggest obstacles. Sponsorssometimes have 30 days to close a transaction, and adding acrowdfunding raise to the workload can prove to be difficult.CrowdStreet and other platforms are partnering with private-capitalcompanies to provide both speed and certainty to our fundraisingefforts.

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Jilliene Helman, founder and CEO, RealtyMogul: The pros to crowdfunding are unprecedentedaccess to commercial real estate transactions for a broader scopeof investors. Alongside greater diversification potential and lowerminimum investments, crowdfunding broadens the capital base forCRE. But it is not without its pitfalls. Lack of liquidity intransactions, real investment risk and lack of day-to-day controlfor investors are potential cons.

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Adam Hooper, CEO and founder,RealCrowd: Pros are speed, efficiency, reach ofnetworks and ability to find new pools of capital that were to dateunable to be reached. Cons depend on the platform and the businessmodel, but a concern for some operators is how will this newregulatory world impact how they have been doing business, and how(or does) this increase any liability they will have toward thisnew pool of investors?

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Carrie Rossenfeld

Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.