Fred Bristol (pictured), chief executive and founder of Brickowner, speaks to Peer2Peer Finance News about the platform’s rebrand, regulation and his outlook for the property market…
Brickowner entered the property investment space in 2017, aiming to give the public access to asset manager-quality developments.
It works with asset managers and developers such as London Property Ventures, SN Developments and Evolve to source and manage residential, commercial, industrial and hotel development projects through the platform.
Investors can fund projects with comparatively lower minimum sums than they would in a property fund and more than £16m has been invested so far.
The platform has also been busy with its own fundraising activities, having raised more than £2m through several Seedrs crowdfunding campaigns.
Brickowner has successfully navigated Brexit and the pandemic, while others have faltered.
Its founder and chief executive Fred Bristol attributes this to a focus on professional, sophisticated and corporate investors.
That is a different approach to when it first launched, as the platform initially expected a lot of younger customers to invest small amounts.
But most of its investors are older and are putting an average of £20,000 on the platform.
This has facilitated a rebrand, an increase in the minimum investment and a change in the way Brickowner operates to cater for a more professional market.
Read more: Brickowner launches secondary market
Bristol explains to Marc Shoffman how Brickowner is building for the future.
Marc Shoffman (MS): What did you do before launching Brickowner?
Fred Bristol (FB): Property is all I have done since I left university in 2002. I went to Eastern Europe and ran a pan-Baltic property fund in Estonia until 2010.
From 2010 to 2015 I was in the UK just running personal investments and then became interested in setting up a property fund which led to the launch of Brickowner.
MS: Why was Brickowner set up and what gap is it filling?
FB: Rather than a property fund where there are high minimum investments, I thought it would be interesting to set up a platform where we could automate the onboarding and then take smaller increments of money.
We focus on being the platform. We don’t want to be the developer and the platform. We are a registered fund manager, an investment management wrapper and work with existing property developers and asset managers which gives us access to lots of sectors in the UK.
From an investor’s perspective, we offer a broad spectrum of investments, not just residential. We have done everything from care homes to developments, hotels. It is a nice way of diversifying.
From the property side, because of the clean-out in the property investment sector, there are very few left who are actually working with developer asset managers to help manage their own investments.
MS: How do you spot investment opportunities?
FB: The property world is pretty small. A lot of people we work with I already knew. People also come to us through the website.
MS: Why did you decide to increase the minimum investment from £100 to £500?
FB: Our average investor puts in £20,000 so the minimum is a bit of a red herring anyway.
When we launched originally, we thought our average investor would be 20-something-year-olds, but the average investor is actually 40- to 70-year-old men putting in £20,000.
People in their 20s aren’t interested. They have less disposable income.
MS: Are you planning more equity crowdfunding campaigns?
FB: There are no more fundraises planned yet.
We found it a good way of raising money and closed our first round in 2016. It helped with the costs of technology, building a team and getting the structures in place on the legal and regulatory side.
MS: Why have you decided on a rebrand?
FB: When we originally branded it was for a slightly younger investor type. Our new branding will be more linked to what our natural investor type is, professional individuals.
We are also updating the whole front end of our platform, including the dashboard.
MS: How are you regulated?
FB: We have two main companies under the group, a small registered alternative investment fund manager and our new limited liability partnership (LLP) structure registered with the Financial Conduct Authority.
We haven’t done an investment with the new structure yet but will do so before the end of the year and it will become the main route.
One of the benefits is tax, as an LLP is not a taxable entity. Rather than a company having corporation tax, in an LLP each member is taxed based on their own rate of income tax.
We stopped taking restricted investors two years ago. We could take them under our old structure but our new structure won’t allow restricted investors.
Our present investments are all done in share classes within a master fund. In the new structure, each development will be in a separate LLP. This is more scalable.
MS: Have projects been impacted by the pandemic, the supply chain crisis or Brexit?
FB: There have definitely been delays, which has been due to a number of factors.
A big one was to do with the beginnings of Covid. Even if people were on site, things were slower.
A lot of what we do is developments where the return is at the end.
We haven’t done any investment where a regular interest payment has been delayed.
MS: What is your outlook for the property market?
FB: There are a lot of issues in terms of material shortages and increased costs, and there is a backlog due to Covid. I am guessing it will take nine months to sort itself out.
Covid is hopefully coming under control, we don’t do central London so hopefully we won’t be affected by Brexit. I’m still positive about the next few years.
In terms of our platform, we are in a lucky position as the barriers to entry are higher than they have ever been. Some competitors have pulled out of the market, which from our perspective is a good thing.
It’s harder for a new entrant to come into the market. It’s becoming more regulated but it is getting the balance right. Regulation is a good thing for the market.
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