A real estate tech startup that helps navigate taxes on investment properties just nabbed funding - backers include early funders of Dollar Shave Club
- Realized, a wealth management platform for investment properties that simplifies a complicated tax benefit, has raised $6 million in a Series A round. The startup's revenue has doubled over the past year, cofounder and CEO David Wieland told Business Insider.
- The startup wants to grow its marketplace for so-called 1031 exchanges - a time-bound process that lets investors defer capital gains taxes when selling property. Realized, founded in 2016, says it has facilitated $350 million in transactions.
- The funding came from Rice Park Capital, a recently-formed fintech and proptech venture fund, and Calibrate Ventures, founded by two venture veterans. One of the co-founders of Calibrate, Kevin Dunlap, invested in Dollar Shave Club and was on the board of Ring before it was bought by Amazon.
- A wave of money has been flowing into startups that are looking to put a tech spin on old-school real estate dealings.
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Realized, a marketplace to help people sell investment properties without taking an immediate tax hit and re-invest in commercial real estate portfolios, just raised $6 million in a Series A round.
A wave of money has been flowing into companies that are looking to put a tech spin on real estate dealings, including brokerages like Compass, startups that help put together cash deals to buy and sell residential real estate, and even firms that finance upfront costs for renting coworking spaces.
Realized co-founder David Wieland told Business Insider that the startup's typical client is "the millionaire next-door": an investor with an average net worth of $1 million to $5 million who has a large portion of wealth tied up in real estate, and needs to adjust their strategy to prepare for retirement.
The company said it connects investors with real estate operators seeking co-investment capital, and that it has facilitated almost $350 million in real estate transactions since its 2016 launch. It declined to give a valuation tied to its latest round of funding.
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Realized wants to use the fresh funding to expand its technology and team to sign up family office investment managers, investment advisers, CPAs, and attorneys to the platform. Realized declined to disclose the number of advisers that it is already working with.
The $6 million funding was led by Calibrate Ventures, an early-stage venture fund with $80 million in capital commitments co-founded in 2017 by Kevin Dunlap and Jason Schoettler. They have previously led investments in Dollar Shave Club, Ring and Chegg. Dunlap was also on the board of doorbell-camera startup Ring before it was bought by Amazon in 2018.
"Customers are coming back multiple times to transact and referring their friends and family," said Dunlap. "That's when you know it's really working."
Rice Park Capital, a recently-formed fintech and proptech venture fund founded by a former chief investment officer for Blackstone's residential mortgage REIT, also joined the funding.
When Wieland spoke to Business Insider, he said that Realized was searching for guidance and partnership with the Series A. The company's revenue has doubled over the past year, and the startup has had a "significant positive" EBITDA for a few years, he said.
Wieland and Realized co-founder David Dahill saw an opportunity for creating a marketplace for real estate securities to make investments for smaller investors less time-intensive. The service focuses on so-called 1031 exchanges, a strategy that allows allows a real estate investor to reinvest money from one property into another of equal or greater value while deferring the hit from capital gains taxes on the first sale.
The 1031 exchange has time constraints. To get the benefit, an investor would have to notify the IRS of the property they intend to purchase within 45 days of selling their previous property, and have the whole exchange completed in 180 days.
"The next best alternative to not meeting that deadline is paying taxes," said Wieland. Realized instead reinvests the money into a portfolio of diversified properties, which it says is a simpler process than finding an individual investment with the same or higher value in only 45 days.
The portfolios are structured as Delaware Statutory Trusts, the industry standard for 1031 exchanges, and one trust can encompass investments in dozens of properties across multiple asset classes. Realized charges a fee for the transaction, but declined to disclose exact terms.