As we launch into another year there has rarely been more uncertainty, apprehension and fear amongst the business world. One thing I am certain about is that 2021 will be the year when equity property crowdfunding will not only grow as a market sector but will become firmly established as an attractive option for alternative funding for property developers. We are living in the middle of a paradigm shift, when the business clock goes back to zero, rules books are ripped up and thrown in the bin and new opportunities arise. I have never been so pleased to be CEO of an equity crowdfunding platform. Why? Let me explain 3 reasons.
Firstly and somewhat stating the obvious, the vast majority of property projects in the UK require equity. While usually based on senior debt from a bank, bridging company or even a P2P crowdfunding platform, the capital stack almost always has need for equity. With the ‘build, build, build’ policy from the Prime minister and the numerous incentives like stamp duty there will be no shortage of developers looking for equity in 2021.
Secondly, whether we like or not there is an unmistakable and potentially long-term pivot to online business and ecommerce. I am not just referring to the obvious lockdown restrictions limiting face to face contact but how the last 9 months have ushered in a new way of doing business. Do not get me wrong, as humans we will always want company and face to face contact, but does anyone really believe we are going back to packed hotel events, bunged restaurants and crammed offices any time soon? I don’t think so! I have a member of staff who joined LEOcrowdfunding 9 months ago and I have never met them in the flesh! We have spent literally weeks’ worth of time on zoom, built a productive working relationship all virtually. Is this the new normal? There will certainly be a definite impact on fundraisers meeting potential investors and investors being able to visit potential investment sites so alternatives must be found.
Finally, technology allows investors to access the information they need online in the comfort of their own home. Google maps, Rightmove, land registry, online networking events and zoom all combine to offer investors incredible tools. So as fundraisers and property investors spend more time at home, become more active online and take advantage of these tools, funds will continue to be raised or invested. If you are an investor looking for good deals or you’re a fundraiser looking for equity for a deal then equity crowdfunding is where you need to look. From the comfort of their own home property investors can have vetted and financially approved deals brought to them, they can meet the fundraisers via webinars, watch live virtual site visits and engage with the fundraiser and other investors on a closed forum, all through their crowdfunding platform. Fundraisers can access a pre qualified and motivated investor base who are actively looking to invest in property.
As more and more fundraisers and investors understand the potential for significant benefits of equity property crowdfunding then more and more will use it to achieve their property goals. How we do almost everything has changed in the last 9 months and within the world of property we many never go back to what we thought was ‘normal’. Whatever changes come in 2021 I believe property crowdfunding will grow as market sector and become the new norm for property investment.