The Fellow Funders real estate crowdfunding division is born. The investment platform, one of the most significant in Spain, launches its own system of real estate funding rounds to offer its investors a high-demand product, competitive returns, and tight deadlines. Fellow Funders aims to help diversify the investment portfolios of its investors, providing a product with a short-term time horizon.
The platform does not only think about investors. Its purpose is also to help the development of the activity of small and medium-sized promoters by allowing them access to alternative investment sources in a sustainable and diversified way.
Fellow Funders is regulated by the CNMV (National Securities Market Commission in English) – and its investment platform makes it possible for any investor to become a company’s shareholder. The investment returns are obtained through profit distribution (dividends), the sale of the company, or by selling their participation (for those that go public in alternative markets).
The new real estate crowdfunding division enters the market with a specific investment product: industrial and commercial assets investment for refurbishment and repositioning in the residential segment. The minimum investment starts at 1,000 euros, allowing any small saver to enter the real estate investment market with the same professionalism as large investors.
The real estate projects that will host the Fellow Funders platform are defined by a balanced risk-return mix, aligning the interests of developers and investors. Moreover, these projects will be based on the “value add” with estimated returns of around 20% per annum and a short-term time horizon. These products will also provide a good diversification of investment portfolios. In other words, it will allow the combination of investment in real estate operations with good short-term profitability and investments in companies with a high potential for future growth and a medium/long-term investment horizon.
Before all projects are available to investors, the Fellow Funders’ risk experts evaluate them. Once available, the project is launched on the platform’s website to reach the necessary funding, which in many cases is achieved before the deadline.
To launch this new real estate crowdfunding division, the company has formed a team of professionals led by Pablo Barriopedro, director of the Real Estate area. Barriopedro has more than 15 years of experience managing real estate assets and real estate development. For Fellow Funders, this new line of business is another step in its process of strategic expansion and consolidation as a group focused on alternative investment. In this sense, new sources of financing in the real estate sector are not an option but a necessity. The commitment of the Fellow Funders group is framed in the generation of investment opportunities in the Real Estate sector as a response to the demand for investment products in the short term.
As part of its consolidation process, Fellow Funders expects to enter the real estate development business by the end of 2021 or the beginning of 2022 and to expand its projects in cities such as Valencia, Barcelona, and Bilbao.
This new business area has already been tested with the publication and financing of the House Flipping Delicias project. The project consists of purchasing premises for refurbishment and change of original use to residential, converting them into housing and storage rooms. The total investment volume was 870,000 euros. The funds were raised within just six days.
The next project (available on their website fellowfunders.es, and on their app for iOS and Android) involves a change of use from a commercial space to 5 residential units in the Cuzco-Castillejos area. The project has a value of 840,000 euros, and Re-Aviva, a company specializing in this type of change of use with whom they have already worked on previous projects, carries out the project.
During its first year of operation, Fellow Funders expects to finance eight projects with an approximate investment volume of 7 million euros. However, it is crucial to consider that Fellow Funders will provide similar products, in line with the current demand of investors who channel their investments through Fellow Funders.
How does Fellow Funders work?
In case you are an investor, register on their platform/app. To do so, you only need to attach a copy of your ID card. Afterward, choose the projects that suit you best. For this task, the objective valuation report will help you, as it describes all the core aspects of the project and evaluates the pros and cons. If you have any doubts, access the investment room and share your questions with other investors or the entrepreneurial team to have all your concerns resolved before investing.
Once the project or projects have been chosen, you should check if they have tax incentives before investing. Keep in mind the importance of diversifying your investments. Both the investment process and the monitoring of your investees are online.
On the other hand, if you are an entrepreneur or developer, register on the platform. Afterward, it provides an Investor’s Deck with the Advanced Fair Value Report. The platform will better evaluate the potential of your project and determine if the project can be financed by Equity Crowdfunding. You will then be asked for the necessary documentation to analyze the project, meet the team that develops it and determine the future financial needs. The goal is to perform the most objective assessment of the project. After completing these tasks and being approved by the operations committee of Fellow Funders, the Equity Crowdfunding campaign is developed (publication on the platform, marketing plan, market appetite survey, dissemination in networks and media, search for investors, etc.). The entire process is transparent and professional for the developer and the investor, given that the latter will become a shareholder of your company.
Once the project is closed and the goal achieved, Fellow Funders provides you with the shareholders’ agreements and the deed of capital increase. However, you can always consult with your legal advisors.
The platform also offers a private area. Here you will find your annual, semi-annual, or quarterly reporting documents. This way, all your investors are aware of the evolution of the business. In addition, you can send your shareholders promotions that you want to offer them from your private area.