A new startup that lets users invest as £50 in the booming buy-to-let housing market in the UK has launched with £1.25m seed funding led by Octopus Investments.
The investment round in Property Partner also includes participation from a number of high profile European funds and investors. These include venture accelerator Seedcamp; Betfair co-founder and Funding Circle Board member Ed Wray; Better Capital founder and venture capitalist, Jon Moulton; Daniel Quai, Crescendo Real Estate co-founder; and BSkyB CFO and Just Eat Board member Andrew Griffith. The financing follows a previously unannounced £0.15m raise in February 2014, in which Wray, Quai and Griffith also took part, taking total funds raised to £1.40m.
Founded by BSkyB’s former head of commercial development Daniel Gandesha, the startup lets investors take a share in buy-to-let properties and receive an income from rent.
The idea is that Property Partner “crowd funds” investments in buy-to-let properties. The platform has a secondary exchange which allows users to sell their investments via the platform whenever they want. The proposition to investors is that they will get a better return investing in the property market in this manner, instead of putting their cash into bank accounts which attract only low savings rates.
Octopus Investments was one of the earliest backers of Zoopla, which recently successfully IPO’d. Wray is on the board of Funding Circle, the crowd funding website for business loans.
Now, this is a big market.
Residential property is the UK’s largest asset class – worth in excess of £5 trillion – with Buy-to-let transactions exceeding £20bn each year. Crowdfunding for real estate has attracted major players in the USA, such as Prodigy Networks, Fundrise, and Realty Mogul although mainly with a focus on commercial property and not with a platform that allows investors to subsequently trade their interests.
Prodigy Networks crowd funded a $172 million skyscraper in Colombia from 3,100 investors. Realty Mogul did the same with a US shopping centre in less than 6 hours. And Fundrise recently announced a Series A fundraising at a $100m valuation.
As you can see this is an ongoing trend and we can expect to see more than one player appear in this space.