Dusseldorf The real estate industry has so far been regarded as barely digitized – Simon Brunke, founder of the real estate investment platform Exporo, wants to benefit from this. With “Propvest”, the fintech has launched a new brand for its investment platform, on which private individuals can automatically invest their money in real estate.
“I want to change the behavior of people and how they invest in real estate,” says Brunke. With his business model, the 41-year-old wants to ensure that people who would otherwise not have the money for a property can invest their money in houses or apartments. He wants nothing less than to “democratize the real estate market”, says the entrepreneur. Becoming a major investor together – that is Brunke’s idea.
Exporo is one of those crowdinvesting platforms that aim to encourage small investors to invest in real estate with high interest rates, fixed terms and low minimum investments. Participation is possible from one euro. This distinguishes the platforms from the traditional real estate market with its high market entry barriers: If investors want to invest in individual properties, they either have to buy them or at least put a larger amount into a closed fund.
This is different with crowd investing platforms such as Exporo, Klickown or Bergfürst. The crowdfunding market has been growing for years: while real estate crowdinvestments in Germany were around one million euros in 2012, they came to 314 million euros in 2019, as the industry portal Crowdinvest.de has calculated. Although investments fell to 254 million euros last year due to the corona, providers are looking to the future with confidence in the face of new products. The real estate boom is apparently continuing – and prices are climbing accordingly.
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Exporo founder Brunke wants to start with two different brands of his company: “Propvest” should enable investors to invest in rented existing properties and – similar to an owner – benefit from the rental income and the increase in value. In addition, investors can – that is the other offer from Exporo – automatically invest amounts of money in a real estate savings plan with the help of an algorithm. This leads to less return, but also reduces the risk.
Propvest relies on tokenized securities
“Propvest is the first robo-advisor for real estate investments,” says Brunke for his company. Propvest is completely digital and relies on tokenized securities. Investors use a blockchain to subscribe to digital securities that they can store on the providers’ platforms – without intermediary banks or custodians. That saves paper and money.
“In order to ensure that investors have a wide range of options, we want to bring up to ten new existing properties to the platform every month in the medium term,” he announced. Brunke is also feeling the consequences of the corona crisis on the demand side – and is currently avoiding hotel and commercial properties.
The balance so far: According to the website, there are currently 432 construction projects for which Exporo has digitally brokered around 823 million euros in the past seven years. The money comes from a total of 31,000 investors.
Brunke, who studied “European business management” at the private University of Applied Sciences in Hanover, founded Exporo in 2014 with his two school friends Julian Oertzen and Björn Maronde. It wasn’t his first attempt in the founding world.
During his studies, Brunke started a classic insurance brokerage agency. The company became the Wirtschaftskanzlei AG (Wika AG) – a broker sales force with around 600 employees. In 2011 Brunke sold his shares and left the board two years later.
Exporo is now his current company. In 2015, one year after it was founded, Exporo received its first venture capital: A private friend put half a million euros into the company, says Brunke. Other professional investors were later added, including e.ventures and Holtzbrinck Venture, with the sum totaling 80 million euros in venture capital so far.
Decline in sales in the Corona year 2020
The company currently has 150 employees and generates around 19 million euros a year. After a decline in sales in 2020, Brunke is aiming for the 19 million sales figure of 2019 again. The company is still not profitable today. The current year marks a turning point: Oertzen, one of the co-founders, has left the company. The entrepreneurs are silent about the exact motives.
Exporo’s business model also has its critics. There are isolated cases of bankruptcies in construction projects, such as this summer with the real estate investment “Wohnduo Rhein-Main”. Six percent annual interest from a deposit of 100 euros – that should attract investors. The preliminary bankruptcy proceedings were lifted in August. An undesirable thrill for investors.
“We try to minimize risks, but we cannot completely rule them out,” says Brunke. Of the more than 400 construction projects, three are currently threatened with bankruptcy. “Of course that was not satisfactory for the investors,” says the company boss. He makes it clear: 70 percent of the investments would be repaid early, a small part “on the date”, and the rest late – or it would fail completely.
To help investors, Exporo rates the funding with a kind of rating. The Exporo class ranges from an “AA” as the best rating to an “F”. With a “C”, the Rhein-Main residential duo landed in the middle. “Exporo’s insolvency rate is still justifiable for more than 400 financed projects,” writes fund analyst Stefan Loipfinger on the Investmentcheck.de platform.
After Brunke cut marketing costs in the difficult Corona year, he has now brought on board Matthias Meusel, a well-known advertiser, as Chief Growth Officer. The former managing director of the advertising agency Gray is supposed to make the products known to the masses. Meusel, who was previously responsible for brand development at Quirin-Privatbank for several years, sees some parallels with his new employer. He too speaks of a democratization of investments that Exporo wants to promote.
Brunke not only wants to polish marketing, he also wants to speed up technology. An app is planned by the end of the year. The company also wants to make the platform more user-friendly. “Airbnb, for example, has a very high level of user-friendliness on its platform – we want to get there too,” says Brunke.
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