Homegrown

Market

Target market

Investors:

Our target market are the 1.1 million people who have invested in UK online alternative finance (2015). These are primarily peer-to-peer lending & crowdfunding investors (Source: Nesta & University of Cambridge, February 2016). We also anticipate substantial demand from the estimated 1.4 million landlords in the UK (HMRC, 2014).

For our target audience, sustained, low interest rates are driving them to look for alternative ways to make money. They are typically attracted to property as an asset class because of its strong historical performance, but high prices, the hassle of ownership & sometimes a lack of experience are all barriers to buying an investment property directly. In addition, buy-to-let investment has become less attractive following recent tax changes & lower forecast house price growth.

Developers:

We believe there is a significant opportunity on the supply side of the business from small to medium-sized property developers seeking equity finance for development projects.

We find that the property developers within our target audience will typically raise up to 70% of development costs (land & build costs) through finance (debt) from the bank and the remaining 30% tends to be funded through equity from the developer and/or high net-worth individuals. Currently, the disaggregated nature of the equity finance market can be a barrier to scale for many developers.

Characteristics of target market

At a global level, the alternative finance addressable market is estimated at around US$3.3 trillion (Source: Deal Index, 2015). In the UK, an estimated £3.2 billion was raised by the UK alternative finance market in 2015, which grew by 84% compared to 2014 (Source: Nesta & University of Cambridge, February 2016).

Within the UK online alternative finance investments and loans market, equity crowdfunding is estimated to be one of the fastest growing markets (up by 295% to £332m in 2015). Property was the most popular sector in 2015, accounting for £696m between debt (£609m) & equity (£87m) platforms & more than 10,500 investors had participated in property crowdfunding alone (Source: Nesta & University of Cambridge, February 2016).

In addition to the potential growth of the UK online alternative finance market, we also see huge potential for future growth from UK property investors. It is estimated that the private rental sector in the UK is worth £1.29tn. However, a recent survey by the Residential Landlords Association revealed that 25% of landlords have sold or are planning to sell their buy-to-let properties as a result of recent tax changes (Source: Residential Landlords Association, 2016).

Marketing strategy

Early traction & data has helped us to understand our customers better including the channels & messages which engage with them & therefore provide the best return on our marketing spend. We consider our marketing strategy in four stages based on the customer's journey; Awareness, Conversion, Investment, & Loyalty.

> Awareness: We aim to generate awareness primarily through a combination of digital advertising (including Google, Facebook & LinkedIn), search engine optimisation supported by content marketing, customer & third party/affiliate referrals & PR.

> Conversion: We capture users’ contact information through social media, their registration on the site, or their subscription to our newsletter. We aim to convert users by providing relevant, interesting, and topical content through email newsletters, social media & regular blogs. We hope that this will serve to better educate the user about our product & investment proposition, and position us as thought leaders in our market. We also look to use calls, webinars, and promotions to increase conversion rates.

> Investment: We continually analyse & optimise the performance of the website to ensure that the process of making an investment with Homegrown is as fast, simple, and intuitive as possible.

> Loyalty: To maximise loyalty, build brand ambassadors and increase referrals we provide investors with a personalised dashboard on the site & provide regular updates on their investment. We also plan to start hosting quarterly investor events.

We expect our marketing plan will evolve as we continue to grow & analyse the performance of our marketing campaigns.

Competition strategy

Our competitive landscape includes other accessible (low-entry investment) savings & investment products, such as Savings & ISAs & the key sectors within the UK online alternative finance market (primarily peer to peer lending & crowdfunding).

We see our largest direct competitors as Property Partner, The House Crowd, and Property Moose. These companies have been successful in making buy-to-let investments more accessible. However, we strongly believe there is a gap in the market for a platform that offers investors a better way to invest in property, by making equity investments in property development projects.

We see Homegrown’s proposition as unique in the UK, although it thrives in other markets like the US. We specialise in offering equity investments in quality residential development projects with established developers and we aim to target the highest asset-backed returns in the UK online alternative finance market.