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Invest in GROUNDFLOOR

A wealthtech platform that lets everyone build wealth through real estate lending

  • $1,142,638Amount raised
  • $18.23Share Price
  • $73,900,000Pre-Money valuation

Purchased securities are not listed on any exchange. A secondary market for these securities does not currently exist and may never develop. You should not purchase these securities with the expectation that one eventually will.

GROUNDFLOOR is offering securities through the use of an Offering Statement that has been qualified by the Securities and Exchange Commission under Tier II of Regulation A. A copy of the Final Offering Circular that forms a part of the Offering Statement may be obtained both here and below. The contents of the Highlights, Term Sheet sections have been prepared by SI Securities, LLC and shall be deemed broker-dealer communications subject to FINRA Rule 2210 (the “Excluded Sections”). With the exception of the Excluded Sections noted above, this profile contains offering materials prepared solely by GROUNDFLOOR without the assistance of SI Securities, and not subject to FINRA Rule 2210 (the “Issuer Profile”). The Issuer Profile may contain forward-looking statements and information relating to, among other things, the company, its business plan and strategy, and its industry. These statements reflect management’s current views with respect to future events based on information currently available and are subject to risks and uncertainties that could cause the company’s actual results to differ materially. Investors are cautioned not to place undue reliance on these forward-looking statements as they are meant for illustrative purposes and they do not represent guarantees of future results, levels of activity, performance, or achievements, all of which cannot be made. Moreover, no person nor any other person or entity assumes responsibility for the accuracy and completeness of forward-looking statements, and is under no duty to update any such statements to conform them to actual results.


Company Highlights

  • GROUNDFLOOR states they are the first and only issuer of payment-dependent real estate notes ever qualified by the SEC under Regulation A+. In 2018, GROUNDFLOOR received regulatory qualification for Reg A+ Tier II, allowing GROUNDFLOOR to sell investment securities to non-accredited and accredited individuals in all 50 states.
  • Over 75,000 registered users have invested more than $250mm in GROUNDFLOOR's real estate investments which earned an average rate of return of 10.6% (since inception).
  • Growing at a 249% annual revenue CAGR since 2014 with revenues more than doubling from 2018 to 2019, from $2.89mm to $6.4mm.
  • Raised more than $22mm since inception in 2013 (this includes $14.4mm from 3,200 public shareholders who own 20% of the company, as well as notable VC and angel investors including Fintech Ventures and MDO Ventures).

Fundraise Highlights

  • Total Amount Raised: US $1,142,638
  • Total Round Size: US $9,999,994
  • Raise Description:  Series B
  • Minimum Investment:  US $984 per investor
  • Security Type:  Preferred Equity
  • Pre-Money valuation :  US $73,900,000

GROUNDFLOOR is a wealthtech platform that offers high-yield, short-term, real estate DEBT investments directly to the general public.


GROUNDFLOOR was born out of the belief that there is a fundamentally better way to capitalize America. We believe a critical mass of individuals can keep an important part of our economy moving. Concentrating capital allocation among the few unnecessarily constricts liquidity in times of financial stress. When lending is financed through millions of individual decisions, we are free.

PLATFORM DESCRIPTION

GROUNDFLOOR is the first and only company qualified by the SEC under Regulation A that offers debt-secured residential real estate investment opportunities to accredited and non-accredited investors alike.

Our unique positioning within the wealthtech industry stems from our innovative use of existing securities law to structure a private debt market -- real estate loans -- as simple investment securities that everyone can access simply and directly, regardless of their wealth or financial status. GROUNDFLOOR is strategically positioned to deliver unique value, especially in these uncertain times. We were built for this.

HOW IT WORKS

GROUNDFLOOR originates and underwrites loans for residential real estate projects. These loans are converted into investment securities (LROs) and qualified by the SEC. Once qualified, individual investors can invest in any LRO on a fractional basis with as little as $10 and create a fully-diversified, custom portfolio of real estate debt tailored to their personal risk tolerance.

TRACTION

Since our inception seven years ago, investors have enjoyed average annualized returns of over 10% each year (10.60% in 2019). This past year, registered users on our platform exceeded 75,000 and annual investment volume topped $100M (a 110% YoY increase from 2018), signaling the public’s overwhelmingly positive response to our industry-disrupting model. We have also originated 1,542 loans in 31 states, including 640 in 2019 alone.

Pitch Deck

Media Mentions

The Team

Founders and Officers

Brian Dally

CEO & CO-FOUNDER

A 20-year veteran of the startup world and an avid community organizer at heart, Brian enjoys attacking entrenched industry incumbents from a position of weakness. Brian believes that saving and investing really matter in the world, and he is passionate about leveling the playing field so everyone can build wealth. Prior to founding GROUNDFLOOR, Brian led a team within Bandwidth.com through a successful product-market pivot that resulted in the concept, brand, and launch of Republic Wireless. Brian has a JD from Harvard Law School, an MBA from Harvard Business School, and a BA with Highest Distinction from the University of Virginia.

Brian Dally

CEO & CO-FOUNDER

A 20-year veteran of the startup world and an avid community organizer at heart, Brian enjoys attacking entrenched industry incumbents from a position of weakness. Brian believes that saving and investing really matter in the world, and he is passionate about leveling the playing field so everyone can build wealth. Prior to founding GROUNDFLOOR, Brian led a team within Bandwidth.com through a successful product-market pivot that resulted in the concept, brand, and launch of Republic Wireless. Brian has a JD from Harvard Law School, an MBA from Harvard Business School, and a BA with Highest Distinction from the University of Virginia.

Nick Bhargava

CO-FOUNDER & EVP REGULATORY AFFAIRS

With over 15 years of experience in the financial and investing world, Nick is one of the foremost experts on regulatory and securities law. In fact, Nick holds the distinction of helping to draft the 2012 JOBS Act, the piece of legislation that paved the way for companies to offer investment securities via crowdfunding. Nick's financial background includes work for the Banking Policy Institute, the SEC, FINRA, TD Waterhouse, and RBC Financial Group.⁠ Nick received a BS in Biological Science and Business from the University of Alberta, and holds a law degree from Duke University. 

Nick Bhargava

CO-FOUNDER & EVP REGULATORY AFFAIRS

With over 15 years of experience in the financial and investing world, Nick is one of the foremost experts on regulatory and securities law. In fact, Nick holds the distinction of helping to draft the 2012 JOBS Act, the piece of legislation that paved the way for companies to offer investment securities via crowdfunding. Nick's financial background includes work for the Banking Policy Institute, the SEC, FINRA, TD Waterhouse, and RBC Financial Group.⁠ Nick received a BS in Biological Science and Business from the University of Alberta, and holds a law degree from Duke University. 

Chris Schmitt

CHIEF TECHNOLOGY OFFICER

Chris is a 20-year technology veteran with expertise in experience creating scalable distributed systems and serves as the CTO of GROUNDFLOOR. He is responsible for our long term technical strategy, new product creation, and growing the engineering team.

Chris's career of building creative, scalable solutions spans the financial services, health care and telecommunication industries. An entrepreneur himself, he joined GROUNDFLOOR as employee number one and has been with the team ever since. Chris has a CIS degree from Roger Williams University.

Chris Schmitt

CHIEF TECHNOLOGY OFFICER

Chris is a 20-year technology veteran with expertise in experience creating scalable distributed systems and serves as the CTO of GROUNDFLOOR. He is responsible for our long term technical strategy, new product creation, and growing the engineering team.

Chris's career of building creative, scalable solutions spans the financial services, health care and telecommunication industries. An entrepreneur himself, he joined GROUNDFLOOR as employee number one and has been with the team ever since. Chris has a CIS degree from Roger Williams University.

Rhonda Hills

SVP SALES & MARKETING

Rhonda Hills is Senior Vice President of Sales and Marketing, responsible for driving engagement and revenue growth for GROUNDFLOOR. Rhonda has spent her career building internet based supply and demand marketplaces.

Most recently Rhonda was Chief Marketing Officer for Dinova, a proprietary marketplace that exclusively connects business diners with preferred restaurants nationwide. Prior to joining Dinova, Rhonda was Executive Vice President for BLiNQ Media, an award winning social media advertising company who's technology connected ready-to-buy consumers with relevant local merchants and offers. As Chief Marketing Officer for Kudzu.com, Rhonda led the national expansion of an online marketplace that connected homeowners with top rated service providers and home contractors in their neighborhood.

Rhonda also led marketing strategy for Cox Interactive Media's network of city websites and was a Founding Father of AOL's Digital City in the 1990's.

Rhonda is a summa cum laude graduate of the University of Maryland, receiving two Bachelor of Arts, in Radio, TV and Film, and in Music.

Rhonda Hills

SVP SALES & MARKETING

Rhonda Hills is Senior Vice President of Sales and Marketing, responsible for driving engagement and revenue growth for GROUNDFLOOR. Rhonda has spent her career building internet based supply and demand marketplaces.

Most recently Rhonda was Chief Marketing Officer for Dinova, a proprietary marketplace that exclusively connects business diners with preferred restaurants nationwide. Prior to joining Dinova, Rhonda was Executive Vice President for BLiNQ Media, an award winning social media advertising company who's technology connected ready-to-buy consumers with relevant local merchants and offers. As Chief Marketing Officer for Kudzu.com, Rhonda led the national expansion of an online marketplace that connected homeowners with top rated service providers and home contractors in their neighborhood.

Rhonda also led marketing strategy for Cox Interactive Media's network of city websites and was a Founding Father of AOL's Digital City in the 1990's.

Rhonda is a summa cum laude graduate of the University of Maryland, receiving two Bachelor of Arts, in Radio, TV and Film, and in Music.

Rich Pulido

SVP LENDING & RISK MANAGEMENT

Rich is the Senior Vice President of Real Estate Operations. He is responsible for designing and building systems and processes critical to the origination, underwriting, closing, and servicing of commercial loan assets. Rich's scope spans individual loans to the entire portfolio. 

Rich spent more than 25 years in commercial real estate with Prudential. His broad experience base includes equity and debt asset management, development, portfolio management and capital market assignments. Significantly, during the Great Recession, Rich led the Special Servicing team responsible for loan workouts and REO for a $55 billion portfolio of commercial mortgages. He also started a capital markets unit, building up a $1 billion book. Rich's experience is national in scope during his career Rich has worked in Chicago, Los Angeles, and Atlanta.

After earning a BS in System Science and Mathematics from UCLA, Rich was a Systems Engineer with Northrop Corp. working on classified military aircraft projects. He subsequently earned his MBA from The University of Chicago Booth School of Business.

Rich Pulido

SVP LENDING & RISK MANAGEMENT

Rich is the Senior Vice President of Real Estate Operations. He is responsible for designing and building systems and processes critical to the origination, underwriting, closing, and servicing of commercial loan assets. Rich's scope spans individual loans to the entire portfolio. 

Rich spent more than 25 years in commercial real estate with Prudential. His broad experience base includes equity and debt asset management, development, portfolio management and capital market assignments. Significantly, during the Great Recession, Rich led the Special Servicing team responsible for loan workouts and REO for a $55 billion portfolio of commercial mortgages. He also started a capital markets unit, building up a $1 billion book. Rich's experience is national in scope during his career Rich has worked in Chicago, Los Angeles, and Atlanta.

After earning a BS in System Science and Mathematics from UCLA, Rich was a Systems Engineer with Northrop Corp. working on classified military aircraft projects. He subsequently earned his MBA from The University of Chicago Booth School of Business.

Benjamin Sutton

VP FINANCE & OPERATIONS

Benjamin is our Controller and Director of Finance of GROUNDFLOOR. He is responsible for the day to day finance and accounting functions.

Benjamin's career began in the Audit practice at KPMG LLP. He then worked in a financial reporting role at a public company during the company’s initial public offering.

Benjamin is a certified public accountant in Georgia and Virginia and has a MAcc from the University of North Florida and BS in Accounting from the University of Florida.

Benjamin Sutton

VP FINANCE & OPERATIONS

Benjamin is our Controller and Director of Finance of GROUNDFLOOR. He is responsible for the day to day finance and accounting functions.

Benjamin's career began in the Audit practice at KPMG LLP. He then worked in a financial reporting role at a public company during the company’s initial public offering.

Benjamin is a certified public accountant in Georgia and Virginia and has a MAcc from the University of North Florida and BS in Accounting from the University of Florida.

Key Team Members

Patrick Donoghue

SR. DIRECTOR, NEW MARKET DEVELOPMENT

Nathan Coleman

DIRECTOR OF INSIDE SALES

Joey Wilson

HEAD OF CUSTOMER SUCCESS

Gregory Waddy

DIRECTOR OF LENDING OPERATIONS

Justin Burris

DIRECTOR OF ENGINEERING

Dave Wilson

DIRECTOR OF ASSET MANAGEMENT

Notable Advisors & Investors

Fintech Ventures
MDO HOLDINGS
Michael Olander J.

Advisor, Board Member

Michael Goodmon

Advisor, Board Observer

Bruce Boehm

Advisor, Board Member

Richard Tuley Jr.

Advisor, Board Member

Lucas Timberlake

Advisor, Board Member

John J. Healy Jr.

Advisor, Advisor

John Mangham

Advisor, Advisor

Term Sheet

Fundraising Description

  • Round type:
    Series B

  • Round size:
    US $9,999,994

  • Raised to date:
    US $1,142,638

  • Minimum investment:
    US $984

  • Target Minimum:
    US $1,250,013
  • Key Terms

  • Security Type:
    Preferred Equity

  • Share price:
    US $18.23

  • Pre-Money valuation:
    US $73,900,000

  • Option pool:
    0.45%

  • Liquidation preference:
    1.0x
  • Additional Terms

  • Custody of Shares

    Investors who invest $250,000 or less will have their securities held in trust with a Custodian that will serve as a single shareholder of record. These investors will be subject to the Custodian’s Account Agreement, including the electronic delivery of all required information. 


  • Closing Conditions

    SI Securities, LLC has the authority to prevent a closing from occurring if it determines, in its sole discretion, that this investment is no longer suitable at the time of the closing, which includes, but is not limited to, the Company raising at least US $1,250,012.87 in connection to the current round.


  • Use of Proceeds

    Investor Perks

    All Investors will receive the perks below, plus the relevant investment tier perks:

    • Quarterly shareholder updates
    • Access to product betas
    • Access to shareholder-only investment offerings
    • Reservations will bump investors up one tier upon conversion to an investment. For example,  a reservation of $50,000 - $99,999 that converts to an investment will earn Investor Perks for the $100,000 - $149,999 tier. Please note that investors who reserve shares must subsequently convert those shares to investments by Friday, July 24th at 11:59pm ET to receive the bonus reservation perks.

    $5,000 - $9,999 Investment:

    • All of the above plus
    • Free investing for life
    • $50 GROUNDFLOOR investment credit
    • Customized GROUNDFLOOR t-shirt

    $10,000 - $49,999 Investment:

    • All of the above plus
    • $100 investment credit

    $50,000 - $99,999 Investment:

    • All of the above plus
    • $500 investment credit

    $100,000 - $149,999 Investment:

    • All of the above plus
    • $2,000 investment credit

    $250,000+ Investment:

    • All of the above plus
    • In-person annual meeting with co-founders in Atlanta
    • On-site tour of ongoing GROUNDFLOOR projects
    • Included in major investor communications throughout the year

    It is advised that you consult a tax professional to fully understand any potential tax implications of receiving investor perks before making an investment.

    Prior Rounds

    The graph below illustrates the valuation cap or the pre-money valuation of GROUNDFLOOR's prior rounds by year.


    This chart does not represent guarantees of future valuation growth and/or declines.

    Other

  • Round Size
    US $300,000
  • Closed Date
    Mar 19, 2014
  • Security Type
    Convertible Note
  • Valuation Cap
    US $4,650,000
  • Other

  • Round Size
    US $1,050,000
  • Closed Date
    Aug 5, 2014
  • Security Type
    Convertible Note
  • Valuation Cap
    US $5,000,000
  • Seed

  • Round Size
    US $1,500,000
  • Closed Date
    Dec 4, 2014
  • Security Type
    Preferred Equity
  • Pre-Money valuation
    US $6,200,000
  • Series A

  • Round Size
    US $5,000,000
  • Closed Date
    Nov 24, 2015
  • Security Type
    Preferred Equity
  • Pre-Money valuation
    US $13,500,000
  • Other

  • Round Size
    US $2,050,000
  • Closed Date
    Dec 31, 2017
  • Security Type
    Convertible Note
  • Valuation Cap
    US $24,558,750
  • Other

  • Round Size
    US $4,228,670
  • Closed Date
    Jun 30, 2018
  • Security Type
    Common Equity
  • Pre-Money valuation
    US $27,287,500
  • Other

  • Round Size
    US $1,500,000
  • Closed Date
    Oct 31, 2018
  • Security Type
    Common Equity
  • Pre-Money valuation
    US $41,104,728
  • Other

  • Round Size
    US $3,012,894
  • Closed Date
    Jun 30, 2019
  • Security Type
    Common Equity
  • Pre-Money valuation
    US $51,848,310
  • Other

  • Round Size
    US $3,607,000
  • Closed Date
    Dec 31, 2019
  • Security Type
    Convertible Note
  • Valuation Cap
    US $60,611,765
  • Other

  • Round Size
    US $538,720
  • Closed Date
    Mar 31, 2020
  • Security Type
    Common Equity
  • Pre-Money valuation
    US $67,346,405
  • Market Landscape

    The primary dynamic influencing prices in the U.S. housing market over the past eight years has been, and continues to be, undersupply. 

    According to macroeconomic analysis by the Urban Institute, every year since 2013 the United States has supplied between 100-500 thousand fewer housing units than the market demanded. This is especially true in the starter and mid-range houses we finance.

    As of year-end 2019, according to the National Association of Realtors, the number of existing homes for sale dipped to the lowest level since 1995. In our view, even as demand recedes as a result of COVID-19 or other economic shocks, supply does as well. We believe that supply would have to exceed demand for a very long time in order to catch up to aggregate pent-up demand. Anecdotal evidence we’re hearing from borrowers and observing in sales within our portfolio supports this view.

    A deep recession and/or financial crisis in 2020 could result in temporary reductions in home prices nationally, in specific housing segments, or in local markets. In the housing crash of 2008, on a nationwide basis median home prices declined 22% from the 2007 peak to the trough in 2011.

    The circumstances that drove residential housing price inflation from the 1990s through 2007 and the subsequent decline were quite different from the market forces that have been at play since then. While price declines are always possible and we can expect to see some in 2020, beyond this year and over the long-term we feel very confident that home prices in the markets and segments we serve will either not suffer from significant price pressure, or will recover from it quickly.

    Risks and Disclosures

    The Company’s filed Preliminary Offering Circular is subject to amendment, which may include material changes to the terms and disclosures.

    Real estate projects involve considerable risk, which may affect the Borrower’s ability to make payments under its Loan and our ability to collect Loan Payments on a timely basis. Real estate development projects are inherently risky, and the risks they involve may affect the Borrower’s ability to make payments under its Loan. The risks involved in real estate development projects include the following:

    • changes in the general economic climate and market conditions;
    • complications involving the renovation or redevelopment of the real estate property connected to the Project;
    • limited availability of mortgage funds or fluctuations in interest rates which may render the sale and refinancing of the real estate property corresponding to the Project difficult;
    • unanticipated increases in real estate taxes and other operating expenses;
    • environmental considerations;
    • zoning laws and other governmental rules and policies; and
    • uninsured losses including possible acts of terrorism or natural disasters.

    The risks associated with a particular investment will also vary depending on the type of Loan being financed and the terms negotiated with Borrowers. For example:

    • With Loans involving renovations, project completion may be delayed because the necessary renovations may be more extensive than first anticipated; as work progresses, more of the structure is opened up which may reveal previously unknowable defects or problems.
    • With new construction Loans, a fundamental default early in the term could be more detrimental to recovery, since it would leave us with a lien (on land and an incomplete structure) that could be worth less than the amount needed to provide a return to investors.
    • Where acquisition (either of land or of an existing structure) is part of use of proceeds the acquisition may fall through, causing the Loan to be abandoned before closing or to be paid off early, as no principal is drawn down after closing. In addition, the purchase price of the property may increase at the time of acquisition, decreasing the remaining funds available from our Loan which could impact the Borrower’s ability to complete the associated renovations or construction as contemplated.
    • Permitting delays could impede a Borrower’s ability to timely repay Loans involving renovations or construction.
    • Borrowers may use part of the Loan Proceeds to repay an existing loan used to acquire the property. There may be delays in the original lender releasing the property from any security interest related to the earlier loan in order for us to assume the first lien position after closing the loan transaction.
    • Borrowers may use part of the Loan Proceeds to offset the amount of cash or equity they otherwise would have in the project. This type of cash out refinancing may be involved in various types of Loans we originate.
    • Borrowers may be advanced all or part of the Loan Proceeds before the corresponding LROs are sold. In this case, the Borrower may begin work on the Project immediately and by the time the corresponding LROs are sold, substantial work may have been completed. This would effectively reduce the amount of time the LROs may be held, as the Borrower is now closer to their proposed exit than when LROs were first offered and therefore may be able to prepay the Loan.
    • There can be any number of issues with the title to a property. Although we confirm our senior lien position on properties by conducting a title search and obtaining title insurance, challenges to the enforceability of our senior position or title defects may nevertheless arise. Such defects could also result in a determination that we do not have an enforceable lien on the property. Resolution of these matters could delay our ability to foreclose on the property or pursue other collection remedies against the Borrower.

    The success of the Project is dependent on the performance of third parties, including the Borrower and its Principal(s), over which we have no control. We will issue a commercial loan to the Borrower to fund the Project. The Borrower owns and controls the Project and is responsible for various management functions that are essential to the success of the Project. The Principal(s) of that borrowing entity control and operate it. Poor management on the part of the Borrower, or its Principals, could adversely affect the financial performance of the Project or expose the Project to unanticipated operating risks, which could reduce the Project cash flow and adversely affect the Borrower’s ability to repay the Loan.

    We have limited experience in developing real estate projects. If the Borrower is unable to repay its obligations under the Loan, we may foreclose on the real estate property. Although we will seek out purchasers for the property, we may have to take an active role in the management of the Project. Prospective investors should consider that we and very few members of our management have previously managed real estate development projects. No assurances can be given that we can operate the Project profitably.

    Credit information may be inaccurate or may not accurately reflect the creditworthiness of the Borrower or its Principals, which may have an adverse effect on our revenues or any returns on an investment in the Series B Stock. In the course of its underwriting, Groundfloor Finance obtains credit information about the Principals of the Borrower from consumer reporting agencies, such as TransUnion, Experian or Equifax. A credit score assigned to a Principal may not reflect the actual creditworthiness of the Borrower or its Principals. (Although the Principal(s) are not personally liable for making payments under the Loan, Groundfloor Finance believes his or her FICO credit score is a relevant factor in understanding the individual practices regarding debt management of the persons who will ultimately be responsible for managing the Project and servicing the debt.) In addition, the information obtained from the credit report is not verified and the credit score of the Principal may be based on outdated, incomplete or inaccurate consumer reporting data. Additionally, there is a risk that, after the underwriting team has completed our credit review, the Principal may have:

    • become delinquent in the payment of or defaulted under an outstanding obligation;
    • taken on additional debt; or
    • sustained other adverse financial events.

    Inaccuracies in the credit information obtained or subsequent events that materially impact the ability to repay the Loan or reduce creditworthiness may increase the risk that the Borrower will default on its Loan, which will increase the risk of an adverse effect on our revenues or any returns on an investment in the Series B Stock.

    Information supplied by Borrowers may be inaccurate or intentionally false. Much of the information provided by Borrowers during the application and underwriting process is not independently verified, and, although Borrowers represent and warrant in the Loan Agreement as to the accuracy of such information, it may nevertheless be inaccurate or incomplete. Additionally, we rely on data provided by third-party sources as a significant component of our underwriting process, and this data may contain inaccuracies. Inaccurate analysis of credit data that could result from false loan application information could harm our reputation, business, and operating results.

    Although we perform fraud checks and authenticate customer identity by analyzing data provided by external databases, we cannot assure that these checks will catch all fraud, and there is a risk that these checks could fail and fraud may occur. We may not be able to recoup funds underlying loans made in connection with inaccurate statements, omissions of fact, or fraud, in which case our revenue, operating results, and profitability will be harmed. Fraudulent activity or significant increases in fraudulent activity could also lead to regulatory intervention, negatively impacting our operating results, brand and reputation, and require us to take steps to reduce fraud risk, which could increase our costs and result in an adverse effect on our revenues.

    Our auditor has expressed substantial doubt about our ability to continue as a going concern. Groundfloor’s consolidated financial statements for the period ended December 31, 2019 include a going concern note from its auditors. Groundfloor incurred a net loss for the years ending December 31, 2019 and December 31, 2018, and had an accumulated deficit of $21.5 million and $17.6 million as of December 31, 2019 and December 31, 2018, respectively. In view of these matters, Groundfloor’s ability to continue as a going concern is dependent upon Groundfloor’s ability to increase operations and to achieve a level of profitability. Groundfloor Finance’s most recent audited financial statements also included a going concern note from its auditors due to its history of net losses. Additionally, the financial statements for Groundfloor Real Estate 1, LLC, a subsidiary of Groundfloor Finance (“GRE 1”) for the period ended December 31, 2019 include a going concern note from our auditors.

    Since its inception, Groundfloor has financed its operations through debt and equity financings. Groundfloor intends to continue financing its activities and working capital needs (and those of GRE 1) largely from private financing from individual investors and venture capital firms until such time that funds provided by operations are sufficient to fund working capital requirements.

    The failure to obtain sufficient debt and equity financing and to achieve profitable operations and positive cash flows from operations could adversely affect Groundfloor’s ability to achieve its business objectives and for the company to continue as a going concern.

    We have a limited operating history. As a company in the early stages of development, we face increased risks, uncertainties, expenses and difficulties. Groundfloor Finance (with its affiliates) has a limited operating history. Groundfloor Finance owns and operates the Groundfloor Platform. Groundfloor Finance began originating real estate loans in Georgia through a subsidiary in November 2013 and transitioned to multi-state operations through the sale of Limited Recourse Obligations (“LROs”) under a Regulation A offering in September 2015. See “Management Discussion and Analysis—Plan of Operation” in the Audited Financials.

    For Groundfloor Finance’s business to be successful, the number of real estate development projects financed by Groundfloor Finance and its subsidiaries will need to increase, which will require Groundfloor Finance to increase its facilities, personnel and infrastructure to accommodate the greater servicing obligations and demands on the Groundfloor Platform. Groundfloor Finance must constantly update its software and website, expand its customer support services and retain an appropriate number of employees to maintain the operations of the Groundfloor Platform, as well as to satisfy our servicing obligations on the Loans. If Groundfloor Finance is unable to increase the capacity of the Groundfloor Platform and maintain the necessary infrastructure, this may have an adverse effect on our revenues.

    Groundfloor Finance has incurred net losses in the past and expect to incur net losses in the future. If Groundfloor Finance becomes insolvent or bankrupt, you may lose your investment. Groundfloor Finance has incurred net losses in the past, and expects to incur net losses in the future. Groundfloor Finance’s accumulated deficit was $21.5 million and $17.6 million as of December 31, 2019 and December 31, 2018, respectively. Groundfloor Finance has not been profitable since inception, and may not become profitable. In addition, Groundfloor Finance expects operating expenses to increase in the future as it expands operations. If operating expenses exceed expectations, financial performance could be adversely affected. If revenue does not grow to offset these increased expenses, Groundfloor Finance may never become profitable. In future periods, Groundfloor Finance may not have any revenue growth or revenue could decline. Failure to become profitable could impair the operations of the Groundfloor Platform by limiting access to working capital required to operate the Groundfloor Platform. If Groundfloor Finance were to become insolvent or bankrupt, this would adversely affect our ability to generate revenues and control our expenses.

    Groundfloor Finance has relied on multiple debt financings and has substantial indebtedness, which may affect the financial condition of Groundfloor Finance. Historically, Groundfloor Finance relied on debt financing to fund its start-up costs and working capital for its operations. See “Management Discussion and Analysis—Liquidity and Capital Resources” in the Audited Financials for more information on these financings. More recently, Groundfloor Finance has relied on debt financing in connection with its loan advance program. See “Management Discussion and Analysis —Liquidity and Capital Resources” and “Interests of Management and Others in Certain Transactions—ISB Note” in the Audited Financials for more information on these financings. Groundfloor Finance’s obligations under these loans will reduce its available cash for re-investment and, therefore, may negatively impact its potential profitability until all amounts are repaid. In addition, since Groundfloor Finance has granted a security interest under these loans for certain assets, if Groundfloor Finance defaulted on its obligations, the secured parties could elect to foreclose on these assets and such a foreclosure would have an adverse effect on the ability of Groundfloor to operate its business.

    Groundfloor Finance’s substantial indebtedness may also limit its ability to borrow additional funds or obtain additional financing in the future. If Groundfloor Finance obtains additional debt financing to fund its operations or as capital for the loan advance program, a substantial portion of its operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, and the terms of the debt securities issued could impose significant restrictions on its operations.

    If we are not current on certain registrations, licenses, filings, or other documents, we may be required to repurchase securities you have bought. In December 2016, Groundfloor Finance issued and sold three series of LROs after the original Form U-1 for such offering had expired. The LROs were refunded in full, including all accrued interest, and submitted again to be offered under a subsequent postqualification amendment to Groundfloor Finance’s Offering Statement on Form 1-A, covered by the Form U-1 dated December 21, 2016. If Groundfloor Finance does not stay current on certain registrations, licenses, filings, or other documents related to the Offering, we may be required to repurchase securities you have bought and as a result you would not receive any returns on the Series B Stock purchased.

    We are also subject to other risks and uncertainties related to engaging in a public offering that may affect our business. Groundfloor Finance and its subsidiaries are subject to additional risks and uncertainties in connection with engaging in an offering of the Series B Stock. These risks and uncertainties include:

    • the potential for increased scrutiny by federal and state regulatory agencies;
    • the greater likelihood of facing civil liability claims for alleged violations of federal and state securities laws;
    • the increasing costs connected with managing a growing business and expanding portfolio of Loans;
    • the impact of greater media attention, including the possibility of negative commentary of Groundfloor’s business model by other market participants such as traditional financial institutions;
    • the costs of qualifying our offerings with federal and state regulators;
    • the time commitment for management to qualify our offerings, which takes focus away from operating the business;
    • navigating complex and evolving regulatory and competitive environments;
    • increasing the number of investors utilizing the Groundfloor Platform;
    • increasing the volume of Loans facilitated through the Groundfloor Platform and fees received from Borrowers;
    • continuing to develop, maintain and scale the Groundfloor Platform;
    • effectively using limited personnel and technology resources;
    • effectively maintaining and scaling Groundfloor’s financial and risk management controls and procedures;
    • maintaining the security of the Groundfloor Platform and the confidentiality of the information provided and utilized across the Groundfloor Platform; and
    • attracting, integrating and retaining an appropriate number of qualified employees.

    *Please refer to Preliminary Offering Circular for full list of Risk Factors

    General Risks and Disclosures

    Start-up investing is risky. Investing in startups is very risky, highly speculative, and should not be made by anyone who cannot afford to lose their entire investment. Unlike an investment in a mature business where there is a track record of revenue and income, the success of a startup or early-stage venture often relies on the development of a new product or service that may or may not find a market. Before investing, you should carefully consider the specific risks and disclosures related to both this offering type and the company which can be found in this company profile and the documents in the data room below.

    Your shares are not easily transferable. You should not plan on being able to readily transfer and/or resell your security. Currently there is no market or liquidity for these shares and the company does not have any plans to list these shares on an exchange or other secondary market. At some point the company may choose to do so, but until then you should plan to hold your investment for a significant period of time before a "liquidation event" occurs. A "liquidation event" is when the company either lists their shares on an exchange, is acquired, or goes bankrupt.

    The Company may not pay dividends for the foreseeable future. Unless otherwise specified in the offering documents and subject to state law, you are not entitled to receive any dividends on your interest in the Company. Accordingly, any potential investor who anticipates the need for current dividends or income from an investment should not purchase any of the securities offered on the Site.

    Valuation and capitalization. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult to assess and you may risk overpaying for your investment. In addition, there may be additional classes of equity with rights that are superior to the class of equity being sold.

    You may only receive limited disclosure. While the company must disclose certain information, since the company is at an early-stage they may only be able to provide limited information about its business plan and operations because it does not have fully developed operations or a long history. The company may also only obligated to file information periodically regarding its business, including financial statements. A publicly listed company, in contrast, is required to file annual and quarterly reports and promptly disclose certain events — through continuing disclosure that you can use to evaluate the status of your investment.

    Investment in personnel. An early-stage investment is also an investment in the entrepreneur or management of the company. Being able to execute on the business plan is often an important factor in whether the business is viable and successful. You should be aware that a portion of your investment may fund the compensation of the company's employees, including its management. You should carefully review any disclosure regarding the company's use of proceeds.

    Possibility of fraud. In light of the relative ease with which early-stage companies can raise funds, it may be the case that certain opportunities turn out to be money-losing fraudulent schemes. As with other investments, there is no guarantee that investments will be immune from fraud.

    Lack of professional guidance. Many successful companies partially attribute their early success to the guidance of professional early-stage investors (e.g., angel investors and venture capital firms). These investors often negotiate for seats on the company's board of directors and play an important role through their resources, contacts and experience in assisting early-stage companies in executing on their business plans. An early-stage company may not have the benefit of such professional investors.

    Representatives of SI Securities, LLC are affiliated with SI Advisors, LLC ("SI Advisors") Representatives of SI Securities, LLC are affiliated with SI Advisors, LLC ("SI Advisors"). SI Advisors is an exempt investment advisor that acts as the General Partner of SI Selections Fund I, L.P. ("SI Selections Fund"). SI Selections Fund is an early stage venture capital fund owned by third-party investors. From time to time, SI Selections Fund may invest in offerings made available on the SeedInvest platform, including this offering. Investments made by SI Selections Fund may be counted towards the total funds raised necessary to reach the minimum funding target as disclosed in the applicable offering materials.

    GROUNDFLOOR's Offering Circular

    The offering circular is the legal document filed with the SEC for a Regulation A offering and provides facts that an investor needs to make an informed investment decision. The offering circular includes an overview of company and company's business, historical financials and capitalization, and key risk factors.

    Download GROUNDFLOOR's  Offering Circular here.

    Frequently Asked Questions

    About Reg A Offerings
    What does it mean that the SEC has qualified this offering?

    "The SEC has qualified this offering" means the SEC has permitted GROUNDFLOOR to offer for sale the securities described in the Offering Circular to investors such as you. The SEC is not judging the merits, accuracy, or completeness of the offering and information in the Offering Circular.


    Making an Investment in GROUNDFLOOR
    How does investing work?

    When you complete your investment on SeedInvest, your money will be transferred to an escrow account where an independent escrow agent will watch over your investment until it is accepted by GROUNDFLOOR. Once GROUNDFLOOR accepts your investment, and certain regulatory procedures are completed, your money will be transferred from the escrow account to GROUNDFLOOR in exchange for your securities. At that point, you will be a proud owner in GROUNDFLOOR.


    What is the difference between preferred equity and a convertible note?

    Preferred equity is usually issued to outside investors and carries rights and conditions that are different from that of common stock. For example, preferred equity may include rights that prevent or minimize the effects of dilution or grants special privileges in situations when the company is sold.

    A convertible note is a unique form of debt that converts into equity, usually in conjunction with a future financing round. The investor effectively loans money to a startup with the expectation that they will receive equity in the company in the future at a discounted price per share when the company raises its next round of financing.

    To learn more about startup investment types check out “How to Choose a Startup Investment” in our academy.


    What will I need to complete my investment?

    To make an investment, you will need the following information readily available:

    1. Personal information such as your current address and phone number
    2. Employment and employer information
    3. Net worth and income information
    4. Social Security Number or passport
    5. ABA bank routing number and checking account number (typically found on a personal check or bank statement)

    What if I change my mind about investing?

    Until a closing occurs, you may cancel your investment at any time, for any reason. You will receive an email when the closing occurs and your securities have been issued. If you have already funded your investment and your funds are in escrow, your funds will be promptly refunded to you upon cancellation. To cancel your investment, please go to your portfolio page by clicking your profile icon in the top right corner.


    After My Investment
    How can I sell my securities in the future?

    Currently there is no market or liquidity for these securities. Right now GROUNDFLOOR does not plan to list these securities on a national exchange or another secondary market. At some point GROUNDFLOOR may choose to do so, but until then you should plan to hold your investment for a significant period of time before a “liquidation event” occurs. A “liquidation event” is when GROUNDFLOOR either lists their securities on an exchange, is acquired, or goes bankrupt.


    How do I keep track of this investment?

    You can return to SeedInvest at any time to view your portfolio of investments and obtain a summary statement.


    Other General Questions
    What is this page about?

    This is GROUNDFLOOR's fundraising profile page, where you can find information that may be helpful for you to make an investment decision in their company. The information on this page includes the company overview, team bios, and the risks and disclosures related to this investment opportunity. You will also find a copy of the GROUNDFLOOR's Offering Circular, which has been qualified by the SEC. The Offering Circular includes important details about GROUNDFLOOR's fundraise that you should review before investing.


    What are the risks of this investment?

    This investment is highly speculative and should not be made by anyone who cannot afford to risk the entire investment amount. In addition to these risks, you should carefully consider the specific information and risks disclosed in GROUNDFLOOR’s profile and Offering Circular.