ProjectCrowd is a local platform in the prelaunch stage focusing on Real Estate crowdfunding. The founders, Ben and Matt, have property finance backgrounds and a vision to enable the masses to share in the returns that can be made from property development. Real Estate crowdfunding is a relatively new niche form of crowdfunding with a risk profile somewhere between equity crowdfunding of businesses and marketplace lending. Pioneers of this form of crowdfunding include Fundrise and Realty Mogul in the US and Property Moose, The House Crowd and CrowdaHouse in the UK.
ProjectCrowd want to provide Equity and Mezzanine financing for small to medium sized developers for a 15% to 18% return to investors. Traditionally, these developers often turn to friends and family in order to raise equity for projects. ProjectCrowd believe this syndicate model is ready to evolve, and want to offer an alternative to developers via the crowd. Senior finance for these projects is still expected to be provided by banks and other ‘traditional’ sources, however it is not beyond the realms of possibility that in time this portion too will be provided by the crowd.
ProjectCrowd is still on the drawing board with regulatory requirements currently unworkable. However legislation is soon expected to become accommodating, as the Australian Government works through the recommendations made by its Advisory Committee in late 2014. Regulation in Australia has meant that it has been a frustrating process to-date, despite the duo having some of the countries top crowdfunding legal brains working with them.
The first successful real estate crowdfunding campaign for an Australian development was completed recently by a Singapore based platform, CoAssets. It appears that the precedent has been set.
To learn more about the Australian AltFi market, check out our roundup here.
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