Crowdfunding is a new approach to raising business funds that that could change the way real estate investment works.

Forget private funding – the way of the future is crowdfunding, a collective approach to raising funds for both personal and professional activities, where companies and individuals instead seek small donations for their businesses from dozens of contributors from across the world.

How crowdfunding works is simple: access a crowdfunding website, like GoFundMe and Kickstarter, open an account and seek donations from the masses. Finding financial backers is key – research firm Masssolution estimates that crowdfunding numbers increased from $1.5 billion in 2011 to $2.8 billion in 2012, and those funds have gone towards a wide array of ventures; for instance, most recently, 30,000 fans of the cult TV series “Veronica Mars” donated more than $2 million in just 10 hours to fund an independent film of the show.

While there are generic crowdfunding websites (listed above), now there are real estate niche crowdfunding websites. Collaperty, a newly-launched social real estate network that allows real estate entrepreneurs to create profiles on collaperty.com, list real estate opportunities and solicit offers from interested investors, has raised more than $29 million in equity. Collaperty’s model allows accredited investors to collectively invest in deals on the platform. The SEC only allows the company to put deals in front those who are accredited, but as the laws loosen up in the coming months, Collaperty will look to expand its reach to a larger investor base.

Rishi Palriwala, a co-founder of Collaperty, says Collaperty was founded to address several deficiencies in the real estate investing world, notably the lack of a centralized location for networking and finding quality investment deals.

Palriwala says that over the next two years, he and the other members of Collaperty’s management team hope to offer investors an E*TRADE-like resource for developing their real estate portfolios and monitoring investment trends, though their ultimate ambitions extend beyond professional investors.

“In an ideal world, we would like to give everyone the power to invest in tangible real estate assets (not REITs) allowing them to have more control over their investment, but at a lower capital barrier to entry,” Palriwala says. “We want to be the one-stop shop for real estate investing.”

A New Way to Create JOBS

Crowdfunding regulations played a key role in the Jumpstart Our Business Startups Act, or the JOBS Act, a 2012 bill intended to encourage funding of small businesses through the easing certain securities regulations. Under the new law, U.S. companies will be able to sell up to $1 million of equity to private investors without having to register the investments with state regulators or, most notably, the Securities and Exchange Commission (SEC). The SEC is still working out kinks in the proposed rules, including how to protect investors from being exploited by illegitimate crowdfunding sites, so we’ll have to wait and see what happens.