Homes or Houses, a company that sources and rents properties for expatriates and foreign buyers investing in UK property, has become the first international firm to raise funds using the Dubai-founded equity crowdfunding platform Eureeca.
Jackie Fitzgerald, the company’s founder and director, is a former Arabian Gulf expatriate who spent six years in Bahrain and seven in Dubai before returning to the north-east of England to set up Homes or Houses in 2012.
The business is based in Blaydon – near Newcastle – and specialises in property in the region, where Ms Fitzgerald is from. So why choose an ostensibly UAE-based platform to raise US$610,000?
“Eighty per cent of the Homes or Houses client base resides in the UAE, making it logical to use a crowdfunding platform headquartered in Dubai,” Ms Fitzgerald says.
She was proved correct, selling 13.4 per cent of equity to investors from within her 50-person client base.
It was Eureeca’s licence from the United Kingdom’s financial conduct authority (FCA) that ticked the box for Ms Fitzgerald.
“While the Middle East is Eureeca’s flagship market, I didn’t view it as a Middle East platform per se; this is largely because of its FCA regulation, which was very important for us as a UK company.”
The Eureeca co-founder and managing director Sam Quawasmi emphasises that it is a global platform. “Creating an international corridor of investment is the backbone of our business model,” he says.
“In the UAE equity crowdfunding is unregulated, such as peer-to-peer lending. However, we have always been ‘regulation ready’, and we use the same systems and investor protection controls approved by the FCA in all markets in which we operate.”
Eureeca operates in Mena, Europe and South East Asia, and opened a London office after getting its FCA licence last February. Since then, it has also been approved by the Malaysian Securities Commission and hopes to become fully operational in Malaysia in the coming weeks.
So far 15 businesses – including the freelance firm Nabbesh, Core Fit and the fashion companies Jobedu and Poupee Couture – have raised a total of $2.5 million using Eureeca, usually from a pool of 30 to 35 investors per deal. But after the success of Homes or Houses, the pipeline is growing, Mr Quawasmi said, with a European technology SME now looking to Eureeca to raise $10m.
Ms Fitzgerald was persuaded by Mr Quawasmi – with whom she had worked during her five years at Shuaa Capital – to look at more funding. “Sam suggested that my business was at the cusp of requiring expansion capital, to prevent success from being our downfall, and he was right.
“Eureeca were great guides through the process – from getting our financials and campaign documents sorted to advising me on how best to package my campaign.”
Momentum is important to crowdfunding, she adds.
Homes or Houses raised $100,00 in the first five days, doubled it in 19 days, and reached its funding target – $404,000 – in 27 days. Ms Fitzgerald decided to overfund, stopping at $610,000, with a third of the total coming from one UAE institutional investor.
A percentage of the funds will be used to open a Dubai office this year, initially to handle administration for its UAE customer base.
“There is, of course, considerable admin involved in purchasing property for people living outside the UK, so we think this will streamline the process.”
As well as the UAE, Ms Fitzgerald’s clients come from Canada, Australia and South Africa. On average, a Homes or Houses client owns 4.2 houses; the maximum is 12.
“In the north-east, property is about a third of the cost of property elsewhere,” Ms Fitzgerald says. “An average property would be a two to three-bedroom houses costing £50,000 (Dh260,000) to £100,000.
“This allows buyers to build a portfolio of properties, rather than a single property, say, in London. Our properties’ average yield is about 7 per cent, significantly higher than in the south.”
As a new business, trying to raise money was a “daunting experience”.
“I was rather apprehensive going into the process,” Ms Fitzgerald admits. “Would people want to invest? Would the campaign be a flop? Homes or Houses is now the largest raise on the platform and the first UK business to raise funds through Eureeca, and obviously we’re delighted and proud of the outcome.”
Adds Mr Quawasmi: “There is so much more to equity crowdfunding than just capital, and Homes or Houses took advantage of the model to the fullest extent. Jackie successfully leveraged her customer base for investment, secured an institutional investment and capitalised on our dual position in the UK and UAE. She really got it.”
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