This time it’s the right one. Last April, the fractional real estate investment platform Bricks.co proudly announces having collected 20 million euros to 165,000 people. Problem, this participatory fundraising does not fall within any legal framework because she was distributing royalties not stocks.
« L’AMF [l’Autorité des marchés financiers, NDLR] told us that the royalties did not depend on their jurisdiction because they were not financial securities”, explains Cedric O’Neill, founder of the start-up. Contacted, the AMF declined to comment.
Two options are therefore available to the start-up: either to comply by proposing actions but by putting a ceiling of 8 million upon lifting – as required by the regulations – or remain in royalties without being regulated.
42 properties financed
It was the first option that was chosen, resulting in the raising of 8 million euros from 8,700 individuals. “We had all the investors sign a document again and reimbursed on a pro rata basis. Some did not wish to participate and were fully reimbursed, ”says the manager.
In parallel with this operation, Bricks.co completed a round of funding of five million euros near business angels including Tony Parker. The French basketball player has already invested in a few French start-ups including Colizey, a sporting goods marketplace, alongside another champion , Teddy Riner. He also became the face of proptech. “He loves real estate and our desire to go to the United States,” says Cédric O’Neill.
To date, Bricks.co has enabled 50,000 people – 80% of whom are under 30 – to invest mainly in France. Of the 42 properties financed (for a total of 50 million euros), three are located in Portugal. “There are better opportunities in Portugal than in France”, underlines the leader.
To address European investors, Bricks.co requested the new European approvala status that will be mandatory at the end of 2023 for the activities of crowdfunding in the form of securities subscription. Still few platforms, like the British Crowdcube, have this Holy Grail to date.
More bank loan
In 2023, Bricks.co will offer American homes. The market is still nascent across the Atlantic, with a few small players including RealT and Fractionnal. “For once, the United States hasn’t taken much of a lead,” observes Mathias Flattin, who heads Axeleo Capital’s proptech fund.
If the Bricks.co model is exportable, it is on the other hand shaken up by the current rise in rates. To finance real estate, the young shoot appeals to individuals and supplements with a bank loan up to 50%. “We will no longer be able to have a bank leverage effect and collect 100% from investors”, specifies Cédric O’Neill. Since the launch of its activity, Bricks.co claims to have generated nearly 5 million euros in turnover (it charges a 10% commission) and claims to have been profitable since day one.