Marketplace lending platform CrowdProperty Australia has raised $1.5 million in a seed round as it aims to ramp up finance for SME property development.
The raise was led by developer Oscar Done, supported by several property, financial services, and tech investors including Black Nova VP Alex Retzlaff and former TripAdvisor technology VP Jeff Lewis.
CrowdProperty launched in Australia in May this year as a joint venture with CrowdProperty UK. It offers wholesale and institutional investors, including SMSFs and trusts, the chance to invest in property project loans and curates investment deals to reduce risk. The company has already assessed more than $120 million worth of property projects, funding three to date with $17 million more under review.
The startup is aiming to lend $200 million in the next two years.
CrowdProperty CEO and co-founder David Ingram said it was “the smoothest” capital raise he’s managed.
“We had the luxury of being quite selective about who we invited to join the round,” he said.
“We had a lot of interest from family offices and wealth managers who saw value in our direct origination of quality residential developments, and from experienced property developers who appreciate the pain points we are helping to solve in their world. Then we had serial tech entrepreneurs who saw our potential to scale the solution.”
Ingram said already having a profitable business model in our UK joint venture partner certainly helped de-risk the business for investors.
“But they also see the opportunity in the Australian market. For example, 55% of Australian wealth is tied up in property compared to 35% in the UK,” he said.
“Access to alternative finance for the builders and developers who want to build the kind of homes Australians want to live in has never been more important. Particularly at a time when housing is becoming more unaffordable for so many Australians. This is underscored by APRA’s announcement to increase the minimum interest rate buffer to 3%.”
CrowdProperty UK CEO Michael Bristow said the Australian JV is looking to transform local SME property development finance.
“We’ve achieved several milestones already in 2021 — launching in Australia and closing both a $1.5m seed round [in Australia] and a £1,800,000 equity funding round [UK] and securing a £300m institutional funding line which complements existing diverse sources of capital in providing certainty of funding for property developers,” he said.
“Our focus is taking action to further step change the businesses in order to realise our potential quicker in our mission to transform property development finance.”