CapitalRise

Idea

Introduction

CapitalRise is a successful, multi-award winning online platform that makes it easy for Property borrowers to raise finance quickly and efficiently and Investors to obtain market leading returns of 8 - 12 % per year from secured lending to prime real estate.

CapitalRise provides access to institutional grade real estate which was previously only available to those with millions to invest. Founders Alex Michelin and Andrew Dunn bring decades of property financing expertise having founded Finchatton, the international luxury property development firm. They have developed over £1.2bn of real estate across 120 transactions with no losses.

CEO & Co-founder Uma Rajah is one of the pioneers of the FinTech sector. An early employee at Wonga, Uma was Head of Product and helped grow the firm to over 900 people at peak. In late 2015 she left to found CapitalRise. She brings a decade of FinTech expertise, having successfully launched, developed and scaled over 5 different lending platforms.

Intended impact

Investors have a problem:
We believe that Savers and Investors are underserved by current investment offerings earning very little on their savings, and are desperately seeking yield.

Property borrowers also have a problem:
Banks have retreated from lending to property as a result of increased regulation imposed since 2008. Their market share has reduced from 100% (in 2011) to around 75% (mid 2018). Property borrowers therefore struggle to get finance from traditional lenders and find customer service at banks very poor. This creates a significant funding gap.

The Solution = CapitalRise:
Connecting investors seeking yield to property borrowers needing finance.

Offering Investors:
• Expertly stress-tested investments, secured against prime property assets
• £1,000 minimum investment.
• Attractive returns of 8-12% p.a.*
• Tax-free returns via our ISA.
• No fees to invest.
• Peace of mind that founders invest their own money into every project.

Offering Borrowers:
• Fast and simple finance.
• Competitive pricing.
• More flexible terms.
• Exceptional service.

Substantial accomplishments to date

Business is revenue positive and growing fast:
• £25m lent against assets worth over £270m.
• Quadrupled lending volumes over the last 12 months.
• Nearly £5m of capital and return repaid to investors to date.
• 9.5% per year earned by our investors on average.
• Zero losses or defaults.
• 2.4x growth in user base over the last 12 months.
• All Investments have been oversubscribed.
• Investments funded exceptionally fast e.g £1.5m in just 45 hours.

Recognition:
• Winner: MoneyNet Best New Property Investment Provider 2019.
• Winner: RESI Award for Best Newcomer 2018.
• Fantastic customer feedback.
• Excellent 5 star rating on Trustpilot.
• Press coverage across numerous titles.

Proprietary Product:
• Fully automated customer onboarding and bond issuance
• Investors can sign up and invest in minutes
• Manage all your investments online and from your mobile
• Resale marketplace built so investors can exit from their investments early

Strong team:
• £2m in seed funding raised in 2018 from the family office of renowned entrepreneur Rana Kapoor, founder of India's 4th largest private bank.
• £1.5m invested by the founders to build the technology and prove the demand for the product
• Expert team of 19 behind the platform with deep experience in property, marketing, investor relations & product.

Monetisation strategy

Revenue is predominantly earned from fees charged to Borrowers

Borrower fees:
• 5-7% of the loan amount consisting of:
o arrangement fees
o exit fees
o interest margin

• 1-3% of the loan amount from other fees such as:
o extension fees.
o brokerage fees.
o monitoring fees.

Investor fees:
• There are no fees to invest.
• 1.5% fee charged to sell an investment on the resale marketplace.
Once we achieve scale we may charge investors an annual fee.

Our lending volumes are growing very fast:
• We are in the final stages of agreeing a £25m funding line from a UK Bank, which has been credit approved.
• We are in discussions with 2 further major high street banks for additional funding lines of up to £60m to satisfy our requirements as the platform scales.
• This should drive an increase in the valuation of the company over the next few years.

Use of proceeds

Proceeds will be used to accelerate the growth of the business with key hires and increased marketing to achieve our next major milestone: reaching £100m of lending.

27% - Technology.
Building out our engineering team and delivering our product roadmap.

27% - Marketing.
To increase the pace of investor and borrower acquisition.

18% - Lending.
To build out our origination and loan monitoring teams to handle greater loan volumes.

16% - Finance, Legal & Compliance.
To manage increased transaction levels.

12% - Investor Relations and Other.
To maintain high customer service levels as customer numbers increase.

These funds are intended to get us to profitability.

Important information

Please note that a shareholder in the company holds a class of share that grant them a 1x non-participating convertible preference right and anti-dilution rights.

Preference right:
The investor invested £2m in that class of share, meaning that the Seedrs shareholders will only share in the proceeds of an exit of the company if such proceeds exceed £2m.

Anti-dilution rights:
This means the investor has anti-dilution protection if the company raises at a valuation resulting in a share price that is less than £11.97 (i.e. the price per share paid by the investor). This will trigger a further issue of shares to effectively treat the investor as if they would have made their investment at such lower valuation.

*Based on existing loans.