Nick Chong · 1 week ago · 2 min read · Insights via Grayscale Investments
New York › Adoption
RealBlocks Aims to Tokenize Real Estate Investing with Ethereum, Raises $3.1 Million Seed Round
RealBlocks, a platform leveraging the Ethereum blockchain to tokenize equity in real estate, closed a $3.1 million seed round. The round was led by Science, Inc., a fund with stakes in digital businesses—such as Dollar Shave Club, and was joined by Anthony Pompliano’s Morgan Creek Capital and several other venture capital funds.
Greg Gilman, co-founder and managing director of Science, Inc. said this about the raise:
“We believe that the real estate market, like nearly all asset classes, will be increasingly data-driven and digitized or digitally native, and we look forward to building on our history of transformative companies.”
Background on RealBlocks
RealBlocks is a real estate investment platform that leverages the Ethereum blockchain to tokenize shares of real estate. On the RealBlocks platform, each token represents a share of equity in a property.
The company promotes its platform as a way to provide “global access, institutional real estate, and instant liquidity” to the market, according to the startup’s website. Allegedly, the tokenization of property equity enables easier access to international investors, opens up investing via cryptocurrency, and enables “peer-to-peer trading.”
Furthermore, RealBlocks suggests that tokenization allows for the purchase and trading of “micro-shares” in property, something that was previously difficult.
The company was founded by Perrin Quarshie, who currently acts as RealBlock’s CEO. He is an MBA from the MIT Sloan School of Management, and a former engineer on nuclear fuel projects at Centrus Energy Corp. Talking about the raise, Qurashie said:
“…we’re accelerating development of our product and adoption of blockchain technology for real estate, an industry that previously hasn’t seen much innovation. This is a great opportunity to improve the investment experience for both sponsors and investors while also minimizing friction throughout the entirety of the process.”
That said, it’s still unclear how the company plans to navigate complex international monetary and investing controls. Furthermore, tokens issued through the platform are possibly securities in the United States, adding additional administrative overhead for the sale and trade of these tokens.
CryptoSlate reached out to Quarshie for more clarity on how the company plans to tackle these issues and he had this to say:
“Tokens will be securities, all of which will be issued through a broker-dealer and fully-compliant with US securities laws. On top of that, we have also built technology to enforce foreign jurisdictional compliance.”
Meanwhile, Anthony Pompliano, the founder of Morgan Creek Capital, said this about their investment in RealBlocks:
“After years of experimentation and development, the market expects these [blockchain] companies to solve real problems now. RealBlocks is one of the teams that has a working product and has shown they can execute at a high level—that is one of the reasons why we are excited to invest.”
Now that the market is maturing, service companies leveraging blockchain technology have started to raise substantial amounts of capital through private equity.
Some examples of this include Securitize—a compliance platform for digitizing securities on the blockchain—which raised $12.75 million November of last year, and BlockFi—a crypto-backed loan provider—which raised $52.5 million July of last year.
According to Pompliano, he is adamant that “every stock, bond, currency, and commodity will be tokenized at some point in the future.” Consequently, Morgan Creek Capital and other progressive venture capital firms are trying to keep ahead of the trend with strategic investments like those in RealBlocks.
However, this enthusiasm should also be tempered with caution. As the technology is maturing, it will be difficult to identify instances where blockchain technology is not necessarily the right fit. As demonstrated through the 2017 bubble and 2018 bust, many companies building blockchain products will fail.
Nonetheless, when private equity firms invest they tend to do so in a more critical and structured way when compared to retail ICO investors. These investments could indicate a growing interest in the technology and may provide affirmation that the technology is steadily maturing.
Updated Jan. 31, 02:15 UTC: Added comment from Perrin Quarshie.