Q&A with Nick Bhargava of Groundfloor | Innovators
The Conversations with Innovators blog discusses new innovations, big ideas, disruptive technologies, and the thought leaders, innovators, rebels, entrepreneurs and trailblazers that make all of this possible.
This week we are talking with Nick Bhargava, co-founder and Executive Vice President of Regulatory Affairs at Groundfloor, the first and only real estate lending marketplace open to non-accredited investors. The company has created an entirely new private security for the public market in the U.S., allowing anyone to build their own portfolio and directly invest in short-term, high-yield returns (avg. of 14%).
Nick leads product development and is responsible for regulatory strategy. An expert in securities law, Nick was heavily involved in the JOBS Act as an early pioneer who advanced the concept of crowdfunding. His years in finance have included work for the Financial Services Roundtable, SEC, FINRA, TD Waterhouse and RBC Financial Group.
Groundfloor was founded in 2013 by Brian Dally and Nick Bhargava and is headquartered in Atlanta, Georgia. Groundfloor’s fast-growing team is on a mission to benefit individual investors and the investments they fund by reformatting and opening private capital markets to broad public participation.
What was the big idea behind Groundfloor?
To take private lending public and create an alternative financial product for non-accredited investors that open up private market returns to the broadest base of individual investors.
Groundfloor is the first and only real estate lending marketplace open to non-accredited investors. Why is that so important?
It’s important because we’ve democratized investing for the 96% of people who have never been able to access this type of investment. We offer a simple way for anyone to invest in first lien real estate loans and build their own portfolio (with net returns averaging over 12%) – with no fees associated, starting with as little as $10.
What advantages does real estate lending offer to average investors over traditional asset classes like the stock market or bank savings?
Americans give away much of their ROI to fees (it is estimated that nearly half a million dollars over the course of 40 years). By cutting out the middleman, Groundfloor provides investors with the opportunity to take control of their future. Our product also delivers, on a risk-adjusted basis, outstanding yield in a debt investment, which has historically not been available to non-accredited, or retail investors.
There has been an explosion of peer-to-peer lending in the last decade. What’s unique about Groundfloor?
Lending Club and Prosper popularized peer-to-peer lending, with hundreds of thousands of investors participating directly on a fractional basis in unsecured consumer debt. Groundfloor is unique because we’re the only financial product allowing non-accredited and accredited investors alike to do that with real estate loans backed by a lien on the property. Our loans are shorter term (6-12 months vs. 3-5 years), higher yield (typically 8-12% vs. 4%) and arguably lower risk (because of the lien). Other real estate platforms are limited to accredited investors and require high minimum investments ($5,000 vs. our $10). We’re the only peer-to-peer investment product in real estate that is qualified by the SEC, with all the public disclosures, audited financials and regulatory reporting and other investor protections that come with that.
Does Groundfloor have any new innovations on the horizon?
Groundfloor plans to bring its innovative model to new asset classes, further collapsing the cost structure in various segments of the capital markets, and providing new opportunities for all investors, regardless of accreditation.
How would you describe an ideal work environment?
Open and collaborative environments, like those found in co-working spaces, incubators, or accelerators, are fantastic places to generate new ideas and work on difficult problems.
What is unique about Groundfloor’s values and culture?
The company was founded on democratic principles of access and opportunity. The asset class we allow investors to access was previously out of reach for non-accredited investors, and big institutions kept the high yield available in this segment to themselves.
What piece of advice would you give to an entrepreneur starting their first business?
Get involved with your local incubator. Learn about other startups in your city. Chances are someone is working on problems that are similar to the ones you are facing, and there are opportunities to collaborate or learn.
What’s your “one thing” that most drives your professional success?
What are you reading right now?
U.S. Securities Exchange Commission Compliance & Disclosure Interpretations.
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