Last month we began our coverage of private platform investments—vehicles for investors to get in on the ground floor of exciting companies before they go public.

We recommend three, and while we’re not quite ready to recommend a fourth, we wanted to make investors aware of several opportunities for private investing involving the company Fundrise. One of those opportunities is investing in private real estate deals that Fundrise puts together and manages. The other is investing in the company itself; it’s a leader in the growing business of raising capital through the Internet for private investment deals.

Fundrise’s main business now is selling shares in private real estate investment trusts online, or “eREITs.” For example, Fundrise currently offers three of these eREITs with properties along the East and West coasts as well as in America’s heartland. Fundrise’s underwriting team hand-picks the diverse properties in the portfolios. 

Here’s how it works. An investor’s money goes toward a debt or equity stake in a property—such as a multifamily residential building—that generates income payouts to investors over time. You collect a slice of the rents, benefit from potential appreciation and don’t have to haggle with a single tenant. The key differences from a traditional REIT are as follows: 

eREITs are not required to distribute at least 90% of income, but Fundrise instead makes distributions that historically hover around 10%.

eREITs have no liquid market to trade in, but Fundrise can typically buy back shares quarterly, though potentially at a discount.

Fundrise shows specific properties and markets it chooses to invest in, a practice uncommon among public REITs.

By raising money online, Fundrise drastically cuts underwriting costs, which means investors get a bigger bang for their buck.

To invest, you’ll need to fill out a form at Fundrise.com. The process and information required is similar to a typical brokerage account, and you can make an investment immediately. The minimum investment is $1,000 for the eREITs. We still have some questions about these products, so we’re not ready to recommend them, but we may do so in the future.

Fundrise to Date

We’ve been impressed by Fundrise. The company is a pioneer in the crowdfunding industry and raised money for itself Feb. 1 in a first-of-its-kind crowdfunded “iPO”—short for Internet public offering. The company set out to raise $10 million and surprised nearly everyone by surpassing its goal by $4.6 million in less than a day. We are closely watching Fundrise for when it launches its next round of financing and will let you know if we think it’s a good deal

But know that crowdfunding has grown into a booming industry. From near zero five years ago, crowdfunding had become a $34.4 billion market by 2015 and continues to grow fast. The appetite for crowdfunding’s core product—startups—is voracious. As with any gold rush, perhaps the best way to play it is by investing in the picks and shovels. In this case, we’re talking about crowdfunding companies themselves, such as Fundrise.

Until recently, getting a glimpse inside one of these marketplaces was next to impossible, and the same goes for investing in one.

What we saw in Fundrise’s offering document made us keenly interested in the company:

We don’t say “pioneer” casually. Fundrise filed its initial patent to create real estate crowdfunding (officially called systems and methods for online securitization of illiquid assets) back in 2011. That’s a full four years before the Jumpstart Our Business Startups Act opened the floodgates for the industry.

Fundrise is growing like wildfire. Between 2013 and 2015, the company’s total debt and equity originations have increased from $.9 million to $70.9 million.

A change in course has fueled growth. Fundrise has nimbly reinvented itself, evolving from a local platform that connected investors with neighboring real estate into a bona fide private marketplace that now competes with major institutions.

The economics are favorable. By going direct to investors online, Fundrise can drastically undercut traditional real estate financiers. Its origination fees range from 0% to 2%, whereas private REITs impose loads up front from 15% to 20%.

The terrain ahead is vast and untapped. Fundrise currently has a mere 0.6% of the existing $15 billion-a-year private REIT industry. With its 100% online platform, the company aims to increase that share in much the same way that online brokers (E-Trade), lenders (Prosper), and roboadvisors (Betterment) did in their respective industries.

We think Fundrise may have established itself as a crucial link in an alternative supply chain for real estate capital. What it’s doing is shortening and streamlining this supply chain, democratizing access for investors and creating transparency for the industry’s currently burdensome fee structure.

We project that these three trends will continue.