Launching a digital finance portal for the first time can be difficult. From our experience, we understand there are many moving parts to this venture so, at a high level, we have outlined the main considerations when starting such an undertaking.
1) Resourcing
This will be the most important area both pre and post launch of your real estate crowdfunding portal. Resourcing for the venture can be broken into two categories a) Internal and b) Monetary. Using the Crowd Valley framework our clients have successfully entered the market varying degrees of each.
a) Internal Resourcing
When launching a platform, the decision needs to be made either to use one’s own internal developers or utilize a partner’s resources. Clients have the opportunity to take advantage of different paths to market depending on how their current operations are structured. Both paths to market will have a direct impact on both types of resourcing.
Experience has shown that the most efficient for our clients is to go with a local development partner and utilize their resources to complete the user interface and user experience workflows. This structure allows for clients to leverage local hands on development and industry leading support to alleviate any technical bottlenecks.
b) Monetary
Using centralised resources such as API documentation, webinars and code examples clients have successfully launched real estate crowdfunding platforms on a wide range of operational budgets. Starter applications can be utilized to effectively launch an MVP into the market in less than one working week. With an API based solution clients have the flexibility to use pre-existing front end framework or bespoke UI’s. Bespoke UI can significantly increase the monetary input for your crowdfunding platform, given the importance that aesthetic appeal has in promoting product value. As a result, the front end framework is the main monetary resourcing to be considered during the configuration process. Additionally, operational costs that come into effect once the platform goes live must be kept in mind as well. These include costs for service such as licensing, hosting, and third party services such as payments, KYC/ID Verification and equity management, to name a few of the more common ones.
2) Regulation
Regulation is beyond the scope of a platform operator’s control but it's a fundamental aspect to be aware of. Working through and setting up a regulated portal will require significant time and resourcing and, depending on where the platform is based/launched, specific regulation addressing crowdfunding may or may not have already been drafted, requiring the platform operator to use existing securities or banking laws.
More established fintech markets like the US & UK, have drafted regulations but these are under constant review. It is important to choose an operational and technological framework that allows you to easily make adjustments to the platform with changes in regulation, future proofing your platform for years to come. For markets that are not yet formally regulated, it is even more important to be aware of these changes as they are often separated into regulatory framework for equity or debt raises. Each country will address the type of raise and its rules differently. Regulatory compliance can be addressed alongside the ongoing development of your platform but all the necessary infrastructure (processes for ID verification, credit checks, investor accreditation, etc) must be in place when the platform goes live.
3) Ecosystem
The crowdfunding ecosystem will be directly influenced by which regulatory body you are working under. The US, UK and EU have strong ecosystems to support the automation of payments, compliance, document management and external data sources (to help with such areas as underwriting).
Each country tends to have their own bespoke requirements for the above. If you are operating in such areas as Asia or Latin America you will first need to check the regulatory status of taking payments, executing compliance and e-signing of documents in your jurisdiction. As a practical example, payment providers will need to both process and hold payments. Either platform operator or payment provider will need a license to execute the latter.
We, at Crowd Valley, are committed to future changes in digital finance with a proven track record in helping our clients identify opportunities and enter new markets in a meaningful way. If you are looking for more insights and best practises to capitalise on collaboration within the fintech space, get in touch with us at Crowd Valley.
About the author - Pete Woodard
Pete has worked within FinTech since 2013 across a broad range of security applications serving multiple verticals. He has scaled Google Venture backed startups in the AdTech space before joining Crowd Valley. Originally from Canada with a education background in Mechanical Engineering and Marketing. Pete has helped to open up new global markets in the digital investing and lending space. When not firmly rooted in the London FinTech scene he enjoys travelling, always mixing business with pleasure. He has spoken to over 1000 digital investing entrepreneurs, which makes him a valuable resource for trends in new security models.
Pete has worked within FinTech since 2013 across a broad range of security applications serving multiple verticals. He has scaled Google Venture backed startups in the AdTech space before joining Crowd Valley. Originally from Canada with a education background in Mechanical Engineering and Marketing. Pete has helped to open up new global markets in the digital investing and lending space. When not firmly rooted in the London FinTech scene he enjoys travelling, always mixing business with pleasure. He has spoken to over 1000 digital investing entrepreneurs, which makes him a valuable resource for trends in new security models.
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