AssetAvenue, a Los Angeles located online commercial real estate lender, said it had completed an $11 million Series A round to fuel growth and further develop its products. The company crowdfunds investor money into commercial real estate loans for borrowers that traditional banks won’t fund.
AssetAvenue’s algorithm rates commercial loan deals for investors that are willing to take on risk in exchange for higher interest payments.
“Many times a borrower might have a great asset that they are looking to get a loan on but their credit is terrible. Although borrower credit is important to us we are not limited to rejecting them because of that,” said Chief Executive David Manshoory. Also, “many times banks won’t lend against properties that have a high vacancy rate.”
Typically, AssetAvenue crowdfunds bridge and transitional loans for developers with plans to renovate commercial properties, apartment complexes and luxury, non-owner occupied residential properties worth more than $1 million dollars. Payment periods are one to three years.
From July to December 2014, the company’s first seven months of public operations, it said $25 million in loans were issued. Ninety percent of that money came from institutional investors like hedge funds, family offices and asset management companies, with the balance from accredited investors. In time, Manshoory said, he believes traditional banks will become involved. Promised annual rates of returns to investors vary from 8 to 12 percent.
In addition to algorithm-driven due diligence, AssetAvenue is focused on streamlining the time it takes to get a loan. Right now, the company said it takes 10 to 14 days to get a loan through the platform. With the recent investment, AssetAvenue figures it can build new technology that will hold the process consistently to 10 days. Traditional commercial real estate loans usually take 30 to 60 days to be approved.
AssetAvenue also will be spending money improve its deal assessment technology.
And yet, despite the recent troubled history of innovation in real estate lending in the United States, Manshoory said he believes their technology doesn’t raise eyebrows around real estate investors, rather it is something they appreciate.
“Lending in real estate is not a new product,” he said. “The ease of investing in real estate is new.”
The company expects familiarity and technology-enabled ease will translate into rapid growth. AssetAvenue currently has about 40 employees and wants to grow to 80 in the next six to nine months.
Funding in AssetAvenue’s $11 million Series A round was led by DCM Ventures, and included NetEase and Matrix Partners.
Technology reporter Garrett Reim can be reached at [email protected]. Follow him on Twitter @garrettreim for the latest in L.A. tech news.
