News & Analysis

Equity crowdfunding platform VentureCrowd closes $1.7 million round for Sydney property development

- August 10, 2016 2 MIN READ

With the debate over the Government’s changes to equity crowdfunding legislation dying down during the election campaign, VentureCrowd has been showcasing its ability to provide alternative financing solutions to organisations outside the startup and tech spheres, announcing it has raised $1.7 million for property developer Clearstate through its VentureCrowd Property offering.

The round saw 49 percent equity given to more than 50 investors, with a targeted return of 84 percent, for a 2.4 hectare development in the western Sydney area of Austral. The development will be sub-divided into 44 residential lots, ranging in size from 260 to 1300 square metres, with an average of 450 sq m.

Coming after a $900,000 raise for a development in Riverstone East last month, a round closed in four hours, VentureCrowd states that this method of funding helps to give developers quicker access to funds and higher returns for investors.

Luke Fay, general manager of Equity and Credit at VentureCrowd, said the two rounds show both sides of the market are looking for new opportunities.

“We anticipated demand for the Austral project following the success of Riverstone, but we were astounded by just how quickly this latest round was oversubscribed,” he said.

“Investors clearly have a robust appetite for alternative opportunities, whether it’s startups, corporate bonds or in this case, Australian property. We’re really looking forward to keeping the momentum going with similar investment opportunities in the coming months.”

Among the 50 investors was Mitchell Hopwood, a former advisor at Credit Suisse, who invested through his self-managed superannuation portfolio.

“The Austral opportunity provided a relatively high, short-term return in a bite-size, easily understandable transaction that is fairly derisked from an investment perspective,” Hopwood said.

“By investing through VentureCrowd, I am given direct exposure to an investment opportunity that I wouldn’t have had access to otherwise, helping me build out a diversified superannuation portfolio.”

This method of investing in property is gaining steam, with a number of startups also working in this space. Melbourne’s EstateBaron, for example, allows developers and financial advisors to list real estate opportunities in which those interested can invest a minimum of $2,000 into a trust to fund the development of a property, while BrickX, set to launch officially this month, will let investors buy a ‘brick’ in a residential property development.

The VentureCrowd deals come just a few months after the platform announced it would be offering retail investors access to blue chip corporate bonds for as little as $25,000 through the Artesian Australian Corporate Bond Fund. The offering allows these investors to receive the same fee structure and conditions as those investing $5 million or more.

VentureCrowd is of course still working with startups, too, currently raising for Art Money, a platform that gives people access to loans in order to help them buy art. It has also this year helped raise over $600,000 for Gamurs and more than $100,000 for Zookal.

Image: Rob Nankivell and Luke Fay. Source: Supplied.