Tax & admin Hunter Ruthven · 12 November 2015
CrowdLords: Bringing a crowdfunding model to the British property market
Combining expertise derived from beinginvolved withthe crowdfunding and property worlds, the co-founders of CrowdLords are building a platform that is attempting to replicate the success seen by US equivalents. Richard Bush and Bethan Jenkins first set out to provide a way for buy-to-let property buyers to access the required capital. Landlords and developers find sites they wish to fund and then present an investment opportunity to investors on the platform. Each property is contained within a special purpose vehicle (SPV), with shareholdings in each divided up between the landlord and investors. From that buy-to-let foundation, Bush and Jenkins have also realised there is great potential in funding development projects particularly in London where the yield on buy-to-let isn’t particularly good. Validation and all-important growth capital was provided through a 150, 000 fundraising round using, you guessed it, a crowdfunding platform. At the end of 2014, CrowdLords listed on Seedrs and offered up a little over 15 per cent of the business to secure the cash. Looking at the evolution of the entire crowdfunding space, whether it be peer-to-peer lending or equity investment, Bush said: “The Financial Conduct Authority (FCA) have been really helpful, and very detailed in its processes. It does classify different platforms in different ways, but for all the right reasons.” Another big help along the way has been the KPMG Small Business Accounting team. Because each property sits in an SPV, accounting each quarter is required alongside the delivery of dividends. “We could have done that in-house, but we needed to reassure investors it was being done correctly that we weren’t skimping, ” Bush explained. KPMG’s online accounting service does all of this financial management for CrowdLords, meaning the SPVs do just what each is supposed to do. Looking at the US market, Bush is hopeful that his business will be able to replicate the success of the three biggest platforms over there, which accounted for a combined $3bn last year.
ABOUT THE EXPERTHunter Ruthven
Hunter Ruthven was previously editor of Business Advice. He was also the editor of Real Business, the UK's most-read website for entrepreneurs and business leaders at the helm of growing SMEs.