Property Partners, an online real estate crowdfunding platform that allows users to invest in properties all over the UK, Europe and beyond, has closed $22.4 million in Series B funding.
The London-based company, which recently secured a $4.25 million venture debt facility from Silicon Valley Bank, has raised a whopping $31.7 million in venture capital funding to date. Leading the latest round was original backer Octopus Ventures, with participation from Index Ventures and Dawn Capital.
“This significant investment is a huge vote of confidence in our business model, and our vision for making the property market better for everyone,” said Dan Gandesh, founder and CEO of Property Partners.
According to Gandesh, the company will use the money to “expand across the board,” with intent to launch a product for institutional investors, including a shared ownership product, and plans to expand overseas.
“These funds will help propel us towards our ultimate goal – that of being a global stock exchange for property,” Gandesh said.
Launched to the public over a year ago, Property Partners already boasts more than 6,200 customers, with more than $34 million invested into 166 properties through the site. The company’s unique crowdfunding business allows individuals to invest as little as $71 in residential properties, including buying, trading and selling their shares on the platform. In return, investors get a portion of the rental income, including any increase in the property’s value with an estimated return of 13 percent per annum after fees.
“Through its combination of technology, business model, and excellent management execution, Property Partner is dramatically increasing and improving the accessibility of property as an investment asset class,” said Jo Oliver, investment director at Octopus Ventures.
According to Neil Rimer of Index Ventures, owning property in London had only been an option for wealthier residents–until now.
“Property Partner changes this by allowing anyone to invest in attractive residential properties, earning rental income and participating in capital gains if the property appreciates,” said Rimer. “Property Partners operates a revolutionary property marketplace that will continue to simplify and open up property ownership to a large base of people.”
The Rise Of Crowdfunding In Real Estate
We all know the real estate industry is big business, but how big? In 2015, there were roughly 210,000 companies operating in the residential brokerage and management field, generating $200 billion in revenue, while companies in the commercial broker and management field generated $35 billion in revenue. Crowdfunding, however, will take real estate to even greater heights.
“It’s like a Kickstarter for the real estate industry,” said David Berneman, owner of Los Angeles-based Golden Bee Properties.
First emerged in 2011, crowdfunding is quickly becoming a mainstay for real estate developers and investors alike. The unique platform gives users direct access to real estate investments across the country, regardless of location. Thanks to recent legislation, both accredited and nonaccredited investors can take interest in crowdfunded projects, including those interested in house flipping.
“There’s a crowdfunder popping up once a month now, and the low-hanging fruit is the fix and flips,” said Jonathan Lee, a principal at George Smith Partners, a Century City real-estate-financing firm.
Investors pumped $870 million into crowdfunding platforms from September 2013 to September 2015, according to New York data provider Crowdnetic. Of that amount, nearly a quarter ($208 million) went into real estate projects.
While the verdict is still out on crowdfunding in the real estate sector, news of Property Partner raising 31.7 million in venture capital funding is sure to give the industry a much needed shot in the arm, including paving the way for monumental changes in coming years.
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