This is a summary of the February 25, 2016 meeting of the ULI Chicago District Council, which gathered at the Union League Club in Chicago to hear an expert panel of professionals discuss opportunities and challenges of crowdfunding in the real estate marketplace.

Topics on this alternative source of capital for developers and investors included the differences between real estate crowdfunding platforms, how developers access crowdfunding sources, risks to both investors and real estate owners, and types of transactions that are attractive to retail investors.

The moderator for the session was Ronan Remandaban, Co-Founder and CEO of Liquideed. Panelists were Michael Episcope, Principal, Origin Investments; Jordan Fishfeld, Chief Executive Officer and Co-Founder, PeerRealty; and Brock Tomlinson, Real Estate Senior Associate, Fundrise, who participated from New York via Skype.

Although it is still in the fledgling stage, crowdfunding has already begun to have an effect on the real estate investment community. Its transparency, focus on web-based communications, and accessibility to a wider net of investors is challenging longstanding industry paradigms.

At the same time, the $2.5 billion piece of the market that was projected during 2015—up from $1 billion in 2014, according to research company Massolution—represents a tiny piece of the pie.

In his opening remarks, Jordan Fishfeld said the market surpassed that $2.5 billion projection last year, with a significant portion “on the debt side” and an estimated $200 million to $400 million in traditional equity.

“(This is) really an explosive industry, really exciting opportunity and one of the great things that we’re starting to see is the institutionalization of this marketplace,” he said.

Crowdfunding’s emergence included a milestone last March, when the Securities & Exchange Commission voted to adopt Regulation A+, “giving issuers the option of a ‘mini-IPO,’” according to a PeerRealty.com timeline of key 2015 developments.

An upcoming step in crowdfunding’s evolution is the mid-May launch of Title III of the JOBS (Jumpstart Our Business Startups) Act, which will allow small individual investors to buy shares of startups and small businesses using crowdfunding platforms.

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