Despite everything going on in the world, we continue to launch new and exciting startups looking to raise capital to fast track their growth. These companies are the true innovators and drivers of our economy and retail equity crowdfunding presents an excellent way to support them directly and share in any success.
Our newest retail offer is BRICKLET, a revolutionary fragmented property platform that is truly disrupting property investing. It offers a world-first model that makes investing in property accessible, easy and fast. It does this by breaking up a piece of property into ‘bricklets’ which are bought by investors at a fraction of the cost. Bricklet owners are a registered owner of that fragment on the land title and receive all the benefits that come with owning an investment property – such as rental and capital yields.
We’ve summarised some key points which impressed us about the company below.
Disrupting an age-old industry
Property investing is nothing new, in fact it’s one of the oldest options out there recognised for its stability and ability to offer tax benefits, rental income and capital gains. Nonetheless, it’s an area that hasn’t seen much innovation for a long time. A major pain investing in property is the high cost of entry with the average house deposit in Australia being $161,800 (based on 20% of the average house price). This is true for both first time investors and more seasoned investors who wish to diversify their portfolio by buying several properties. Other pains include how much time it takes to buy an investment property as well as the issues associated with rental management. In contrast, BRICKLET enables investors to become landlords within days at a fraction of the cost whilst also receiving hassle-free asset management.
World-first concept and platform
There’s fractional property investing and then there’s fragmented. Confusing we know, but the difference is significant. Fractional property involves the purchase of a given property funded by a number of fractional smaller investors. However individual investors are not included on the land title, but rather own a fraction of the trust that owns the property. This limits direct exposure and control, meaning that if the entity ceases to exist, so too does the value of the investment.
Another similar model to fractional investing is Real Estate Investment Trusts (REITs) which function like a managed fund of stock market investments. Investors gain exposure to the trust itself, rather than individual properties within the trust. As such, the choice in the buying and selling of specific assets is limited, with these decisions instead made by a manager.
BRICKLET divides properties into a set number of “bricklets”, each with a value proportional to the overall investment. The investors are on the land title which means that the asset will never cease to exist like a trust and they have complete control over selling the asset. Whilst there are several examples in Australia of fractional investing platforms, the founding team of BRICKLET have never come across another fragmented investing platform making it a world-first.
Backed by the best
Don’t believe us? BRICKLET’s approach has been validated by big names in the real estate industry. Property giants Mirvac and Stockland joined the company on the journey as initial investors to fund its development and growth. Both companies conducted extensive due diligence and legal review and believe there’s a strong future for fragmented property.
BRICKLET was also named by the Australian Financial Review as a top prop-tech company to watch in 2020. Plus Accounting firm BDO said “fragmented property investing could be ground-breaking for SMSFs by giving investors all the benefits of property without many of the risk and compliance drawbacks”.
Traction to date
BRICKLET has sold just under $9 million in bricklets in the first quarter of 2020 after launching in September last year. This is even more impressive when you consider the launch was only to wholesale investors - the group that fragmented property investing is currently limited to given its relative youth as a financial instrument. The Company is working with regulators to provide the opportunity to all Australians.
Check out the coverage of the launch on Channel 9 and the ABC.
BRICKLET’s unique solution was entirely developed in-house by leading software development and commercialisation company Lakeba Group. Lakeba has successfully commercialised a number of software platforms including Shelfie, which was also a success story for Equitise with a current valuation of 8 times the original price in the 2018 raise.
This technology developed by Lakeba Group enables the company to provide a fast, seamless and highly user friendly investment experience in addition to ongoing property and portfolio management. The platform enables investors to purchase and trade securities hassle-free. This approach also enables BRICKLET to continue to develop additional revenue streams through the platform such as detailed analytics and finance.
We see a lot of great ideas in our line of work but it’s really exciting when you come across one that’s not only a world-first but has already been built and received impressive traction. BRICKLET also has the benefit of not just operating but disrupting the property market - an industry at the heart of the ‘Great Australian Dream’ and one that has long since been recognised as a stable investment class. Marry the above points with the backing of two industry giants, as well as proprietary technology, and you’ve got an offer that’s pretty beefy!
A few points to consider in this current crazy world we find ourselves in:
- Equity crowdfunding is a longer term investment as the equity is currently ‘illiquid’, which means the shares can’t readily be sold until an exit event like an ASX listing or a buy-out occurs. This means that the value of the investment is less prone to the fluctuations in the market like we’re currently experiencing as it gives the market time to recover
- Market correlation and investment returns aside, one of the best things about equity crowdfunding is the ability to support the Australian startups driving the economy from the bottom floor. Startup communities are becoming increasingly important in the modern economic era, and these opportunities allow you to make your investment mean something, whilst also potentially making a return, with funds going straight into growth and job creation.
- The property market isn't always correlated with ASX downturns and market crashes which means that BRICKLET might be less sensitive to the current climate. For instance in the 2008 GFC, the share market dropped a whopping -40% whilst the national property market rose +7.5%, and then in the following years went up +1.9%, +13.7%. Continue reading here.
You can view our other equity crowdfunds here.