How Is The Fast-Growing Proptech Market Disrupting The European Property Finance Sector? With Michael Bristow And Faisal Butt

In the first episode of season 9 of the Propcast, Louisa is joined by Michael Bristow, CEO and Co-Founder of CrowdProperty and Faisal Butt, Founder & CEO of Pi Labs. During the episode, they discuss how Pi Labs started, as well as how the PropTech market has changed and grown. Michael shares his journey from investor to founder, and chats about his specialist property development lending platform, CrowdProperty. With their ‘property finance by property people’ proposition, CrowdProperty and Pi Labs are disrupting property finance for small and medium sized developers who have previously struggled to access the financing they need.

Resources:

• LMRE Global Recruitment and Search Consultancy
• LMRE YouTube Interviews

Companies Mentioned:

• Spire Ventures
• OfficeRnD
• PropTech1
• Fifth Wall
• GREENPASS
• Okibo 
• Lantech 

Key Insights From This Episode: 

• We’re disrupting property finance for small and medium sized developers, where historically financial services underserved them. – Michael
• If you’re a B2B SaaS business, it doesn’t matter where you are because you can build a globally scalable business. – Faisal 
• If you can prove one market, you can arguably have the ability to scale in many markets. – Michael
• Australia has many duopolistic markets which typically drive less aggressive competition between players. – Michael
• Since there was such a dearth of liquidity for PropTech before, I find that there is more coming in now, but I don’t think there is too much. I believe that the market needs to mature and that funding is needed at different stages. – Faisal
• Retention is what you need to focus on. When you have someone great in your team, you need to look after them because if not, they will go elsewhere. – Michael

About Our Guests:

Mike Bristow

Mike Bristow is the CEO and Co-Founder of CrowdProperty, the UK’s leading specialist property development online lending platform. With a background in strategy consultancy advising major corporates and private equity funds on corporate strategy and M&A, Mike has been investing in property since 2002, investing in high potential proptech businesses since 2014 and sits on the Investment Committee of Pi Labs, Europe’s first and most prolific venture capital fund investing exclusively in early stage ventures in the proptech vertical, in which he is also an LP.

Mike has an MBA from London Business School, is a founding board member of the Innovate Finance 36H Group alongside other leading fintech lending platforms and was named ‘Entrepreneur of the Year’ at the Midlands Business Awards 2020.

About CrowdProperty

CrowdProperty is the UK’s leading specialist property development online lending platform – a fintech/proptech lending innovator, exceptionally efficiently matching the demand (quality property professionals undertaking quality property projects) and supply (major global financial institutions and private investors) of capital for value-creating property projects. CrowdProperty has built the best SME property development lender in the market, changing the game with a distinct ‘property finance by property people’ proposition, unlocking the potential of small and medium sized developers to build more homes and drive spend in the UK economy on labour, materials and services.

 Small and medium sized property developers and property professionals have been poorly and inefficiently served by traditional funding sources for decades. Actual property development and investment experience lies at the heart of CrowdProperty meaning a hands-on, expertise-led partnership, underpinned by technology for efficiency and deep asset class expertise for effectiveness of lending, increasing the likelihood of success of our customer’s projects. CrowdProperty funds property professionals undertaking any sort of property project, structuring the perfect funding product and doing so with greater speed, ease, certainty, transparency and expertise than anyone in the market. As property people providing property finance, we intimately understand market pains and built the business around the needs of small and medium sized property developers. 

CrowdProperty has funded over £400,000,000 of property projects and the construction of 2,000 homes. CrowdProperty was recognised as one of the 50 fastest growing tech businesses in the UK (UK #41 and Midlands #1 in the Deloitte Fast50 report) and by the Financial Times as the #132 fastest growing business in Europe. Apply for finance for your property project in just 5 minutes at www.crowdproperty.com/apply View video case studies of projects we’ve funded at: www.crowdproperty.com/case-studies 

Faisal Butt

Faisal Butt is CEO and Founder of Pi Labs, a London-based venture capital firm focused on backing companies that are at the forefront of digitalising the real estate and construction sectors. Faisal founded Pi Labs in 2015, after leading the first round of investments in PropTech start-ups Hubble and Trussle as an individual investor. Faisal and his team have built a portfolio of over 60 PropTech companies across the UK, Europe, North America, and Australia, making Pi Labs one of the most active investors in PropTech start-ups globally. Faisal is also the founder of Spire Ventures, a personal investment vehicle with a focus on investment in traditional property services companies. His traditional property investments include POD Management, Beaumont Bailey, and 90 North, a real estate investment manager which has managed $2bn of real estate assets across Europe and the USA.

Global proptech venture capital (VC) firm Pi Labs backs the innovators revolutionising the future of physical spaces. Connecting next generation technologists with the real estate world and mentoring forward-thinking founders as they grow and scale their startups, Pi Labs’ purpose is to solve the greatest challenges facing the real estate world through technology and create a positive impact on our physical environment for people, businesses and communities. Founded in 2014, London-based Pi Labs invests in early-stage proptech startups which are transforming the future of physical spaces across Europe – where it is the most active proptech VC. Its portfolio companies operate in global markets, including Asia and the US. From pre-seed to Series A and follow-on investments in later funding rounds, Pi Labs has grown its portfolio to more than 60 companies which are shaping the future of our physical spaces, with more than 50% of startups focused on addressing environmental and social issues.

About Our Host

Louisa Dickins

https://www.linkedin.com/in/louisa-dickins-ab065392/

Louisa started her career in property working at a well-known estate agency in London. Realising her people skills, she moved over to Lloyd May to pursue a career in recruitment. She now is a Director at LMRE, who are a specialist recruitment firm driven by PropTech and recruitment professionals, and Louisa oversees their 5 core areas. Louisa co-founded LMRE and provides a constructive recruitment platform to the new disruptors in real estate. Louisa is also on the board of Directors at UK PropTech Association (UKPA).

About LMRE

www.lmre.tech

LMRE believe there is a better way to recruit. LMRE focus on a more comprehensive, client led focus delivering exceptional talent to the place at the time. They are passionate about the industry and passionate about people’s careers. LMRE spend time with each client to become and an extension of the business, and their transparency and core values help them grow with the sector. LMRE simplify recruitment and innovate with our clients and evolve the people driven, PropTech community.

Timestamps:

[02:40] Faisal: Why did you get into this space and how did Pi Labs come about?

• I started my career in California during the first .com boom and bust. 
• At 25, I quit the corporate world to join the entrepreneurial world and set up my own tech business. Being a founder led me to segwaying and deciding to do an MBA at Oxford. 
• In 2009, during the recession caused by real estate, I was looking for investment opportunities and I looked at investments into traditional real estate businesses. In 2013, I wanted to focus on the intersection between real estate and technology. 

[05:00] How does Spire Ventures come into all of this? 

• I made investments before Pi Labs that were in traditional real estate and I decided that if I wanted to continue, I should set up an Investment Management Business – a Fund Management Business-  and separate personal investment from business investment.
• Pi Labs focuses on PropTech businesses where Spire Ventures focuses on traditional fee-generating businesses. 

[05:40] Michael: You are an Investment Committee Member at Pi Labs, what does that mean and can you tell us more about the move you made from being an investor to a founder?

• My background started in Mechanical Engineering and I went into strategy consulting.
• I did things in the reverse route. I started as an advisor, went on to be an investor, and then went on to be a founder. 
• I did my MBA at the London Business School, pre financial crisis. 
• Since 2002, I have been investing in residential real estate. 
• Once the investment team has filtered a lot of businesses and they pieced together the investment thesis, they put that to the final approving committee called the “Investment Committee”.

 [09:15] Talk us through finding CrowdProperty and the product.

• We are in full-on growth mode as a profitable FinTech, PropTech business. We fund small to medium sized property developers.
• We’ve got a lot of debt capital from major global asset managers; over £400M worth of property projects with over 2000 homes being built. 
• We have expanded into Australia

[11:05] After your third fund raise, is the focus going to remain in Europe? 

• After our first fund was launched in 2015, we were mostly a UK fund and we had one company in Bulgaria which has turned into a global business.
• With our second fund, we started investing in the Netherlands, Finland, and throughout Europe and we wanted to focus on businesses that had a global thesis. 
• Our third fund is our most international fund. 

[13:30] How much are you looking to invest? 

• We can invest anywhere from pre-seed to series A but our sweet spot is anywhere on the seed spectrum. 
• Checks can be as small as £100,000 to £1 million.
• This fund has a pretty significant amount of growth capital reserves.

[15:00] Michael: Why is Australia the next point of call rather than the US?

• Most of my consulting career was spent advising businesses on international expansion. 
• Australia is a smaller market with 24 million in population and they are in the earliest stage of the evolution of FinTech and PropTech. 
• Australia has many duopolistic markets which typically drive less aggressive competition between players. You can drop in and be quite disruptive.

[17:40] Faisal: You’ve done 25 investments, is there a direction for this fund? 

• We are quite a dynamic investor. 
• We are publishing our own research on a number of topics such as sustainability and ESG. 
• We are interested in robotics and the metaverse.              

[20:55] What are the main challenges which are out there for you and other investors?

• Sifting through the volume and identifying the winners.
• There is such a dearth of liquidity for PropTech before that now  the market needs to mature. 

 [23:35] The ‘LMRE’ part, Louisa asks the guests to talk about; 

L – Touch on the main lessons you have learnt throughout your career.

Faisal: Stay focused, be disciplined. 

Michael: Focus drives expertise, world-class talent and competitive advantage.

M – Please give a mention to anyone / product / service.

Michael: Pi Labs

R – What has been the most rewarding aspect of working in PropTech?

Faisal: Watching businesses grow. Watching a founding team build to scale. 

E – What are you excited about in the future of PropTech?

Faisal: Deploying this capital into a batch of really exciting high calibre startups. Growing our team. 

Michael:  Disrupting property development, finance, and helping more homes get built.

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