The equity crowdfunding model continues to branch out into pastures new, as strategic land investment platform Intro Crowd goes live.
Similar in style to the various real estate equity crowdfunding models, Intro Crowd will allow investors to band together in order to fund the acquisition of strategically selected plots of land. The platform will then work to sell that land on for housing development, in the hope of offering investors equity upside. The Intro Crowd investment proposition is a pure capital appreciation play. In this regard it differs from, say, Property Partner – where investors stand to earn a dividend yield from rental income, as well as being exposed to the value of the property. But Intro Crowd CEO and Founder Gregory Baker tells us that the returns on offer through land investment could well be higher than those generated by other forms of real estate investment, citing the potential for 100% to 200% returns over a number of years.
Investors will be able to peruse a large amount of documentation when assessing opportunities on the platform, ranging from third-party valuation reports, right through to drone footage of the site.
Gregory describes the Intro Crowd proposition as a “middle term” investment, with a horizon of perhaps two to three years. The platform will rely upon an existing network of introducers to identify promising sites that are adjacent to existing settlements, with a focus on those that are experiencing a high growth in population. These plots will then be listed on the platform as investment opportunities – and will be acquired if the target fundraise is met. Once acquired, Intro Crowd will seek to add value to the land by readying it for development – which entails the seeking of planning permission, the implementation of infrastructure (like sewage systems), and so on.
Intro Crowd will set up an investment company in order to purchase each plot of land, and it is that company that investors will hold equity in. Investors will be able to buy shares in these companies from £1,500. Intro Crowd will charge an investment fee of 2% and a one-off management fee that will vary in amount from site to site. The platform will also charge a success fee of 5% based on the gross proceeds of any sale.
The whole model here is one of investors taking a risk on Intro Crowd’s ability to deliver a successful exit. This final part of the platform’s fee structure to a degree serves as incentivisation for Intro Crowd to make good on the promise of a sale. The platform’s first project is a strategic land development at Cam, near Dursley in Gloucestshire. Intro Crowd has funded this project in its entirety, as a means of kick-starting the platform. Going forwards, the platform’s vision is to become a pure facilitator – with the aforementioned fee structure in place – rather than investing alongside the crowd.
Intro Crowd CEO Gregory Baker has spent the bulk of his career building technology-based financial products. He is a Founder and Director of Hermex FX, the City foreign exchange firm. Mr. Baker commented the launch of Intro Crowd:
“There are plenty of ways to invest in property, but our platform allows people to invest in strategic land, which are sites on the edges of towns and villages. The Government has pledged to build one million new homes over the next five years and the challenge is finding the land on which to build them. We believe our investors can make a contribution to reducing this shortfall.”
Alternative finance platforms are gradually opening up solutions for every link on the real estate chain. Intro Crowd is attempting to open up investment opportunities in land. Proplend and Wellesley & Co. provide access to development finance. Property Partner, Property Moose and a range of other platforms facilitate equity investments in real estate. The likes of Landbay and LendInvest offer investors exposure to buy-to-let mortgages. Each of these platforms is attempting to deliver a dynamic aftermarket, and each hopes to become the de facto exchange within their asset class. Intro Crowd is now vying for a place in that ecosystem, and as far as we can see is without any direct competitors – for now.
Now in its sixth year, the AltFi London Summit returns on 18th March 2019 to 155 Bishopsgate. Last year proved to be a crucial turning point for the key players building the future of finance. Leading platforms launched oversubscribed IPOs, digital banks proliferated and mainstream financial institutions started their own disruptive propositions. With 2019 certain to be another landmark year, more questions will be asked by regulators with investor interest in disruption also poised for more rapid growth.