Crowd Street Plans Expansion Into Private Credit — What Could This Mean for Investors?

March 31 2025

Eventually, the firm also plans to grow into a broader bucket of alternatives, like private equity and venture capital. This growth plan supports Crowd Street’s mission to bring private market access to more investors, providing them with the option to diversify their overall portfolios beyond commercial real estate. To explore what this transition could mean for our members, Crowd Street’s editorial team spoke with Sheldon Chang, head of the firm’s investment management and advisory.

Let’s start with private credit. What are some general characteristics of the asset class?

“Private credit allows many private companies to borrow money to support their operations and growth.5 These are often middle-market firms, larger than small businesses but not massive corporations.6 Instead of turning to traditional banks, they often have to work with non-bank lenders like private equity firms or specialized investment funds.7

These loans are privately negotiated between lenders and borrowers, typically making the terms more flexible versus a traditional loan. Because these companies aren’t covered by large commercial banks and typically don’t have credit ratings—the kind that big public companies get from agencies like Moody’s—they have fewer options to borrow via traditional loans or bonds and generally pay higher interest rates.8,9”

Why do you think this category has seen so much growth in recent years?

“Professional institutional investors have been increasingly adding private credit to their portfolios for various reasons such as accessing a broader exposure to fixed income and credit.10 As a result, private credit has been growing rapidly into a more mainstream asset class11 that potentially fits into an alternative investments allocation or even replaces a portion of a traditional fixed income allocation12 Generally speaking, these investments tend to be income-oriented, with a smaller emphasis on capital appreciation.13

Individuals appear to be benefiting from this trend as private credit funds are becoming increasingly available from established investment managers via SEC-registered products.14 This presumably creates transparency and increases ease of access, while providing additional regulatory oversight."

We’ve observed a few factors that seem to be driving this growth. Banks have scaled back their lending15 largely due to stricter regulations, capital requirements, and reduced staffing. In many cases, non-bank lenders have stepped in to fill the gap.

At the same time, companies are staying private longer16 because going public can be costly and burdensome. Private markets appear to be more efficient at funding these businesses—just look at companies like SpaceX and OpenAI17—which could mean fewer public companies and potentially more private credit may be needed.”

Beyond private credit, what’s next for Crowd Street in private markets?

“Private credit is our immediate focus because we believe it aligns with what many of our members are looking for—income-oriented investments. While CRE can offer some of that, I believe private corporate credit has the potential to be an effective vehicle for potentially generating passive income.

Like all asset classes, private credit carries unique risks, including the fact that borrowers can be smaller and riskier than those in regulated banks or public markets. As the asset class grows, the International Monetary Fund advises investors to remain cautious about vulnerabilities within the private credit industry, outlined in full here.

Crowd Street’s 2025 strategy reflects an ongoing commitment to its core goal: expanding private market access for more investors through deal sourcing, due diligence, and its innovative digital marketplace.

References

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