Brickowner

Follow-on

A crowd funding platform for property investment in the UK

EIS

Location: London, United Kingdom

Partner: Innovify

brickowner.com

Categories: Finance & Payments Digital B2C

Investment sought:: £100,009

Equity offered:: 7.14%

Funded 29 Jul 2016

Investment amount:: £117,080

Valuation (pre-money):: £1,300,954

Idea

Please note that whilst the campaign is labelled as EIS eligible the Company has £47,945.09 remaining of its SEIS limit. We will, therefore, be looking to seek SEIS relief on the first £47,945.09 invested into the campaign, with the balance being EIS eligible. Any tax relief is dependent on personal circumstances and may be subject to change in the future.

Introduction

Brickowner is a property crowdfunding platform that lets people invest directly into property. The platform provides investors with the ability to diversify their investment over multiple properties and offers people a route to get onto the property ladder.

The Brickowner platform will allow people to keep track of any property market growth whilst they save for a deposit for a home.

The platform will let people invest in property in parts of the country that have the highest projected growth.

Minimum investment will be £100 and residential property will be the initial focus.

Brickowner users will benefit from rental income and any capital growth of the property they invest in. We intend for investors to be able to sell their shares in the properties through the platform. We intend for the platform to be fully automated both for investing and divesting.

In the future, Brickowner will also look at letting people invest in portfolio’s of property and invest in properties managed by 3rd party partners.

Intended impact

The platform will allow people to invest in a hassle free manner into property in regions of the UK where they might lack sufficient knowledge to invest on their own.

84% of the UK population would prefer to buy their home than to rent, however 1.8m 25-34 year olds have been locked out of home ownership since 2001. The Brickowner platform will allow these people who may not be able to afford to buy their own home to invest into and own property whilst they save up for a deposit.

Brickowner will help democratize the property market by allowing more people to benefit from income and potential capital growth that can be generated through property ownership.

We believe an increasing number of people will choose to save for their deposit for a home by investing into property using platforms such as the Brickowner platform, rather than saving money in cash or investing in an alternative asset class such as the stock market. We consider that the platform would in essence provide people with a first step onto the property ladder.

We believe that the recent Government tax changes have made it unviable for many of the present 2 million UK Buy to Let investors to carry on investing directly themselves into UK property. Our platform would provide a practical alternative for them to invest into property.

Property is generally viewed as an illiquid asset, which inhibits some people from investing. We intend for our platform to enable investors to sell their shares in a property, creating liquidity, prior to the property being sold.

Investment into property via Brickowner will allow people to benefit from any income and capital growth that is generated. We believe that this can offer an attractive alternative to holding cash in a bank, or investing in an alternative asset class such as the stock market.

Substantial accomplishments to date

We successfully raised our first seed round over subscribed. Investors included a first round seed investor in one of UK’s largest P2P lending platforms, a number of large UK property fund managers, and experienced tech investors.

John Wood, Managing Partner of Cluttons, an investor in our first seed round, has since joined the board as a non-exec.

We have started building an Advisory Board, which presently includes Maulik Sailor, who has previously built a P2P platform, and Ed Ungar, a former Google Director and currently CCO of Onfido.com

We have rebranded the business, and completed a user focus group.

Our website, backend infrastructure, and specialist User Experience work has been carried out by a leading team with previous experience building large platforms.

Front end platform built and now live, and back end infrastructure is built.

We have secured our first property to be listed on the platform, and created a strong pipeline of other properties. Properties will only be available for investment on the platform to users once the necessary FCA approval has been obtained

Monetisation strategy

Brickowner generates its income from raising money, and investing it successfully. We believe that our low investment threshold of £100 will encourage more investors to use our platform.

Our aim is to scale from individual properties to blocks of apartments and regional portfolios, with an initial focus on East Anglia and the East Midlands, but to quickly cover the highest growth areas across the UK. We intend to be the leading UK crowd funding platform for property investment that focusses on developing strong and long term local relationships as a purchaser and landlord.

Our belief is that having ready made property portfolio’s, as well as blocks of apartments, and individual properties, available for investment on the platform, will help us scale the business quicker.

To help scale the platform even faster, we would also look at placing carefully selected investment opportunities on the platform that would be run by chosen partners. This would also help open up the platform to the possibility of institutions co-investing in certain opportunities alongside individuals.

Brickowner will charge an upfront placement fee on funds raised on the platform and a monthly fee for overseeing the management of the properties.

Our target market are the 2 million Buy to Let Investors in the UK and 1.8 million 25-34 year olds who are unable to get onto the housing ladder. We believe the Brickowner platform will prove very attractive to both of these market segments, and we would source the opportunities for the platform to be in line with what we feel these 2 different segments would like to invest in.

Use of proceeds

Developing further automation for the backend of the platform.

Marketing and PR for the launch of the platform and ongoing.

Working capital for the business including office cost.

Finalising legal work, and work associated with FCA.

Costs related to sourcing and securing properties for the platform.

Market

Target market

Our target market includes:

The 1.8 million 25-34 year olds who are locked out of home ownership, but potentially want exposure to the property market, whilst they save for a deposit for a home.

By 2014 64% of first time buyers were purchasing with help from their parents. Brickowner would enable parents to invest into property and over time build up enough for a deposit for a first home for their children.

Property investors or owners in the UK wanting to diversity into different regions of the UK.

People who live in or have links to our investment regions wanting to invest in and support these areas.

Existing property investors wanting a more diversified property investment portfolio.

Investors looking for possible better returns on their money than they would get by holding cash in the bank, or investing in an alternative asset class.

People who want to invest in property but do not want to own and manage the property directly themselves.

People looking for a hedge against inflation, whilst having the potential to benefit from income and capital growth.

Since the recession, the rich are 64% richer and the poor 57% poorer. In part this is because those that are wealthier own property. Brickowner intends to help democratize property ownership and allow more people to invest into property and enable them to keep track of house price growth.

Since the financial crisis an extra 600,000 people have become private landlords, taking the total to over 2 million. We believe that the recent government tax changes has significantly reduced the viability for many of these individuals of investing in property directly themselves. We believe that in the future many of these people will choose to invest in property through the Brickowner platform instead.

We envisage that once we start offering portfolio’s and third party partner investment opportunities on the platform, using the platform could also be viewed as attractive by institutional investors, who would invest alongside individuals.

Characteristics of target market

A further 600,000 people have become private landlords since the credit crisis, taking the total number of private landlords to over 2 million.

In 2016 the Government increased regulation of the Buy to Let sector. Many of these investors will need an alternative way to invest into property. Brickowner provides such an alternative way to invest.

Since 2001 1.8m 25-34 year olds have been locked out of home ownership.

84% of the UK population would prefer to buy their home than to rent.

The Office for National Statistics stated that in 2014 the average home in England and Wales cost 8.8 times the typical local salary, up from 6.4 times local salaries in 2002, leading to a need for greater deposits to purchase a home.

According to the Governments English Housing Survey, the rental market has been growing by 17,500 households a month over the 10 years to 2014.

Before the 2007 crash 30% of first time buyers were helped by their parents, whilst by 2014 this had increased to 64%.

Marketing strategy

From our previous seed round we have a number of significant high level shareholders who we expect will be able to help market the platform.

We have put together a detailed PR and marketing strategy, for our launch and ongoing basis after launch.

In our initial target investment regions of East Anglia and East Midlands we feel the team have strong existing connections. Through these existing networks we aim to target clients from the East Midlands and East Anglia, who have not previously had an opportunity to invest in their region.

We aim to use national media coverage to source clients from across the country.

As well as PR, we will implement a strong social media strategy to reach the market. Online and social media marketing strategies will be implemented which specifically target those that fit our core investor profiles.

We believe that the low investment entry point of £100 will incentivise many more new investors to “dip their toe in the water” after which we feel they may become repeat investors and invest significantly larger amounts. This will also create a larger and more diverse pool of investors. We intend to incentivise users to make referrals to new investors and to promote the platform on social media.

Brickowner will create business for companies selling property, and property service companies. We will look at ways of working with these companies to promote the Brickowner platform, including cross marketing techniques, and strategic partnerships.

Many of the third party property partners we would use would lack a liquidity mechanism for any existing equity investors they might have and be unable to take investors wanting to invest smaller amounts. As partners we could solve both of these issues for them. We would envisage that they would be keen to promote and market our platform.

We will aim to incentivise individuals and companies that have access to potential clients for the platform, such as accountants, and financial advisors.

Competition strategy

The equity crowd funding model for direct property investment, such as ours, is a less mature model than the peer-to-peer lending model. In that respect we are amongst the early entrants in this sector.

Our market is huge, as we envisage the main initial users of our platform will consist of the present 2 million Buy to Let Investors, and the 1.8 million 25-34 year olds who are presently unable to get onto the property ladder.

We envisage that over time many investors that presently invest into property through listed property funds, will find the Brickowner platform a more attractive way of investing into property due to the greater control and transparency they will have over their investment.

We are building the platform with a strong emphasis on user experience to try and make it as user friendly as possible.

We intent to build up strong brand awareness, both nationally, and in the areas we invest.

We believe in a national coverage local knowledge approach. In the areas we invest we aim to become known as a reliable purchaser and landlord committed to that area. We expect that this will help enable us to secure the best available properties at the best prices. We believe we can grow fast in the areas we target by following such a sustainable and community based approach. We aim to become a strong active local partner and positive contributor to the local economies.

We will target regions of the UK with growing economies and what we consider to be undervalued properties, and properties with significant capital growth and income potential.

Many of the other property crowdfunding platforms don’t presently have an automated secondary market, which we believe is something investors strongly want. We will have a secondary market from launch.

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