Our latest interview sees Techboard correspondent Bradley Delamare from Tank Stream Labs make a switch from interviewee to interviewer (see the Techboard interview with Bradley). Bradley, spoke with Anthony Millet, CEO of residential property crowd-investment platform BRICKX following their $9M capital raise. We recently caught up with Anthony at the Myriad Launch Party in Brisbane where he was demonstrating his snake wrangling skills.
Bradley Delamare: So Anthony can go give us a bit of background into how you came to be involved with BRICKX?
Anthony Millet: Growing up, I’d always had an entrepreneurial flair, looking for neat business ideas, albeit on a small scale, looking to take advantage of opportunities and solve customer problems.
In 2001 I studied Money, Banking and Finance at the University of Birmingham. I clearly had a keen interest in business and went on to become an investment banker for four years at UBS in London, which is where I cut my teeth in the corporate world.
After four years, and much soul searching I decided there was probably more to life than working in investment banking forever. So I left there to go and take over the family business, which was a small sports retail store that had a modest website offering.
I was only meant to be going for a period of a year before starting my MBA, but ultimately that one year became seven years and over that seven year period we built a business that grew from having a turnover of a million dollars online to over $70 million online and we launched the business into eight different countries, which was then later sold to a large sports retailer JD sports.
After that first experience of proving my entrepreneurial flair on quite a big scale. I needed a bit of time out, so I embarked on the gap year that I never had. In 2015, I started addressing my bucket list, including a car rally from London to Mongolia called the Mongol Rally, which ended in tears in Turkmenistan when our car blew up and then also traveled around South America, before settling in Australia with my Australian wife.
When I came to Australia, I didn't actually have any specific plans of what I would be doing. I was very open minded as to what my next adventure would be and spent the first three months, meeting a number of other entrepreneurs, VC’s & business people to get a flavor for the market. I was so appreciative of how kind and generous the Australian startup and business community were with their time and introductions.
Given my experience in e-commerce, you would think that my natural gravitation would be towards the e-commerce space here in Australia, but I very quickly realized that the infrastructure within this country was not yet well suited for e- commerce success and hence the reason we have limited e-commerce successes in this country. I think the Iconic is probably the most obvious success story, but competition is pretty weak because the costs involved in getting started and operating are very high (relative to other geographies), along with a competitive international landscape.
Rather than go into something where I knew the odds are instantly against me, there were two sectors that I had identified as being ripe for disruption; the property sector and finance sector, where Australia was also lagging in innovation compared to the rest of the world.
About the same time I came to the realisation of the sectors that I wanted to focus on, I became aware of BRICKX and quickly realised what a great fit this company with huge ambitions was to my sector thesis.
Bradley: Typically property investment includes months of planning, research, negotiations, estate agents etc… can you give us some insights into the process of property investing through BRICKX?
Anthony: I'll do is break it down into two. I'll give you the process from a consumers point of view and and I'll talk a little bit about all the stuff that we do to take the hassle out of it.
The real premise behind BRICKX is about accessibility. The residential property has been the most consistently top performing asset class over most long term periods, over the last 10- 20 years it's outperformed the share market yet many are unable to get access to this type of investment. Typically you've only ever been able to get access to this market by buying the property itself. There has been a lot of talk recently about housing affordability, but the truth is housing has always being relatively expensive, and if you've got a few grand to make an investment, investing in residential property has never been an option available.
We thought, how can we make property an investable asset class in the same way that people think about shares and this is really the premise behind BRICKX. So from a consumer, we're focused on creating a simple platform, in which customers deposit funds, & can then choose from a number of the properties on our platform and invest in those particular properties by buying bricks. When you buy bricks, you're entitled to your share of the monthly income from the tenants that are in these properties and as the value of the property changes the value of the brick generally changes as well.
You have investment access to a property without the need for buying the whole property. Every property is split into 10,000 units (in a unit trust), meaning a million dollars will cost $100 per one brick. So it's very accessible to everyone.
There's no product in the world that if you decided hey I want to go and invest a couple of grand into high quality property that allows you do that in five minutes. So for BRICKX, it's really about making a traditional, challenging and difficult process a hassle free process by democratising the way we think about real estate.
We have a team of experts including economists from Corelogic and realestate.com and our expert property buying team who come up with the macro strategy around where we should be buying down to the individual suburbs. We are looking for properties in suburbs that have got a low vacancy rate and high rental demand, as well as being highly developed so there's limited opportunity for significant new supply to come onto the market. We're looking for properties that are uncomplicated have relatively low strata fees and generally well renovated so that we're not going to have any significant expenditure over the life of holding it on the platform.
In terms of the buying bricks (the investors process) we encourage everyone to do as much research as they need to get comfortable with financial product but the reality is if you're someone who understands financial products you can go on our website and purchase bricks within five or ten minutes.
Bradley: Tell us a bit how your recent capital raise, the process of securing funding from one of Australia most well known VC funds Reinventure & NAB Ventures.
Anthony: Raising money in Australia is challenging, there aren't a lot of professional investors and we spent a lot of time with them.
At the stage of business that we're at, we had some great early signs of validation. At the time we commenced fundraising we had 3000 Users/Property Investors and we now have over 10,000 users, with 40,000 people who are signed up with a profile on BRICKX.
We were looking to find a partner that could help us explore future product opportunities and evolve beyond just a platform to invest, rather to actually start to tackling some of the more challenging issues such as housing affordability or poor experiences for tenants, even things like equity release in the future where actually someone might want to sell part of their home, not their entire home.
So we were looking for active investors who were not just interested in putting money in but actually could strategically help us realize the vision for some our exciting initiatives.
Reinventure and NAB are connected to banks, so we felt that we had very good alignment with them. Some of the banks biggest challenges at the moment is millennial engagement and housing affordability, which aligns very well with BRICKX as a product.
Bradley: Can you give the readers some tips on how to secure investment?
Anthony: So in terms of tips & tricks for early stage startups my advice would be to have a clear view of what your vision is. All businesses will and pivot and most experienced investors expect this from such early stage ventures as they evolve and grow. Investors know you don't have all the answers on day one, but being to communicate what your vision is and having investors understand and buy into that vision helps a long way. You should also be all over your numbers & metrics. Brutal honesty is critical as investors know & expect you haven't got all of the answers and they are generally very forgiving, as long as you are brutally honest and can say we just don't know the answer to that.
Bradley: What role did data play in the capital raising process:
Anthony: Taking a step back as to why you want the data. When an outsider (Investor) is looking at you, they realise they're investing early on, you've got a load of hypotheses and assumptions and you've got a vision. At such an early stage you’re often lacking evidence that it is actually real or achievable. So the more data you can provide that shows that you're not bat crazy and actually your hypotheses are sound or even some of them are not sound is okay, in short data becomes a means to justify what you're presenting is a real opportunity and it's actually got viability.
In the case of BRICKX the data that we had available was conversion data. We knew the levels of engagement of people coming on to our platform, how frequently they were coming, how frequently they were depositing and the fact that they were saving. Yet we were still a relatively young business, we'd only been live in the market for seven months when we started that conversation, as a result we had limited data. But we could see from the seven months of data that showed that engagement was high. We could see the kind of audiences that we're using us. We could see the people repeat investing, admittedly we couldn't see where all of these people were coming from. Public Relations (PR) was a big strategy for us and one of the problems of PR is it's quite unmeasurable and so we had to be open about what data we had and the fact that we had big gaps from a marketing perspective, around where our customers are coming from and how continue to engage with that targeted audience. Think about the data that's going to give strength in making the case that your business model works.
Bradley:What’s next for BRICKX? Anything exciting to share with readers?
Anthony: In the second half of this year we're going to be launching a very exciting savings product which is aimed at encouraging people to save in line with the property market. The main goal of assisting people with saving for specific goals, whether it be a housing deposit or whatever else it may be, residential property has far outperformed the returns of high interest savings accounts and we're creating an environment where people can commit to saving and actually reap the benefit of residential property investment.
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