Booming investments in real estate are leading the way among equity-crowdfunded projects, which rose to $662 million in the first quarter of 2015, a big jump from the $483 million recorded in the final quarter of 2014.
"Equity crowdfunding is going to double every year as more and more investors get to know about it," said Eric Smith, director of data analytics at Crowdnetic, an online platform that tracks equity investments in real-time and just published the equity-crowdfunding data in its new quarterly report.
The financial sector has been the most successful in terms of recorded capital investments, with $172.8 million raised. The technology and services sectors are close behind.
Equity crowdfunding was made possible by Title II of the Jumpstarting Our Business Startups (JOBS) Act of 2012. The Title II regulations, enacted in September 2013, stipulate that investors must be accredited, meaning they made $200,000 or more in the last two years or have a net worth of $1 million excluding their primary residence.
Accredited investors now have the opportunity to invest in projects like the 17 John Street commercial real estate overhaul in Manhattan, a project of real estate crowdfunding platform Prodigy Network. With $35 million raised from accredited investors so far, Prodigy Network's 17 John project is the largest equity-crowdfunded deal, according to Crowdnetic.
Following that is HLR Properties, a Denver-based oil and gas company that raised $25 million. The third-largest deal as tracked by Crowdnetic is another real estate development deal from Los Angeles-based MondayOne Properties, which is building three separate developments and has raised $19 million so far.
It's no surprise that two of the three largest equity-crowdfunded deals are in real estate, which is included in the equity-crowdfunded financial sector. Crowdnetic's report shows that the largest industries in terms of recorded capital investment are real estate development, at $86 million, and other real estate investments, at $38.7 million.
"A lot of people really do like real estate," Smith said. "It's something they understand. It's a solid asset."