NYCE Breaks Crowdfunding Record, Announces Blockchain IPO With tZero

NYCE formally announced Wednesday a record-breaking $1.31-million raise, as well as the signing of a deal to go public with blockchain-powered alternative trading system tZero Group Inc TZROP, a subsidiary of Medici Ventures, the venture capital arm of Overstock.com Inc OSTK.

What Happened: In light of the pandemic, wealth disparities between different classes and demographics became increasingly apparent. According to some projections, median black wealth – as measured by net worth – is projected to drop to $0 by 2053.

As a result, Martin Braithwaite, a soccer player for FC Barcelona, and Philip Michael, author of “Real Estate Wealth Hacking: How To 10X Your Net Worth In 18 Months,” cofounded NYCE – a Robinhood-like app – to allow micro-investors to buy into fund-owned real estate for as low as $10.

Photo provided by NYCE Companies.

“The number one driver behind the racial wealth gap is the absence of real estate ownership in minority communities,” CEO Philip Michael told Benzinga. “Simple shifts in individual behavior could reduce the wealth gap we have today.”

After Regulation CF, or Title III of the JOBS Act was enacted by the Securities and Exchange Commission in May 2016, entrepreneurs were allowed to capture funding from non-accredited, public investors through platforms such as Wefunder and Republic.

Under this regulatory evolution, NYCE became the fastest real estate startup to issue shares and raise over $1 million. Through those funding opportunities, the company acquired nearly $260 million in assets under management and over 1,500 apartments.

Graphic: NYCE’s efficiency in raising and deploying investor capital.

“The investors bought in NYCE’s real estate portfolio at a $25 million valuation cap in 2020,” Michael noted in reference to last year’s investors doubling their money. Since March, over 3,300 investors invested at a $50 million valuation, doubling the value of NYCE’s portfolio.

Putting it all together, investors own the NYCE app, the company’s IP, its $500 million real estate pipeline, as well as the $1 million ARR subscription community TRIBE.

“We opened the first building – a coworking space – that can house 17 people,” Michael added in an example reference to its ‘Hacker House’ project in partnership with Temple University and Amazon.com, Inc. AMZN. Residents of the facility also have an opportunity to pitch their startups and receive funding from NYCE-affiliate InStudio Ventures, a VC firm with $5 million from the Adidas ADDYY family.

More On tZero: NYCE also signed a deal with tZero to go public via the firm’s secondary market platform, which allows private assets liquidity optionality.

“By doing this partnership, we can provide potential liquidity to early investors, while delivering outstanding projected returns,” Michael told Benzinga. “More importantly, this proves that Regulation CF is a valid avenue for not just companies to raise money but for retail investors to get access to deals typically reserved for the rich and well-connected.”

If successful, the blockchain-powered minority IPO digitizing nearly $18 million of securities in NYCE’s common stock would present the first major exit for Regulation CF crowdfunding investors.

Wefunder Director of Partnerships Justin Renfro added: “Wefunder currently has 40% of the Regulation CF market. NYCE going public proves the Reg. CF model works, not just for founders but for investors as well.”

Why It Matters: In being the best Series A-stage fintech startup of the decade, NYCE is committed to allowing all Americans investible access in ETF-style, diversified real estate portfolios.

NYCE’s 140,000 community can compete with pension funds, for example, which were in the news on their competition with homeowners for stakes in appreciating residential real estate.

What Is Up Next: “The goal is to consolidate everybody in the app, and create more first-time investors,” Michael said. “It’s about strengthening a community and putting together systems with courses, resources – things like that – so more people can go out there and build wealth.”

In terms of the NYCE team, Michael is looking to reward those members that have been with the company from the beginning; “My team sacrificed so much working for next to no money. I want to make sure they’re taken care of, so long as the investors get their 2x.”

Photo: NYCE Companies CEO Philip Michael.