Today we’re pleased to announce that Groundfloor’s product offering has been qualified by the U.S. Securities & Exchange Commission under Tier II of Regulation A. This is an important milestone not only for us as a company, but for individual investors nationwide as well.
Our first offering four years ago was available only to residents of Georgia. In 2014 and 2015, we quietly prototyped the original version of Groundfloor under the innovative Invest Georgia Exemption. After 18 months of regulatory and product development, we became the first issuer with a security like ours to qualify under Regulation A. For the past two years, we’ve operated under Tier I of those rules, which allowed us to offer securities with concurrent federal and state-level qualification. Our work with state and federal regulators made our product offering and our company better. Still, two-thirds of the U.S. investor population were left out. We have always been eager to bring Groundfloor to the rest of the country. With our lending operations ready to supply more than the Tier I limit allowed, we recently decided to request qualification under Tier II, tripling our addressable market and paving the way to start offering our securities to over 200 million individual investors in all 50 U.S. states.
The road we’ve chosen hasn’t been an easy one. The regulatory disclosures and reporting requirements to which we’ve submitted have sometimes slowed us down and imposed very high costs. That’s hard for a startup like ours. But nevertheless, we’ve always stayed true to our commitment to serve non-accredited and accredited investors alike. Why? Because we believe a more open, more accessible, broad-based and level investment playing field benefits individual investors, the projects they finance and the economy as a whole.
Demand to invest with Groundfloor currently outstrips our ability to originate a quantity and volume of loans sufficient to meet it. The launch of our origination network, announced in October, will help us accelerate our expansion without compromising loan quality. To add fuel to that fire, we’ve also decided to raise a new round of equity capital. Instead of taking the typical venture capital route, as also announced today, we’ve filed to raise this round via an online public offering under Regulation A. True to our mission, this will provide our investors the chance to own a piece of the business their investments are helping us build. We expect to make further announcements soon about how investors who register for an account with us can participate.
It’s an exciting time in finance generally, and especially for Groundfloor. Capital markets cannot be reformatted in a day. We ask for your patience as we structure an orderly expansion, inviting an increasing number of new investors to join us from our wait list every month as we bring supply into balance with demand. This means that those who’ve been investing with us won’t have to contend with a sudden increase in competition to invest, and ensures there will be enough product to go around for everyone who chooses to fund a Groundfloor account.
We invite your questions and comments about these developments below or write to us privately anytime at founders@groundfloor.us.