- Tokenized over $2B worth of commercial real estate properties on online marketplace
- Key partners and service providers include world-class organizations such as Coinbase, Polymath, Templum and Ernst & Young, as part of the Entrepreneurs Access Network's inaugural cohort
- Founder & CEO has 17+ years of experience in commercial real estate brokerage with Cushman & Wakefield and Colliers International and led prior e-commerce startup in the late 90s through multiple venture rounds and eventual exit
- Raised $1M+ over two seed funding rounds
- Total Amount Raised: US $438,164
- Total Round Size: US $5,000,000
- Seed :
- Minimum Investment: US $1,000 per investor
- : Tiered Preferred Equity
- US $55,000,000 :
- Side by Side Offering
- Purchase Price: US $6.40 Final
RedSwan CRE was founded in early 2018 with the vision to transform the nature of capital markets tied to the commercial real estate (“CRE”) industry. Specifically, Red Swan is using blockchain technology to tokenize equity limited partnership shares of Class A and B CRE properties.
Through tokenization, RedSwan CRE can fractionalize direct CRE ownership, making institutional-grade CRE more accessible and attractive to smaller investors with low minimum investment thresholds. Quality, off-market CRE, historically exclusive to deep pocketed private equity and banking firms, are now available to a greater number of individual and institutional market participants. Tokenization also allows us to streamline and compress the time it takes for real estate developers and sponsors to raise equity capital for their projects. A process that traditionally takes many months to complete and requires many intermediaries and a lot of tedious paperwork can be shortened into days or weeks at lower cost.
By representing CRE ownership in the form of digital tokens, the possibility of 24/7 liquidity for CRE can now be a reality. RedSwan CRE's vision is for real estate, over time, to be easily traded in the secondary market like common stocks today.
RedSwan CRE operates a Marketplace that showcases digital CRE investment opportunities. We attract Accredited Investors within the United States under Regulation D and International Investors outside the US under Regulation S. All investments are offered at a very affordable $1,000 minimum commitment.
Since founding, we have closed two seed rounds of financing, onboarded $2 Bn worth of properties on the platform, finalized issuance technology, created a Registered Investment Advisory division and formed partnerships and relationships with world class technology, financial services and blockchain companies.
A Side by Side offering refers to a deal that is raising capital under two offering types. Investments made through the SeedInvest platform are offered via Regulation CF and subject to investment limitations further described in the Form C and/or subscription documents. Investments made outside of the SeedInvest platform are offered via Regulation D and requires one to be a verified accredited investor in order to be eligible to invest.
US $285,659 (under Reg CF only)
US $5.76 no later than Sep 24, 2021 (10.0% discount)
US $6.40 Final
Investors who invest less than $50,000 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.
Early Bird Bonus Perk: Investors who invest by Friday, 09/24/2021 at 11:59pm ET will get bumped to the next perk tier. For example, an investment of $10,000 - $24,999 will earn perks for the $25,000 - $100,000 Tier.
Tier 1: $2,500 - $9,999
10% off annual management fees for all commercial real estate investment deals that investors participate in through December 31, 2023.
Tier 2: $10,000 - $24,999
25% off annual management fees for all commercial real estate investment deals that investors participate in through December 31, 2023.
Tier 3: $25,000-$100,000
50% off annual management fees for all commercial real estate investment deals that investors participate in through December 31, 2023.
Tier 4: Over $100,000
75% off annual management fees for all commercial real estate investment deals that investors participate in through December 31, 2023.
Please note that US based investors that participate in RedSwan CRE's commercial real estate investment offerings have to be considered Accredited Investors under Regulation D. As such, the above Perks are only applicable to Accredited Investors who are participating in our SeedInvest Reg CF investment round.
It is advised that you consult a tax professional to fully understand any potential tax implications of receiving investor perks before making an investment.
Please note that due to share price calculations, some final investment amounts may be rounded down to the nearest whole share - these will still qualify for the designated perk tier. Additionally, investors must complete the online process and receive an initial email confirmation by the deadline stated above in order to be eligible for perks.
The graph below illustrates theor the of RedSwan CRE's prior rounds by year.
The commercial real estate industry is sizable. The global stock of CRE properties is approximately $75 trillion. On average, 35% of this value is backed by equity, which results in $26T of locked equity. Assuming that up to 90% of the trapped equity is tokenized, then potential maximum amount of digital CRE equity offerings can be as much as $23T over time.
Given the enormous size of the industry, the potential revenue pools are likewise significant. In CRE, a successful capital raise can generate a success based fee of 4-5%. Therefore, $23T in issuances over time can result in $1.2T of potential success fees for equity CRE crowdfunding platforms like RedSwan CRE. In addition, asset management and custody fees of 1.5% per annum can be charged to investors that hold the tokens. For $23T worth of tokens, that amounts to $0.3T of revenues per year. Finally, fees can be earned on the secondary trading of the digital tokens. Secondary trading of digital asset tokens is very nascent but we estimate that the fee rate for secondary trading will be approximately 25 basis points of volume traded.
RedSwan competes with other real estate crowdfunding firms such as Real-T, Securitize, Cadre and Crowdstreet. We believe that RedSwan is the first to focus 100% on the application of tokenization technology to high quality CRE. For example, Real-T is a blockchain RE company but focuses on small single-family and multi-family homes in secondary and tertiary markets. Securitize also leverages blockchain technology but is not RE focused. Cadre and Crowdstreet are large, well-funded equity CRE crowdfunding platforms that do offer investment access to similar high quality Class A and B buildings. However, there is no blockchain layer to their platform and hence they are limited in their ability to offer fast, secondary market liquidity.
The development and commercialization of the Company’s products and services are highly competitive. It faces competition with respect to any products and services that it may seek to develop or commercialize in the future. Its competitors include major companies worldwide. The equity crowdfunding and tokenization markets are emerging industries where new competitors are entering the market frequently. Many of the Company’s competitors have significantly greater financial, technical and human resources and may have superior expertise in research and development and marketing approved services and thus may be better equipped than the Company to develop and commercialize services. These competitors also compete with the Company in recruiting and retaining qualified personnel and acquiring technologies. Smaller or early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Accordingly, the Company’s competitors may commercialize products more rapidly or effectively than the Company is able to, which would adversely affect its competitive position, the likelihood that its services will achieve initial market acceptance and its ability to generate meaningful additional revenues from its products and services.
The Company’s expenses will significantly increase as they seek to execute their current business model. Although the Company estimates that it has enough runway until end of year, they will be ramping up cash burn to promote revenue growth, further develop R&D, and fund other Company operations after the raise. Doing so could require significant effort and expense or may not be feasible.
The Company projects aggressive growth. If these assumptions are wrong and the projections regarding market penetration are too aggressive, then the financial forecast may overstate the Company's overall viability. In addition, the forward-looking statements are only predictions. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
The outbreak of the novel coronavirus, COVID-19, has adversely impacted global commercial activity and contributed to significant declines and volatility in financial markets. The coronavirus pandemic and government responses are creating disruption in global supply chains and adversely impacting many industries. The outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate material adverse impact of the novel coronavirus. Nevertheless, the novel coronavirus presents material uncertainty and risk with respect to the Funds, their performance, and their financial results.
The regulatory regime governing blockchain technologies, cryptocurrencies, tokens, and token offerings, is uncertain, and new regulations or policies may adversely affect the development of the Company’s products. Regulation of tokens and token offerings, cryptocurrencies, blockchain technologies, and cryptocurrency exchanges currently is being developed and likely to rapidly evolve. Regulations on token offerings vary significantly among international, federal, state, and local jurisdictions and are subject to significant uncertainty. Various legislative and executive bodies in the United States and in other countries may in the future, adopt laws, regulations, guidance, or other actions, which may severely impact the development, growth, adoption, and utility of such tokens. Failure by the Company or certain users to comply with any laws, rules, and regulations, some of which may not exist yet or are subject to interpretation, could result in a variety of adverse consequences, including civil penalties and fines.
As blockchain networks and blockchain assets have grown in popularity and in market size, federal and state agencies have begun to take interest in, and in some cases regulate, their use and operations. In the case of virtual currencies, state regulators like the New York Department of Financial Services have created new regulatory frameworks and special licenses for virtual currency business activities in the State of New York. Others, as in Texas, have published guidance on how their existing regulatory regimes apply to virtual currencies. Some states, like New Hampshire, North Carolina, and Washington, have amended their state’s statutes to include virtual currencies into existing licensing regimes. Treatment of virtual currencies continues to evolve under federal law as well. The Department of the Treasury, the Securities Exchange Commission (the “SEC”), and the Commodity Futures Trading Commission (the “CFTC”), for example, have published guidance on the treatment of virtual currencies. The IRS released guidance treating virtual currency as property that is not currency for U.S. federal income tax purposes, although there is no indication yet whether other courts or federal or state regulators will follow this classification. Both federal and state agencies have instituted enforcement actions against those violating their interpretation of existing laws. The regulation of non-currency use of Blockchain assets is also uncertain. The CFTC has publicly taken the position that certain Blockchain assets are commodities, and the SEC has issued a public report stating federal securities laws require treating some Blockchain related assets as securities. To the extent that a domestic government or quasi-governmental agency exerts regulatory authority over a Blockchain network or asset, tokens may be adversely affected.
The Company may not receive necessary regulatory approvals to publicly offer tokens via a registration statement. Prior to the commencement of a sale of any tokens to the public, the Company may need regulatory approvals, and/or “no action” clearances, from the SEC and possibly state securities regulators. If the Company is not able to obtain these regulatory approvals or “no action” clearances, it may have to reconfigure the offering of tokens so that it satisfies regulatory requirements. If the Company cannot obtain the necessary approvals, it may not be able to launch or distribute tokens effectively or at all.
The auditing CPA has included a “going concern” note in the audited financials. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit of $476,397, an operating cash flow loss of $213,002 and liquid assets in cash of $405,224. The Company’s situation raises a substantial doubt on whether the entity can continue as a going concern in the next twelve months.
The Company’s ability to continue as a going concern in the next twelve months following the date the financial statements were available to be issued is dependent upon its ability to produce revenues and/or obtain financing sufficient to meet current and future obligations and deploy such to produce profitable operating results.
Management has evaluated these conditions and plans to generate revenues and raise capital as needed to satisfy its capital needs. During the next twelve months, the Company intends to fund its operations through debt and/or equity financing.
There are no assurances that management will be able to raise capital on terms acceptable to the Company. If it is unable to obtain sufficient amounts of additional capital, it may be required to reduce the scope of its planned development, which could harm its business, financial condition, and operating results. The accompanying financial statements do not include any adjustments that might result from these uncertainties.
The Company has outstanding liabilities. The Company entered into an EIDL agreement during fiscal year 2020, the credit facility size being $67,400. The interest rate is 3.75% per annum. The total outstanding balance as of December 31, 2020 was $67,400.
The Company entered into a PPP agreement during fiscal year 2020, the credit facility size being $12,500. The interest rate is 1.00% per annum. The total outstanding balance as of December 31, 2020 was $12,500.
The PPP Loan is subject to forgiveness. The Company received the forgiveness in 2021 and will recognize a debt forgiveness gain and remove liability from its balance sheet.
The Company is overdue on its 2019 and 2020 tax filing, which could subject it to penalties, fines, or interest changes, and which could indicate a failure to maintain adequate financial controls and safeguards. In particular, the Internal Revenue Service (IRS) could impose the Company with costly penalties and interest charges if the Company has filed its tax return late, or has not furnished certain information by the due date. In addition, even if the Company has filed an extension, if it underestimated its taxes, the IRS could penalize it. Potential tax consequences could adversely affect the Company’s results of operations or financial condition.
The Company’s Board does not hold regular board meetings or keep meeting minutes from its board meetings. Though the Company is a Delaware Corporation and Delaware does not legally require its corporations to record and retain meeting minutes, the practice of keeping board minutes is critical to maintaining good corporate governance. Minutes of meetings provide a record of corporate actions, including director and officer appointments and board consents for issuances, and can be helpful in the event of an audit or lawsuit. These recordkeeping practices can also help to reduce the risk of potential liability due to failure to observe corporate formalities, and the failure to do so could negatively impact certain processes, including but not limited to the due diligence process with potential investors or acquirers. There is no guarantee that the Company’s board will begin keeping board meeting minutes.
Not all of the key employees are currently working full time for the Company. As a result, the COO may not devote all of their time to the business, and may from time to time serve as employees, officers, directors, and consultants of other companies. These other companies may have interests in conflict with the Company.
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 theseshares 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 \u2014 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.
Frequently Asked Questions
A Side by Side offering refers to a deal that is raising capital under two offering types. This Side by Side offering is raising under Regulation CF and Rule 506(c) of Regulation D.
The Form C is a document the company must file with the Securities and Exchange Commission (“SEC”) which includes basic information about the company and its offering and is a condition to making a Reg CF offering available to investors. It is important to note that the SEC does not review the Form C, and therefore is not recommending and/or approving any of the securities being offered.
Before making any investment decision, it is highly recommended that prospective investors review the Form C filed with the SEC (included in the company's profile) before making any investment decision.
Rule 506(c) under Regulation D is a type of offering with no limits on how much a company may raise. The company may generally solicit their offering, but the company must verify each investor’s status as an accredited investor prior to closing and accepting funds. To learn more about Rule 506(c) under Regulation D and other offering types check out our blog and academy.
Title III of the JOBS Act outlines Reg CF, a type of offering allowing private companies to raise up to $5 million from all Americans. Prior capital raising options limited private companies to raising money only from accredited investors, historically the wealthiest ~2% of Americans. Like a Kickstarter campaign, Reg CF allows companies to raise funds online from their early adopters and the crowd. However, instead of providing investors a reward such as a t-shirt or a card, investors receive securities, typically equity, in the startups they back. To learn more about Reg CF and other offering types check out our blog and academy.
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 RedSwan CRE. Once RedSwan CRE accepts your investment, and certain regulatory procedures are completed, your money will be transferred from the escrow account to RedSwan CRE in exchange for your securities. At that point, you will be a proud owner in RedSwan CRE.
To make an investment, you will need the following information readily available:
- Personal information such as your current address and phone number
- Employment and employer information
- Net worth and income information
- Your accredited investor status
- Social Security Number or passport
- ABA bank routing number and checking account number (typically found on a personal check or bank statement) or debit card information, unless paying via a Wire transfer.
Non-accredited investors are limited in the amount that he or she may invest in a Reg CF offering during any rolling 12-month period:
- If either the annual income or the net worth of the investor is less than $107,000, the investor is limited to the greater of $2,200 or 5% of the greater of his or her annual income or net worth.
- If the annual income and net worth of the investor are both greater than $107,000, the investor is limited to 10% of the greater of his or her annual income or net worth, to a maximum of $107,000.
Separately, RedSwan CRE has set a minimum investment amount of US $1,000.
Accredited investors do not have any investment limits.
You are a partial owner of the company, you do own securities after all! But more importantly, companies which have raised money via Regulation CF must file information with the SEC and post it on their websites on an annual basis. Receiving regular company updates is important to keep shareholders educated and informed about the progress of the company and their investment. This annual report includes information similar to a company’s initial Reg CF filing and key information that a company will want to share with its investors to foster a dynamic and healthy relationship.
In certain circumstances a company may terminate its ongoing reporting requirement if:
- The company becomes a fully-reporting registrant with the SEC
- The company has filed at least one annual report, but has no more than 300 shareholders of record
- The company has filed at least three annual reports, and has no more than $10 million in assets
- The company or another party purchases or repurchases all the securities sold in reliance on Section 4(a)(6)
- The company ceases to do business
However, regardless of whether a company has terminated its ongoing reporting requirement per SEC rules, SeedInvest works with all companies on its platform to ensure that investors are provided quarterly updates. These quarterly reports will include information such as: (i) quarterly net sales, (ii) quarterly change in cash and cash on hand, (iii) material updates on the business, (iv) fundraising updates (any plans for next round, current round status, etc.), and (v) any notable press and news.
Currently there is no market or liquidity for these securities. Right now RedSwan CRE does not plan to list these securities on a national exchange or another secondary market. At some point RedSwan CRE 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 RedSwan CRE either lists their securities on an exchange, is acquired, or goes bankrupt.
You can return to SeedInvest at any time to view your portfolio of investments and obtain a summary statement. If invested under Regulation CF you may also receive periodic updates from the company about their business, in addition to monthly account statements.
This is RedSwan CRE'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. If the company runs a side by side offering that includes an offering under Regulation CF, you may also find a copy of the RedSwan CRE's Form C. The Form C includes important details about RedSwan CRE's fundraise that you should review before investing.
For offerings made under Regulation CF, you may cancel your investment at any time up to 48 hours prior to the offering end date or an earlier date set by the company. You will be sent a notification at least five business days prior to a closing that is set to occur earlier than the original stated end date giving you an opportunity to cancel your investment if you have not already done so. Once a closing occurs, and if you have not canceled your investment, you will receive an email notifying you that your securities have been issued. If you have already funded your investment, your funds will be promptly refunded to you upon cancellation. To cancel your investment, you may go to your account's portfolio page by clicking your profile icon in the top right corner.
If you invest under any other offering type, you may cancel your investment at any time, for any reason until a closing occurs. 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 account's portfolio page by clicking your profile icon in the top right corner.