PropTech News talks to London-based proptech startup Real Funds which is focused on providing alternative finance to small and medium-sized house builders through a combination of crowd financing and technology.
We spoke to founder and CEO Arya Taware, about her journey in launching Real Funds, the inspiration and future plans for her startup.
Q: What is Real Funds?
Real Funds is a fast-growing financial-property-tech startup. We are a real estate peer-to-peer lending platform disrupting the oligopolistic position of a few major house builders by providing alternative finance to small and medium-sized house builders, who currently have limited access to finance, especially after 2008 banking crisis.
At the same time, we are opening this exclusive market, which was previously available only to those with high capital and the right connections. Through our platform, you can invest in property development projects in your local community and beyond for as little as £10, for returns of up to 10-12% per annum. Our ultimate vision for the future is where cities will be financially self-sustainable, with local communities investing in local property developments.
Q: Where did you find the inspiration for Real Funds?
In 2013, I worked for a small developer. We would go around seeking development opportunities but could hardly get access to finance to build the proposed housing schemes. This frustration led me to start researching deeper into the issue. I found out that there was limited finance for small and medium-sized development projects. This is a widespread issue and one of the causes of our current housing crisis.
With the rise of fintech, I saw an opportunity to solve this gap in the market by making alternative finance available to small and medium-sized house builders via a combination of crowd financing and technology. For the past year and a half, I have been developing Real Funds, working on the business model, meeting with industry experts and building the team.
Q: How do you believe you can solve the gap in the market?
By funding small and medium-sized house builders through crowd funding, we provide them capital they would otherwise not have access to. This will enable them to build more and the right kind of housing. The government has established a target of building 240,000 houses each year. Housing experts believe such figures cannot be met at this point. We believe actually it can if new innovative development models such as the one Real Funds proposes are promoted.
Q: If funds aren’t raised, what will happen?
We have secured institutional funding that will allow us to provide the remaining funds necessary for a project to be constructed, in the eventuality that the crowdfunding round does not provide the necessary capital. This mechanism ensures that every single project that is approved on our platform will get 100% funding, making it safe for both the house builders– who are ensured to get the funding required – and the investors – who do not have to worry about a project not being fully funded and getting their investment back.
Q: The real-estate investment market is seen to be very middle-aged male dominant. Do you consider this a challenge for your startup?
I would not consider this a challenge. There are very successful women changing the real estate industry at the moment: Jilliene Helman for instance is making a splash with Realty Mogul in the USA.
I do strongly believe that more women can be encouraged to work in the construction and the fintech industry as they usually bring something new and innovative. The recent government scheme encouraging more women to join the construction industry is in that sense encouraging. Many amazing women also support this inclusion: the CEO of Lux Reality Marta de Sousa collaborated with other industry experts on the Built by Her campaign, encouraging women to work in construction. I believe if more people recognise and support these campaigns, it will create a more equal gender industry.
Q: What are your future plans for the company?
We are gearing towards launch by getting regulated by the Financial Conduct Authority (FCA) and by recruiting our property team. We are planning a beta launch by the end of this year, with two projects advertised on our platform. We have opened an Investors’ Club membership, where members who register for our pre-launch will have first access to these initial projects. Due to the large amount of interest, we will be closing the Investors’ Club registration in two weeks time.
We will have our official platform launch beginning of 2016, when everyone will be able to invest. In the meantime we are also welcoming interested investors and property developers to get in touch with us and register on our website realfunds.co.uk.