Happy New Year! All of us at Groundfloor are looking forward to all that 2021 has in store for us, and for you, our customers. Before the new year gets too much further underway, though, let’s take a look back at everything we accomplished in 2020. During a year of unprecedented challenges, Groundfloor continued to grow, breaking investment and revenue records and developing innovative new products and features, and garnered several new accolades. Check out our graphical summary below to put it all in perspective.
Investor Activity
Our community continued to grow and spread the word about Groundfloor's innovative investing platform in 2020. We hit 87,500 registered Groundfloor users, who made over $145 million in investments on our platform in 2020 -- a new all-time record for retail investments and a 50% increase year over year from 2019.
Even as the COVID-19 pandemic slowed down much of the financial world, the number of investments on our platform grew by 28%, from 307,586 in 2019 to 394,882 in 2020; and the average number of investors per loan shot up to 710.
Loan Originations
After intentionally scaling back lending operations in Q2 2020 at the onset of the pandemic, we worked steadily to rebuild our loan pipeline, restoring our pre-COVID lending guidelines by Q3 2020. We ended 2020 with a total of 380 loans originated, representing over $76 million. The average loan size increased by 14% from 2019, growing from $177,371 to $201,989 in 2020. To date, we have originated over 1,730 loans since our inception.
Interest Paid
Groundfloor repaid over $5.1 million in interest on 444 loans to our investors in 2020. On an annualized basis, we delivered a 10.42% average rate of return1 on investments. Our underwriting and asset management teams continued to perform well, with only 10 of 444 loans repaid in 2020 subject to fundamental default and 190 subject to workout.2 For more information about the state of our repaid and outstanding loan portfolios during the COVID-19 pandemic, please refer to our August 2020 Portfolio Analysis. For more information about the performance of our loans up until November 2020, please refer to our most recent diversification analysis.
COVID-19 Response
2020 also threw the world and financial markets a major curveball with the onset and rapid spread of the COVID-19 pandemic. As the pandemic triggered economic uncertainty and froze financial markets, Groundfloor successfully transitioned our capital base to 100% retail capital within three months, resulting in more available lending capital than ever before with better economics. Our team understood that retail capital is more flexible in times of uncertainty; as a result, Groundfloor was uniquely positioned to support real estate developers with our capital base of thousands of individual investors, even as banks and other lending institutions would (or could) not.
Additionally, Groundfloor was proactive in communicating about the performance of our investment portfolio and the state of the real estate market. In May 2020, we performed an extensive Stress Test Analysis to model how the pandemic could potentially affect portfolio performance, and launched a weekly Asset Management Update series on our blog to provide further transparency into loan repayments and performance.
To encourage investments on our platform, we expanded access to our Groundfloor Notes product and launched the Groundfloor Stimulus Program, which rewarded investors for funding real estate developers at the beginning of the pandemic with an extra 4% interest bonus. These initiatives helped stimulate investment amidst public market uncertainty, and ultimately led to us breaking our own retail investment records each quarter since Q2 2020.
Product Expansions and Improvements
We continued to diversify and improve upon our product offerings in 2020. To meet the rising demand for real estate capital, we launched several new lending initiatives to take advantage of new market opportunities. These initiatives included new lowered pricing, an expanded lending footprint for our new construction loan product, an increased maximum loan size, and a new 100% loan-to-cost (LTC) product called Loan100, available only to our most experienced borrowers. These new initiatives also benefited Groundfloor investors, giving them a wider variety of investment opportunities and options for diversification.
2020 also saw Groundfloor achieve significant progress in enhancing our platform to match the evolving sophistication of our product suite and meet the needs of a growing investor base. In Q1 2020, we developed and launched the Groundfloor Investment Wizard, a new feature that automatically matches available loans with investment criteria users can select and customize, making it easier to diversify working dollars with just a few clicks. Our team also overhauled our investor onboarding experience and made significant updates to our Investor Dashboard to enhance user experience and functionality. Finally, in Q3 2020, we launched a national affiliate program to attract new investors to our platform.
Company Expansion and Honors
Our efforts and investment in 2020 not only resulted in record-setting performance and continued product and feature enhancements, but were further validated with several awards celebrating our innovation and business results. The company continued to grow in 2020 as we hired additional employees to help build out our team, specifically in key departments such as sales, marketing, asset management, and engineering.
Groundfloor was honored with several notable awards in 2020, including being featured on the 2020 Inc. 5000 List at #402, ranking at #102 on the 2020 Deloitte Technology Fast 500 List, being chosen as the Best Lending Platform at the 6th Annual Benzinga Global Fintech Awards (and being named a finalist for this year’s Best Alternative Investments Platform), and being named one of the Technology Association of Georgia’s Top 10 Most Innovative Companies in 2020. Groundfloor was also named the winner of the HousingWire Tech 100 Award, the Atlanta Business Chronicle’s Pacesetter Award, and the Golden Bridge Award for Startup of the Year. In total, Groundfloor received seven major industry awards last year.
While we appreciate this recognition, we measure our effectiveness through validation from our lifeblood: our customers. As such, we implemented quarterly customer satisfaction surveys in 2019 to establish an initial baseline of customer sentiment and then measure it on an ongoing basis. In 2020, our customers reported that they are extremely satisfied, giving us an average satisfaction score of 8.1 -- a significantly higher score than lending and investment product industry benchmarks. Groundfloor is committed to a service-oriented culture, and our teams digest the qualitative feedback to continuously guide customer-centric service and product improvements (such as the above-mentioned user experience enhancements) with the intention of improving these scores.
Fundraising
In May 2020, we launched our first-ever open preferred equity raise in partnership with SeedInvest. The campaign has become the most funded fintech deal in SeedInvest’s history, raising over $3.4 million from over 1,900 SeedInvest investors thus far and bringing Groundfloor's total public shareholders to over 4,700, owning over 25% of the company. The financing raised was put to immediate use addressing hiring needs and expanding product and regulatory development to support new features, offerings, and enhancements to our innovative investment products.
Whether you’re an investor, borrower, partner, or friend, we thank you for your continuing support and interest, and invite you to participate by posting comments and questions below, emailing us directly at founders@groundfloor.us, or contacting our support staff at support@groundfloor.us.
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