Solving the “Dirty Secret” of Crowdfunding
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Fritton:”We are discussing with a number of institutions right now, but we are still focused on cultivating our crowd.”
LOS ANGELES—“One of the dirty secrets of peer-to-peer funding is that it always starts out with the crowd and then moves exclusively to the institutions,” Jason Fritton, the co-founder and CEO of Patch of Land, tells GlobeSt.com. Fritton is trying to avoid that outcome by finding a balance between the crowd and institutional investors. In essence, his company Patch of Land, which, to date, has not lost any investor capital, is acting as a strict filter, originating what the crowd and approved institutional investors can handle together.
“We have built a niche in single-family rehab and refi, as well as small multifamily markets, and now institutions can see our successful two-year record,” he says. “The institutions that we are talking to could easily outlay $200 million a month, and even a quarter of that would allow us to grow originations with instant and massive scale. The demand for our lending products has grown so quickly that it can outweigh the capacity of our crowd to fund it, so institutional capital allows us to run a more balanced marketplace with more loans and more diversification for all investors…
