Property Partner, a crowdfunding platform that lets people buy a small slice of a rental property for as little as £50 (£70.76), has raised £15.9 million($22.5 million) in equity and debt to fuel growth and launch new products.
The London-based startup, which launched to the public just over a year ago, has raised £12.9 million ($18.3 million) in equity funding in a round led by Octopus Ventures, which was a seed investor in the business. Existing investors Index Ventures also took part in the round, as well as Dawn Capital.
Property Partners has also secured a £3 million ($4.25 million) venture debt facility from Silicon Valley Bank, taking the total raised to £15.9 million. To date, it has raised £22.5 million ($31.8 million).
The company says in a release announcing the raise that it will use the money to “expand across the board,” with plans to launch a product for institutional investors, a shared ownership product, and plans to expand overseas.
Founder and CEO Dan Gandesha told Business Insider recently that his ambition is to build a stock market for property, allowing shares in rental properties to be traded over the Property Partner platform just as you would with any listed stock.
In the release announcing the funding, Gandesha says:
This significant investment is a huge vote of confidence in our business model, and our vision for making the property market better for everyone. These funds will help propel us towards our ultimate goal – that of being a global stock exchange for property.
Property Partner finds a house — or more likely an entire development and it often buys in bulk — negotiates a deal with the seller and then posts the property on its website once it has exchanged on the deal. Property Partner pays the deposit from its balance sheet and underwrites the deal but the idea is that investors stump up the whole price.
Investors get a chunk of the rental income proportionate to their shareholding and also benefit from any increase in the property’s value. Independent assessors periodically revalue the properties, adjusting share prices accordingly. The company advertises an estimated return of 13% per annum after fees.
Neil Rimer, who was a founding partner at Property Partner investor Index Ventures but has since set up his own VC firm, is quoted in the release as saying:
Owning property in London has so far only been an option for wealthier residents. Property Partner changes this by allowing anyone to invest in attractive residential properties, earning rental income and participating in capital gains if the property appreciates. Property Partner operates a revolutionary property marketplace that will continue to simplify and open up property ownership to a larger base of people.
6,200 people have invested £24 million ($34 million) into 166 properties over Property Partner’s platform since launch.
The company is among a crop of new startups springing up in the UK that call themselves PropTech — property technology companies.
The first generation were online estate agents like Zoopla and Rightmove, but now there are crowdfunding property purchase sites — Crowdahouse, The House Crowd, Property Moose — and crowdfunding mortgage sites, like Landbay and LendInvest.
Jo Oliver, investment director at Octopus Ventures, says in the release:
The £5.75 trillion ($8.14 trillion) UK property market, with the exception of pioneers such as Zoopla, has been slow to embrace technology. However, this is now changing rapidly and Property Partner is one of the companies leading this disruption. Through its combination of technology, business model and excellent management execution Property Partner is dramatically increasing and improving the accessibility of property as an investment asset class.