Property crowdfunding opening up new horizons
The grey skies of Chicago and some blue-sky thinking led Moresh Kokane to Australia in 2014. The four years since then have been a busy time for the 35-year-old, who is already working on his second Australian proptech start-up.
“I was making a good living in Chicago consulting to investment banks, but my wife and I were sick of the weather there,’’ says Moresh.
“I saw an article in The Economist magazine saying Melbourne was a very nice place to live, so we applied for a permanent residency in Australia and we just packed our bags and moved. We didn’t know anybody here.’’
With successful startups in India under his belt, Moresh was precluded by his visa from starting a business in the US, so he was excited to be free to work for himself again in Australia.
The idea for his first local venture, Estate Baron, was born from the realisation that Australians are three times more likely to be invested in property than Americans.
“I noticed Aussies were really interested in property,’’ he says. “Property crowdfunding was taking off in the US but there was nobody doing it in Australia, so I decided to work on that.’’
Moresh launched Estate Baron in 2015. He is gratified by the performance of the crowdfunding platform, although he prefers to think of it as a software company.
“We have built our own SaaS product that enables property developers to quickly set up a website under their own branding, which they can then use to promote to their own investor base. So we should really be seen as a technology/compliance/service solutions provider,’’ says Moresh.
“We also act as a place where potential investors can come to see all these offers. In that sense, we are a little bit like the ASX, where the developers can list the offers and then investors can make their own decisions.
“Our job is to ensure that everything is running smoothly and that our investors are provided with the information they need to make their own judgment.’’
Estate Baron allows mum-and-dad investors and SMSFs to invest in property development in a passive way, as they can in public companies listed on the stock market, without taking on debt.
Each property development issues a prospectus, the same document a public company issues when listing on the ASX, which is then lodged with and reviewed by the Australian Securities and Investments Commission. And every project is also audited, giving investors peace of mind.
The Estate Baron model is flexible enough to handle almost any size of property development.
“The smallest development we have done so far was a $250,000 home renovation in Melbourne, and right now we are working on a project for around $10 million,’’ says Moresh. “There is no limit to how big we can go.’’
Earlier this year, Estate Baron was one of four startups selected for the Charter Hall PropTech Accelerator program. Moresh says he found the experience invaluable, not least because of a “fortunate collision” with the team at innovation hub Collective Campus.
This led to a new joint venture called Konkrete, which Charter Hall believes could revolutionise property fund management.
Konkrete is a blockchain-enabled fractional property marketplace designed to help solve Australia’s housing affordability crisis.
“Blockchain is the next step for us,’’ says Moresh. “I want to help people who cannot afford to buy their own homes, those who cannot save enough money for a deposit.
“We are building a structure by which people can crowdfund their own homes by raising money for a deposit, or release equity from their existing properties. Blockchain is being used as the infrastructure, because it makes the system very transparent.’’
However the technology underlying Konkrete has a huge range of other potential uses, including unlocking access to property investors beyond Australia for Estate Baron, provided it can meet regulatory requirements such as those around customer identity verification.
“We could have a person in Venezuela investing in a piece of property in Australia. That is very powerful,’’ says Moresh.
Charter Hall’s Chief Technology Office Aidan Coleman says the company is working with EstateBaron to explore how Konkrete could provide a more frictionless experience for international investors in Charter Hall funds.
“I think we are going to see a lot of focus on how funds management businesses, real estate businesses, can utilise technology like blockchain to gain more of a foothold into equity raising globally,’’ said Aidan.
But as a firm believer in the decentralisation ethos, Moresh’s vision is not just a platform to revolutionise property funds, but a self-regulating, self-sustaining ecosystem that could become the infrastructure for a global securities trading network.
“Once you have a distributed share registry on the blockchain, anybody can transact peer to peer, which means you don't need to go to a stock exchange to achieve liquidity,’’ says Moresh.
“It will be a mechanism for use by anyone wanting to raise money or build a secondary market for their own securities offerings.
“My job is really to build the framework based upon which it could work. I feel quite privileged to be in a position to do that.’’