AssetAvenue, the Los Angeles-based online commercial real estate lender, recently announced the completion of an $11 million round of Series A funding. The company has reported that the funding will be used for further product development and growth. Having built a reputation for crowdfunding investor funds into commercial real estate loans for borrowers who are not typically able to obtain funding from traditional banks, AssetAvenue takes a rather innovation approach to commercial real estate funding. The algorithm used by AssetAvenue rates commercial loan deals for the benefit of investors who are willing to accept a higher level of risk in exchange for receiving higher interest rate payments. Annual return rates for investors willing to accept the risk vary from eight percent to 12 percent.
How AssetAvenue's Platform Works
In the competitive world of commercial real estate, it is not uncommon for a borrower to locate an excellent asset for which they need a loan, only to discover they are not able to qualify for a traditional loan due to their credit. While credit is usually important in such borrowing situations, AssetAvenue takes a slightly different approach by not rejecting applicants simply because of credit.
For instance, AssetAvenue will often crowdfund transitional and bridge loans for developers who may plan to renovate an apartment complex or other commercial property. Such properties typically have a value of more than $1 million. Pay periods tend to range between one to three years.
During the first seven months of the company's public operations last year, AssetAvenue issued approximately $25 million in loans. The majority of the funding for those loans stemmed from institutional investors, such as asset management companies, family offices, and hedge funds.
AssetAvenue's Plans for Future Growth
Along with providing due diligence driven by robust algorithms, AssetAvenue is also working toward streamlining the amount of time required to secure a loan. Currently, the firm reports that it takes up to two weeks for a loan to move through the platform. Thanks to the recent round of funding, AssetAvenue has reported being hopeful that new technology will make it possible to bring the process down to about ten days. By comparison, it currently takes traditional commercial loans anywhere from one month to two months to receive approval. Such lengthy times to process loans can often make it difficult for investors to respond to potential deals in a timely manner.
In addition to investing in technology to streamline its loan process, AssetAvenue has also reported plans to invest in improved deal assessment technology. New investments in technology could also drive further growth for the company, which currently employs a staff of about 40 but plans to double that number within less than a year.
AssetAvenue was founded by Kevin Arrabaca, David Manshoory, and Chris Ganan in 2013. As an online peer-to-peer lending platform, AssetAvenue allows qualified investors to participate in investment opportunities with as little as $5,000. The company also provides a Whole Loan Program through which loans can be funded.