In the following chart, Stefano D'Aniello of GroundBreaker provides readers with a comprehensive overview of real estate crowdfunding.

1. How it works Examples Advantages Disadvantages Who is it for?
Online
Syndicates
Syndicates find a
local operator that
originates a deal
and will acquire,
build, and/or
manage the
relevant property
and offer to raise
(“syndicate”)
funds in exchange
for a cut of the
deal economics.
This is the most
common type of
operation and
includes “passive”
investment
platforms like
Realty Mogul,
iFunding,
RealCrowd, and
Patch of Land.
For those raising
funds, the
advantage of this
model is its
simplicity:
investors and
operators deal only
with the syndicator,
who takes the
burden of managing
both the investors
and the operator.
The extra layer of
costs and fees that
the syndicator
brings along and
the lack of a direct
connection
between the
operator and the
investors.
Overall, for
fundraisers and
investors alike,
online syndicates
are a good way to
get their feet wet
with real estate
crowdfunding.
Placement
Agents
Placement agents
play matchmaker
between investors
and operators –
they connect the
parties through
their online
platform and take
a commission on
all funds that are
raised (usually
3%).
Fundrise Networks
uses this model, at
least in part.
Venovate and other
alternative
investment
brokerages will
likely get into this
space.
For investors:
placement agents
are broker-dealers
bound by SEC and
FINRA rules. They
have to do some
basic due diligence
on all deals they
place.
Placement agents,
unlike syndicates,
will usually have no
ongoing
management
responsibilites.
Thus, plain
brokerage will
provide fewer
protections than a
reputable syndicate
can bring.
For operators: This
is a good
alternative if you
are looking to raise
funds for one
project, as long as
there are no
“retainers” or other
upfront fees.
If you are a savvy
investor looking for
dealflow, this

2. The fees can be a
drag.
model and lead
generation may be
a good choice, if you
don’t mind the fees.
Vertical
Integration
Vertically
integrated
platforms work
like syndicates but
also add value in
some other way:
usually by being
the developer or
property manager.
In short, they are
operator and
syndicator, all in
one.
Both Prodigy
Network and
Fundrise have done
deals of this kind in
the past (although
they do not use
these models for
every deal they do).
Since there is no
middleman trying
to get a cut of the
deal economics, this
model has the best
potential to offer a
win-win for
investors and
fundraisers alike.
The absence of a
middleman
presents some
problems on its
own, especially for
the uninitiated. I
would only warn
investors to take a
close look at fee
structures, since
the platform and its
related entities will
be getting paid in
many different
ways.
For those looking to
get “close to the
asset,” be passive,
and avoid
middlemen, this is
the best choice.
This is probably the
most sensible
business model in
the industry and we
would all benefit
from more
vertically
integrated
platforms.
Lead
Generation
These are
PR/marketing
platforms that
promote a deal
and charging per
impression (the
online term for
lead), regardless of
whether an
investment is
ForeFund Capital It provides a direct
link between
investors and
operators
(presumably at a
lower price point
than a placement
agent).
It neither protects
investors, nor
assures results to
those seeking
funds, who will
have to pay before
they even close the
investment round.
This is a great
choice for more
experienced
investors and
operators who are
comfortable paying
for an introduction,
with no assurances
made.

3. made.
White Label
These SaaS
businesses create
custom-branded
crowdfunding
platforms for their
clients, who in
turn adopt any of
the four models
listed above.
The client
manages the
content and front-
end operation of
the platform. The
technology
company manages
everything on the
back end, from
software updates
and server
maintenance, to
reporting and
compliance.
GroundBreaker
(which I co-
founded) uses this
business model and
provides operators
a scalable, fully
operating
crowdfunding
platform within a
day or two.
Clients (operators)
(i) don’t pay
commissions or
management fees,
(ii) retain full
control of their deal
and (iii) grow their
investor base
directly.
Investors will need
to analyze each
platform operator
individually, since
white label
software will power
up any of the
business models
described above.
Creating your own
site is a long-term
business move.
Hence, this is not
the best alternative
for those that need
funds right then
and there for a
project.
For operators
seeking a long-term
solution to their
funding needs and
who want to
complement their
offline fundraising
efforts with an
online platform, as
well as streamline
their fundraising
and investor
management
operations, this is
it.