When you hear the term IPO in the world of investing, you immediately think “Initial Public Offering.”
This is when a company offers stocks for the first time to individual investors. It is typically done to create a strong revenue stream for the company while allowing people to diversify their portfolio and buy in to ownership of a company they love.
But for Fundrise, iPO stands for internet Public Offering. The Fundrise iPO is an exciting, pioneering strategy that gives investors the opportunity to buy an ownership stake in the Fundrise company itself, Rise Companies Corp..
Each stock has a public offering price, an amount set by the company’s board of directors. However, the price for this Class B Common Stock price may vary at different times. The minimum initial investment in the iPO is $1,000. Your maximum investment in the Fundrise iPO is limited to 50% of your real estate principal invested. For example, if you’ve invested $4,000 in real estate funds (eREITs and/or eFunds), your maximum iPO investment will be no more than $2,000.
Let’s take a look at Fundrise to better understand the value of the stock offered in the iPO.
Launched 10 years ago and based in Washington, D.C., Fundrise is an online investing platform with a unique twist.
Investors know Fundrise as one of the first companies to successfully harness the power of crowdfunding in the real estate market.
This significantly lowers the barriers associated with buying into private real estate investments. In the past, this meant being "in the know" and having tens of thousands to invest. You can get started with as little as $500 when you invest with Fundrise.
The Fundrise iPO is an internet Public Offering where its platform investors can buy shares in the parent company. It is part of an early-stage investment in the company’s future growth.
Unlike a traditional IPO, the Fundrise iPO is what’s called a primary offering. Shares are not being listed on an exchange nor will they be publicly traded.
When you invest in the Fundrise iPO, you are purchasing shares of Rise Companies Corp., the parent company and owner of Fundrise.
According to the Fundrise marketing team, the iPO is an integral part of their initial mission to democratize the investment industry. When the company succeeds, so will iPO investors.
Fundrise is a very transparent company. You can find quarterly and annual audited reports and other required financial disclosures for Rise Companies Corp. on the Securities and Exchange Commission’s (SEC) Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) site.
You will not pay any commission costs when investing in the Fundrise iPO. You simply decide how many shares you want to purchase.
However, you must be a Fundrise investor with at least a starter account (or higher) to get in on the iPO. The company expects to make the iPO available to eligible investors within their first year of investing
Fundrise is offering up to 2,598,884 shares of its Class B Common Stock to the public.
Your returns will be based on the change in the value of the company over time. Fundrise has long-term potential to grow, making shares more valuable over time.
Keep in mind, as with any investment, there is no guarantee of profit and investors may be subject to a partial or total loss of their investment.
The Fundrise iPO is a long–term, illiquid investment. Their goal is to provide liquidity in the future through a potential traditional IPO on a stock exchange or a sale of the company.
However, unlike its real estate funds, the Fundrise iPO does not expect to pay a dividend during the term of the investment, and redemption may be limited or suspended, or there may be no possibility of redemption.
Fundrise iPO investors should be prepared to hold the investment indefinitely until the company experiences a liquidation event, which is not guaranteed.
The Fundrise iPO is an interesting strategy that could allow its platform investors a shot at growth in share value. The cost per share is something even new investors can handle (although it is subject to change). However, you must be a Fundrise investor in order to get in on the Fundrise iPO, and the minimum investment is $1,000.
Keep in mind, there won’t be dividends paid out on your Fundrise company shares. And Fundrise has geared the iPO specifically to long-term investors who aren’t looking to make a quick profit.
When you invest in Fundrise, you are investing in real estate projects all over the US. When you invest in the iPO, you are investing in the company itself.