A quick introduction to Property Moose
Property Moose was founded in 2013 as one of the first property crowdfunding platforms in Europe. Our mission is to democratise investment and lower the barriers to entry, whilst revolutionising the antiquated financial services industry. We have experienced significant growth and support since our launch, fueled by 3 rounds of funding from a European Venture Capital (VC). Our community of 20,000 members now spans across 70 countries.
Some benefits that have led to the industry’s growth
Property as an asset class has outperformed the FTSE All Share Index over the last 20-years. Over the last 20 years, UK property prices have grown by 14.34% p.a. on average (1). This is compared to the FTSE All Share index which has delivered 3.46% p.a. (2) on average over the last 20 years.
I believe the property crowdfunding sector has seen a significant amount of growth in recent years. One of the reasons for this may be the level of transparency and accountability within the industry. For example, property crowdfunding allows you to have full control over your investment decisions by choosing which individual investments you put your money into, as opposed to a fund, an ISA or in fact, most other traditional investment products.
There’s also the added potential benefit of real-estate expertise. Expert knowledge of the market could take an individual years to cultivate. In addition to this, many property crowdfunding companies, including Property Moose, have developed relationships with property experts across the country, providing individuals with access to exclusive off-market deals. It’s this same existing network that can ensure a hassle free investment experience, where an investor can become a landlord without having to change a light bulb.
Better yet, we believe one of the main opportunities is the ability to create a diverse portfolio due to the low entry point. Our mission is to lower the barriers to home-ownership, which is why, in our case, our minimum investment is just £10.
It’s therefore no surprise that there has been a significant amount of growth in the industry. I believe that we are observing a new crowdfunding platform enter the space each month.
What risks do crowdfunding platforms face?
One significant risk comes down to reputation. As the industry is still nascent, trust is absolutely vital to sustaining a network of members, and upholding credibility within the sector.
There is also a ‘key-man’ risk within the industry. For example, I believe there are very few platforms with high calibre teams, and keeping those who pioneered the industry within the industry might prove to be difficult as firms begin to institutionalise.
Another risk faced by property crowdfunding companies is any changes in regulation. The sector is still very new, and any dramatic alterations to existing guidelines could possibly be beyond what existing firms can weather. Even a small change could prevent a business from being commercial for one month, which may be a cost that the balance sheet can’t handle.
Regulation and expertise
It could be easy to underestimate the amount of expertise needed to create and manage a successful platform. Corporate finance and legal expertise are essential, and the cost of regulation is significant. Regulations are in place for good reason, and provide the appropriate permissions to operate an equity crowdfunding platform, and helps ensure that the highest levels of consumer protection can be offered. We have been in consultation with the FCA since our incorporation to assist in the creation of the industry standards.
That said, I don’t think firms should be more or less regulated as they are already very closely and appropriately scrutinised. A robust, unchanging approach from the regulator could help to stabilise the industry, and allow more innovation.
What does the future hold?
I believe there’s still an incredible amount of scope for opportunity. The industry’s current operation can be viewed as surface level in comparison to the untapped potential yet to be explored.
I believe we will start to witness the creation of ‘hybrid platforms.’ Currently, the sector is clearly divided between business equity, property, bio-tech and debt. It’s likely that soon, platforms could start offering a ‘one-stop’ market place, providing multiple opportunities on a single platform.
Larger, more established firms may want to use their learnings from innovative start-ups and early-stage businesses to potentially improve their offerings and capture the new market that alternative finance firms have created.
There are also many innovations that we have here at Property Moose that are due to be released to the market in 2017.
Written by Ben Lloyd
Sources
- http://www.nationwide.co.uk/about/house-price-index/download-data#xtab:uk-series
- http://swanlowpark.co.uk/ftseannual.jsp
Disclaimer and Legals
Property Moose does not provide any advice in relation to investments and you must rely on your own due diligence before investing. Please remember that property prices can go down as well as up and that all figures, rates and yields are projections only and should not be relied on. If in doubt, please seek the advice of a financial adviser. Your capital is at risk if you invest. This post has been approved as a financial promotion by Resolution Compliance Limited.
Property Moose is a trading name of Crowd Fin Limited which is an Appointed Representative of Resolution Compliance Limited which is authorised and regulated by the Financial Conduct Authority (no: 574048).
