Property crowdfuding platform CrowdfundUP has closed a $2.1 million capital raise to build its team and grow its market presence locally and in China.
The funding comes as the property sector faces disruption from increasing numbers of new entrants with disruptive business models such as Purplebricks Australia, PropertyNow and BRICKX.
The investment in CrowdfundUP has been led by asset development and management firm Positive Investment Enterprise, which has a focus on property development, venture capital and funds management throughout Australia, China and the US.
Professional services firm BDO also participated.
CrowdfundUP founder and managing director, Jack Quigley, said the business would expand rapidly in the next year, with plans in place to establish its own fund as well.
"Our major goal is to increase our funding volume substantially to in excess of $50 million and we want to establish an underwriting fund so we can instantly approve opportunities and we can be an alternative lender ourselves and not just rely on the crowd," he said.
"A lot of the US competitors have taken the next step and actually launched electronic Real Estate Investment Trusts (eREITS), they're ahead of us. That lets people invest in a purchasing fund that goes and invests in real estate via an online crowdfunding platform."
Quality control
All investment opportunities are vetted by the CrowdfundUP team to ensure their quality, and interest rates are set according to risk.
Investors can monitor the performance of their investments in real time via the CrowdfundUP platform.
Mr Quigley, who is a FinTech Australia director, said the motivation behind the business was to give more people the chance to invest in commercial real estate.
"If you look at self-managed super funds with under $500,000, commercial property makes up about 1-2 per cent. For SMSFs in excess of $10 million, that number jumps to 21 per cent, so that tells me it's a great asset, but the large price creates a barrier to entry," he said.
The investments are generally on a fixed-term basis and since launching in March 2015 the platform has returned $660,000 to investors from one deal.
Mr Quigley said he was considering introducing a live platform to enable members to sell the investment opportunities to one another. But ultimately his hope is that when investors make a return, it will be reinvested.
Chief executive of Positive Investment Enterprise, Ali Mohammed, said the CrowdfundUP investment added "strategic value" to its core business.
"This strategic partnership will deliver access to new markets and customers, accelerate innovation driven development cycles, and improve CrowdfundUP's competitive positioning in the global market," he said.
Other Australian property tech start-ups have also closed successful rounds. Last year real estate agent comparison website OpenAgent closed a $6 million funding round led by Hollard Investments, and this year the female co-founders Marta Higuera and Zoe Pointon followed it up with $12 million from Westpac-backed VC Reinventure.
