Richard Bush, chief executive of CrowdLords, explains how – and why – he changed his business model, as the platform eyes a “stable, sustainable” expansion…
PROPERTY lending is a famously dynamic market. Evolving regulations and increased competition mean that in order to succeed, property platforms have to be relatively flexible and focused on sustainable growth.
This isn’t a problem for CrowdLords. Since it was founded back in 2014, the platform has moved from being a place where people could become buy-to-let landlords by raising equity from the crowd; to become a more investor–led platform offering a range of investment types, including an Innovative Finance ISA (IFISA) for UK real estate.
CrowdLords’ chief executive Richard Bush explains that the changing remit was largely driven by government legislation which was focused on professionalising the buy–to–let market.
“That made it quite difficult for the single buy-to–let model to work,” he says. “We discovered that most single unit buy–to–lets were no longer going to work as an investment so we very quickly pivoted from buy-to-let investments into funding developments and rental portfolios.”
The ability to pivot its business model will serve CrowdLords well in the years to come. Making the shift from buy-to-let to broader property investments meant that Bush had to familiarise himself with a new due diligence process and a new – highly competitive – market.
“It was a significant change and it took us a year or so to be in a position to be able to do that, but we were convinced that we had to,” says Bush. “We could see there was a great opportunity for developers and subsequently for investors. The resultant increase in our investor base and average investment size has also enabled us to offer investments into ‘blocks’ of buy–to–lets rather than single units.”
Property crowdfunding and peer-to-peer property lending have become increasingly popular in recent years, thanks to their relatively solid security, a range of risk/return options for investors, and eligibility under a number of the tax-free wrappers.
However, this means that CrowdLords has moved into the market at a point when competition is high. Luckily, Bush is not trying to compete with any one platform.
“We are very ambitious, and we have quite strong views on what it takes to be successful at what we do,” he says. “Having said that we’re also realistic in our ambition to grow. So, we will grow and become a significant player, but we will do it in a sustainable way.”
And Bush knows better than many what it takes to grow a new business. Before setting up CrowdLords, he ran a successful business–to–business branding and marketing agency which was built from the ground up.
“That time spent helping other businesses to build brands and markets certainly helps now that I am in a position to do it for my own business” he says.
For instance, Bush is adamant that the best growth happens organically, even if that means that it lags behind its competitors in terms of loanbook growth.
“It might mean we grow more slowly, but I think what’s more important is that we end up with a sustainable business,” he says. “And what that means to our investors and development partners is that our three-way relationships can flourish, bringing higher levels of trust and confidence to everyone involved.”
“At the end of the day, what will distinguish one platform from another will be how well they serve their clients and their users, so that’s what we focus on.”