November 7th, 2018
One of the most prominent internal tensions we have at Streitwise is the friction between delivering the best outward, online customer facing experience possible while at the same time staying true to our core competency as a commercial real estate investor and manager. Finite resources require internal allocation decisions that do not allow us to both develop from scratch a shiny new platform while simultaneously delivering on our most important objective of identifying, acquiring and operating what we believe to be a quality, risk adjusted portfolio of commercial real estate assets.
We could have simply elected to solve this problem by raising venture capital (“market’s hot!”), growing the team (“look at our huge team!”), and tackling everything at once (“you get a car, and you get a car!”). We watched as so many around us in the fintech world did just that. RealtyShares, Realty Mogul, PeerStreet, and so on. Growth at any cost. And fancy platforms. Really, some of our competitors’ engineering teams have done incredible jobs with the outward facing client portal.
But we prefer not to spend time and emotional energy chasing others, when we already know who we are and where we want to go. That’s been hard. I haven’t graduated from being human after all, and to shut off our natural propensity to care about “what so and so is doing” is an incredibly difficult hurdle to overcome. It takes effort and a team and a culture that understand the mission.
Today, RealtyShares announced that they will be winding down operations despite over $63 million in venture capital funding and over $870 million invested through their previous projects. No doubt red flags will pop up about the “crowdfunding” industry. The Real Deal calls this a “blow to the young crowdfunding industry”. Others are quick to point out that RealtyShares only act as an intermediary between sponsor and investor, which is an inefficient business model that relies on growth at all costs.
A few weeks ago, Wealthfront got in hot water over allocations to its internal funds, ostensibly to increase their own fee revenue at the expense of allocating to better structured funds with outside managers. These won’t be the last examples of companies that find the need to grow at any cost.
But that is simply not our mission. We stuck to our knitting and have declined any outside capital at the corporate level. Streitwise is funded exclusively by its founders as an extension of their existing commercial real estate investment business. And in having decided we’re the tortoise, not the hare, we put our heads down and push daily to:
- Patiently grow a portfolio of stable, diversified commercial real estate assets
- Cultivate a network of investors in the Streitwise community who share a similar long-term vision
- Improve and expand our partnerships with shareholder on-boarding, reporting and management companies to jointly provide excellence in customer service
Our commitment remains, as always, to our investors and the segment of their portfolio they have entrusted to us.
Eliot Bencuya is the co-founder and CEO of Streitwise. Eliot has extensive experience identifying, underwriting, and executing value-add real estate investments.
Prior to forming Streitwise, he was a Vice President of Acquisitions for Canyon Capital Realty Advisors and the Canyon-Johnson Urban Funds, where he was responsible for originating, underwriting, structuring and executing transactions in the Pacific Northwest, Northern California and Midwest regions. Mr. Bencuya also held positions at Sovereign Investment Company (a subsidiary of the Marcus and Millichap Company) and the investment banking division of Merrill Lynch & Co. He holds a Bachelor of Arts degree in Economics and International Studies from Yale University, and a Masters of Business Administration degree from the Haas School of Business at the University of California, Berkeley. Mr. Bencuya is a member of ULI.