CrowdProperty

Idea

Introduction

CrowdProperty is a specialist property peer-to-peer lending platform facilitating loans between private individuals and UK professional property businesses. Actual property development and investment experience lies at the heart of the business meaning hands-on, expertise-led due diligence and loan monitoring, made more effective and efficient with proprietary, in-house built tech.

Lending is focused on the SME property developer market, a key segment for supplying much needed UK housing stock, which our customers tell us is poorly and inefficiently served by traditional funding sources. We offer property professionals speed and certainty of funding and our lenders access to inflation-beating first-charge secured returns previously only accessible to institutions, which can be tax-free through the CrowdProperty ISA.

CrowdProperty has funded the development of over 500 Great British Homes, worth over £80,000,000 by lending over £30,000,000 and has a perfect track record of repaying capital and interest to lenders with no late loans at all in our loan book.

Intended impact

Our aim is for CrowdProperty to become the #1 place for:
- Project finance direct to SME property professionals
- Strong first-charge secured returns for lenders

We work directly with property professionals:
- Bridging, Refurbishment, Development, Development Exit, Auction and ‘Special Situations’ (bespoke solutions given our expertise) funding
- Data-led objective project and developer assessment against our rigorous lending criteria, served up efficiently via our tech platform to our team of property experts for quick, expertise-based decision making
- A direct relationship, partnership approach aligned to property professionals' needs to support the successful completion of the project

We offer lenders:
- First-charge secured superior returns
- Many rigorously assessed and curated residential lending opportunities throughout the UK
- Both SelfSelect and AutoInvest routes to invest
- Tax-efficient investment options via our ISA and SIPP/SSAS pensions
- A proven track record of 100% capital and interest payback track record and no late loans in our loan book

Substantial accomplishments to date

We've step-changed key operating metrics since our last fundraise, proving we can scale:
- 505 homes funded (162 at Nov17 raise)
- £82m property funded (£28m)
- £31m lent (£10m)
- £12.7m repaid (£6.6m)
- 2,308 new lenders in last 12 months (632)
- £3.55m of first pledges in last 12 months (0.5m)
- £911m total finance applications (£184m)
- £870m direct application annual run-rate based on last 6 months (£103m)

Most powerfully, we have proven the ability to directly originate funding applications, disintermediating the finance broker market at scale.

Importantly we have also opened our books up for Brismo Independent Verification, validating our performance, track-record, no late loans and significant outperformance of their UK P2P Returns Index.

CrowdProperty has been able to grow very quickly because we focus every day on building and building our trusted brand, enabled by:
- Our ongoing 100% track record and loan book quality
- Originating all projects directly, part of enabling a better deal for all
- Building long-term, deep relationships with our property professional customer base
- Only ever taking first charge security
- Only lending on projects with planning consent
- Being totally independent
- Purposefully positioning ourselves on every level to attract high quality projects
- Having many decades of hands-on expertise in the senior team
- Focusing only on what we do, continuously building stronger and deeper expertise
- Having and always building all capability in-house (including full tech capability)

External accreditation extends to being fully authorised and regulated by the FCA, an HMRC approved ISA manager, the only property development platform member of the P2PFA (the top table of the sector) and also the only to be Brismo Verified (independent performance scrutiny of every loan cashflow).

Monetisation strategy

Finance arrangement fees: 2-4% charged to borrowers. Interest spread: 1.5-2%pts of spread between borrower rate charged and the lender rate provided. This is importantly consistent and laid out transparently on our platform statistics page with spread cashflow at the end of the loan, a prudent structure preferred by the FCA in the unlikely case of needing to fund the wind-down of the loan book.

Given huge direct origination volume, there will be further monetisation opportunities, such as referring applications that do not meet our underwriting criteria.

We believe CrowdProperty has strong economics due to achievable fees, average loan size, borrower repeat frequency and capital recycling due to average loan length, enabling us to build a strong, scalable, sustainable and profitable P2P lending business.

Use of proceeds

We’ve proven that we can grow the team and deliver value-enhancing growth. We are very clear about the key areas of the business to grow to unlock growth – predominantly on the borrower-side (currently 6 FTEs). The evolution of our proprietary platform can be predominantly delivered by the current team (currently 6 FTEs), with 1-2 specific additional recruits to build identified proposition developments (lender and borrower side) and further operational efficiencies. We believe we can triple our lending again with a team growth from 24 to c.34, i.e. realise significant scale benefits from the core team, systems and processes we have in place.

We have also tested, refined and optimised marketing on both the borrower and lender sides, scaling investment in which will deliver new customers where customer lifetime value significantly outweighs cost of acquisition.

Furthermore, we have additional proposition development opportunities in the pipeline.