Startups have opened real estate investing to the little guy, and VCs have taken note.

Groundfloor is a crowdfunding platform for real estate investing, bringing the idea of investing in property to the smartphone-wielding masses. It is also serving up loans on the other side of the equation. It competes with platforms such as RealtyMogul and Patch of Land, but has upped the ante in recent months with significant funding and certification from the Securities and Exchange Commission.

Last week, Groundlfoor announced the completion of a $5 Series A raise to help expand its business beyond the present nine states where it operates.

And back on Sept. 1, Groundfloor qualified with the SEC to sell securities to non-accredited investors under Regulation A. Before that the company operated a pilot for 18 months in Georgia, under Georgia state law. Groundfloor is the first company to achieve SEC qualification for peer-to-peer microlending since Prosper and Lending Club in 2009, according to a company press release.

Investors’ loans are secured by liens on the real estate, said Groundfloor CEO Brian Dally, a veteran of the telecom industry. What sets Groundfloor’s loans apart is the “control, transparency, and even fun” that investors enjoy, Daly said. Digital — and more to the point, mobile — has made this possible for new classes of investors.

“It took a year to get to $1 million in investments; six months to get to the next million; and two months to get to the third million,” Dally said. Those last two months were October and November of this year. Groundfloor has funded 54 projects and seen zero defaults. “The worst we’ve had is a loan or two that needs to be extended,” he said.

So what’s next? Daly wants to open Groundfloor up to investors beyond its current market — right now it is missing key states such as New York and Florida. “Part of the money will be used to go through those state processes — it takes lawyers, and they don’t work for free.”

This state-by-state licensing will be familiar to those operating money transfer services, or MSBs. State regulations contribute to the high cost of launching fintech startups in the U.S., according to Daniel Webber, managing director of currency exchange marketplace FXCompared.com. “You can launch a payments startup for five figures in the U.K. compared with seven figures in the U.S.,” Webber said.

But Daly said the regulations, far from stifling innovation, are necessary and appropriate. “There are and should be barriers to entry, regulations for disclosures and corporate governance, in order to protect investors and borrowers,” he said.

The lead investor in Groundfloor’s round is a new venture called Fintech Ventures. Led by Invest AG veteran Sergei Kouzmmine, Fintech Ventures is a $100 million fund that expects to fund 15 to 30 ventures in its lifetime, according to a representative.