Real estate securities marketplace LEX has raised $6 million in additional seed funding, the company announced Wednesday.
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The LEX marketplace lets both accredited and unaccredited investors obtain minority positions in commercial real estate properties through single-asset IPOs, according to the company. Investors can buy and sell shares of commercial real estate assets without lockups through LEX’s platform, which is powered by Nasdaq.
While its focus right now is commercial real estate, the company is building the platform to bring liquidity to other asset classes, according to CEO Drew Sterrett.
“We really are an infrastructure platform,” Sterrett said in an interview with Crunchbase News. “An infrastructure and technology platform.”
LEX began with commercial real estate because that’s Sterrett’s background, he said. The CEO was working at a private equity firm and structuring commercial real estate deals, but didn’t have the ability to go into a PE deal and invest in real estate. Sterrett came to the realization that commercial real estate was one of the oldest asset classes, but extremely illiquid.
“We had artificial intelligence funds before we had real estate and commercial real estate funds,” Sterrett said.
The company is hoping to one day move past commercial real estate to other asset classes including income share agreements, farmland and private equity. LEX plans on using the new funding to invest in the company’s technology and grow the team, which currently has about 25 employees and may grow past 50 employees in the next year, Sterrett said.
Venture-backed commercial real estate startups raised nearly $379 million in funding in 2020, according to preliminary Crunchbase data, while VC-backed startups in the real estate investment space raised more than $333 million. Fintech, on the other hand, raised more than $26 billion.
Investors in the round include WatermanClark managing partner Ric Clark, Tim Callahan, Paul Hastings partner Marty Edelman, Kawawa Capital, Inertia Ventures, Modern Venture Partners, Subversive Capital, Gaingels, Two Lanterns Venture Partners, RAJ Capital and Arizona Cardinals player DeAndre Hopkins.
“The LEX platform provides a creative solution to some of the industry’s long-standing pain points and empowers institutional and retail investors with new tools to diversify their portfolios while providing property owners with a unique model of accessing liquidity,” former Brookfield veteran Clark of WatermanClark said in a statement.
LEX last raised $4 million in seed funding from Greycroft and Thor Equities in October 2019. The new round brings the company’s total funding to more than $10 million.
Illustration: Li-Anne Dias