Dubai-based real estate crowdfunding platform Smart Crowd has raised $600,000 in seed funding from Shorooq Investments, Abaxx Technologies, 500 Startups and some individual investors.
Founded last year by Siddiq Farid, Musfique Ahmed and Abdul Kadir Faizal, Smart Crowd that claims to be Middle East’s first and only financially regulated real estate crowdfunding platform that allows users to make micro-investments investments in real estate, starting with as little as AED 5,000 (~$1,350).
In their own words, they “provide the opportunity to buy and sell shares in properties, reducing the barriers to entry to low-middle income households to build financial assets and generate investment income.”
Currently operating under an Innovation Testing License (ITL) from Dubai Financial Services Authority (DFSA), Smart Crowd only allows the UAE residents to make these investments. The startup plans to pursue a full license that will allow citizens from all around the world to invest in properties through its platform.
Once you’ve made the investment, you can earn money in form of dividend – that is basically the rent (divided among all the owners) a property is able to collect minus the management/administration fee. The property is managed by a Dubai Real Estate Regulatory Agency (RERA) approved Facility Manager.
Smart Crowd charges 10% of the annual rent to cover this and other property-related expenses.UAE’s Smart Crowd raises $600,000 as seed funding to help you invest in real estate with little moneyClick To Tweet
The startup, however makes big chunk of their money by charging a 4% structuring fee – 1.5% at the time of investment and 2.5% at the time of exit.
Exiting the property, however, is not as easy as it should be. There’s no secondary market at the moment so you cannot sell your investment to someone else.
The only option for exit is to wait for the end of investment term when all the investors will vote to sell their holdings at the market value.
Smart Crowd, according to their website plans to introduce a secondary market in the future.
The startup plans to use investment to accelerate their growth and further develop the product.
Smart Crowd Co-Founder Siddiq Farid, speaking about the investment, said, “We are on a rapid and exciting growth journey of democratising real estate ownership. We are excited to have the backing of both regional and global investor this early in our growth cycle, demonstrating our team’s ability to execute on big ideas. The fundraise will allow us to accelerate our growth and continue to invest in our revolutionary technology. We are particularly proud to have Shorooq as our lead investor who believed in us early on and supported us throughout the funding round.”
Shane Shin, Founding Managing Partner of Abu Dhabi headquartered Shorooq Investments, noted: “Shorooq Investments is excited to lead the Series Seed financing round of Smart Crowd and join this grand journey with such a strong, dedicated group of founders: Siddiq, Musfique and Abdul Kadir. The real estate crowd funding platform has already revolutionised how real estate investments are done in mature markets like the US and Europe, influencing millions of peoples’ lives and their real estate savings.”
Mahmoud Adi, Shorooq’s Founding Partner, added, “Smart Crowd solves two underlying pain points in a real estate investment: the requirement of significant lump-sum cash and the relatively long holding period and illiquid market. By enabling clients to invest in a property for as low as AED5,000, Smart Crowd is fulfilling people’s dreams of investing in homes and encouraging everyone to start saving now versus waiting to get a huge amount of capital which can take decades. We are confident the region now needs an innovative solution like Smart Crowd and is ready to wholeheartedly embrace this platform.”
Sharif El-Badawi, Partner at 500 Start-ups, said: “Smart Crowd offers a much needed alternative through which investors large and small, experienced or novice, can crowdfund their projects, without the need for banks and large tickets. They enable a whole new class of real estate investors with smaller checks and higher volumes, which results in projects being funded faster and with full transparency. Perhaps more importantly, the technology behind Smart Crowd enables these investors to get into the real estate market with little hassle and allows them to generate residual and capital returns fairly quickly.”
The startup was part of first cohort of Abu-Dhabi based FinTech Hive and had also participated in the Sharjah-based Sheraa’s acceleration program.
They were also winners of Accenture Innovation Award at GITEX last year and Seedtars Sharjah earlier this year.