An Aussie startup looking to redefine how people invest in property has followed up a $9 million Series A raise with another milestone: reaching more than 10,000 users since launching in late 2016.
The startup, BrickX, was founded by current chief executive officer Anthony Millet in 2014 and offers Australian investors a way to purchase individual parts of a property, called “Bricks”. These units are similar to shares in a company, with one property being broken up into 10,000 Bricks and customers able to buy as many or as few of them as they’d like.
BrickX currently offers its customers a choice of 15 different properties in Sydney, Melbourne, or Adelaide. The business’ first four properties since its launch have returned an annualised return of 7%, and in total $17 million has been transacted on the BrickX platform.
But despite founding the company in 2014, Millet and his team were unable to launch the platform until late 2016 thanks to the regulatory quagmire posed by the startup’s unique business model.
“The sophistication of the model makes BrickX unique, but it meant it took us quite a while to launch the business thanks to the complex regulatory environment,” Millet told StartupSmart.
But having now been up and running for around 18 months, the startup’s “strong and steady” growth has seen it hit a major milestone of 10,000 investors on the platform, something Millet describes a “phenomenal” level of validation.
“To get from nothing to your first few thousand customers is super challenging but a lot of validation, and to get to 10,000 is a phenomenal amount of validation, and a hell of an achievement,” he says.
“What’s even better is that we not only have 10,000 users, but over 50% of those are repeat investors who are starting to use BrickX as a way to achieve their goals.”
While the team is chuffed with the uptake of the BrickX platform, Millet says the property market represents a $7.5 trillion opportunity in Australia and BrickX is one of the few operators attempting to solve housing affordability in the country.
With that in mind, he believes the potential customer numbers could be in the millions, and the startup has a ways to go until it hits those numbers. He is pleased with the investment spread though, which ranges from millennials investing $100-200 for a few Bricks, to self-managed super fund operators purchasing $30,000 stakes.
The platform also boasts a median time of 19 hours for when investors want to exit their stake, something Millet is proud of considering the “illiquid” nature of the underlying investment.
“At this time I’m extremely happy and very comfortable with [our growth], and the investments from NAB and Reinventure will help us rapidly expand and promote the platform,” he says.
$9 million raise marks second big four bank investment
In early March, BrickX announced it had finalised a $9 million Series A funding round, backed by big four bank NAB’s venture capital arm NAB Ventures. The raise followed on from an investment from other big four bank Westpac’s venture capital arm Reinventure, the amount of which was undisclosed.
This funding has allowed the startup to expand its tech and product teams, with plans to unveil two more offerings this year to tie into the startup’s investment platform. This includes a savings plan system and an invest-to-buy product, which are slated for mid-year and end-of-year releases, respectively.
“Startups are often in cash burn phase, and this investment allows us to have significant runway which we can use to create our product offerings,” Millet says.
One thing that’s not on the cards anytime soon is international expansion though, with BrickX an “Australian business built to solve a uniquely Australian problem”, says Millet, who believes part of the reason the platform’s seen such success is the close affinity Australians have with home ownership, and the coinciding challenges of housing affordability.
That being said, Millet says the team has identified a number of other markets with a similar intersection where BrickX may look to expand in the future, including Singapore, London, New York, and Hong Kong.
“It’s not something we’re considering for 2018, but it’s something we’d like to do,” he says.
“We don’t view ourselves as a disruptor, we’re not disrupting incumbent businesses. We see ourselves as a revolutionary, a pioneering business that constantly focuses on new goals and helps our users achieve their own goals.”
For other startups hoping to grow their customer base in a similar fashion, Millet offers a “cliched” piece of advice: stay customer-facing and focused.
“You have to have a business centred around solving a specific problem for customers, where you help them engage with that problem in a way that feels natural to them,” he says.
“This will help you with clarity and decision-making, and it helps you think about your brand and positioning, which will ultimately make you successful as a customer-facing company.”