VentureCrowd aiming to raise $50m by end of 2021

VentureCrowd CEO says fund allows unsophisticated investors to reap the value of the entire construction process.

Mr Maarbani said the digital nature of VentureCrowd’s investment platform would attract millennial investors who are often overlooked by the industry.

Local equity crowd-funding platform VentureCrowd is hoping to raise $50m by the end of 2021 through a new mortgage fund to allow young, retail investors to dip their toes into the post-COVID property market.

VentureCrowd’s completely digital investment platform will allow retail and wholesale investors to tip a minimum of $5000 into the Mortgage Fund V2.0’s secure, registered mortgages from their phones.

The targeted return is 7 per cent a year but investors will also be able to swap their stake for property at the end of development. 

It comes as national housing prices sustaining a 0.4 per cent national drop in May due to the coronavirus pandemic, a decline that is likely to be sustained, according to AMP Capital chief economist Shane Oliver who has said that national average prices could fall 5-10 per cent into next year as high debt levels and lower immigration contributed to a market oversupply.

But VentureCrowd CEO Steve Maarbani said the Mortgage Fund V2.0 was “almost counter-cyclical” in nature as it allowed unsophisticated investors to reap the value of the entire construction process and not just the end product. 

“In a market where, if you want to participate in property, your only option is to buy off the plan or acquire an existing dwelling, then the next few years are not looking great for capital growth for that particular asset,” Mr Maarbani said.

“And that assumes you can even afford acquiring that asset, which most people can’t.

“We are funding a fund that is lending to property developments that are a block of dirt today - the process of approval can take six months and the construction can take 18 months … the growth process is not correlated to house price valuations today.” 

Mr Maarbani said the digital nature of VentureCrowd’s investment platform would attract millennial investors who are often overlooked by the industry.

The investment markets and the financial services sector had not necessarily understood the importance of the millennial, Mr Maarbani added. 

“And they’ve been very slow to democracies and digitise what they do. There’s been an assumption that people interested in building a nest egg for themselves start at ages 50 and 60 - that’s complete rubbish.” 

The decision to offer investors a chance to trade equity for property ownership was motivated by the perceived unfairness of the property market. 

“The Australian dream of owning a home is becoming increasingly unattainable for many, which is another reason we are working to unlock the wealth that exists within the property development space for all,” Mr Maarbani said.

Steven Maarbani. Source: Supplied.

“Ultimately, for our millennial investors, you’re probably looking to build on your nest egg to get a deposit for your first project. 

“So we will be asking investors: before we take it to the open market, would you like to acquire one? 

“We can effectively swap an interest in the fund for some portion of the sale price in the end product. Because we have a development management team that is part of the group we are also in control of the sale of the final development - we don’t just finance them.” 

Since its launch in 2013 VentureCrowd’s crowd-funding platform has grown to 42,000 registered wholesale investors and has raised more than $117m of start-up and real estate capital.

Last year, advisory firm Ernst & Young predicted that globally, the real estate crowd-funding market would reach $9bn by 2021 from a base of $4bn in 2016.