Democratising investing opportunities is a key focus for crowdfunding pioneer Steve Maarbani.
The founder and CEO of VentureCrowd spoke to the FINSIA Podcast about the growth of the sector, how it is being driven by Millennials and how it offers an extra avenue into property.
“For a long time, property has been funded by an elite group of specific people and it has never been that accessible to the broader group,” says former PwC partner Steve.
Even buying a home, he notes, is a daunting challenge.
“But if you have $10,000 in the bank or $20,000 or $50,000 even, and your desire to invest in a property is because you expect the property market to grow well over the next 12 to 24 months, then there are other ways to do that.”
While developers would normally go to a family office or a group of institutional investors, he adds: “We've intentionally tried not to do that.
“When we acquire a property, we make the equity component available to the crowd on the website.
“So you're in the property market, taking advantage of property upside at an equity level for $10,000 or $20,000.
“That comes with equity risk, of course it does, but that opportunity has until now just not been available to most people.
“That is our objective to democratise access to alternative investments, including property.
“Up until now, all of the most lucrative gains were taken by a specific and elite group of people.”
While the range of investors exploring crowdfunding options starts with those in their early 30s, it goes all the way through to late retirees, according to Steve. VentureCrowd’s 61,000-plus investors have raised $150million since 2013.
And he expects the numbers to continue climbing as Millennials are now moving into a stage of their lives where they're ‘hitting 40’
“They are a group of people who were born with a mobile phone in their hand,” he says.
“They're doing things digitally. They're not interested in being taken to lunch to be shown an investment opportunity.
“They say just send me the details. I want to click on a phone on my own. I might run that through my peers and decide, who else knows about this? Who else is in? Where do I get peer validation? How else can I validate digitally? And they're very comfortable validating digitally, then making an investment digitally.
“Within the next two or three years from now, if those numbers are what we expect, then hundreds of millions of dollars are going to flow through digital platforms into venture capital opportunities.
“I'm not saying it's going to take from existing sources. I expect that it will be complementary and will grow the pie rather than anything else, but it is going to be a significant amount of money.”