Karl Vaan - BitOfProperty
Karl Vaan – CEO / Co-founder

Twenty-five-year-old Karl Vaan is the founder of BitOfProperty, a startup that lets people invest in real estate through cryptocurrency. Recently, the crypto startup received an undisclosed seed funding from LIFULL, the largest real estate listing site in Japan.

For this week’s Tech Startup Story, we caught up with Karl to talk about how the idea of BitOfProperty come about, what goes behind the scene of building the startup and more.

Here’s the story of BitOfProperty.

On January 27 of 2017, I quit my job and stepped on a plane to fly to Singapore and find funding for our idea. It was my first time doing fundraising for the company, so it took four months and about 70 meetings, but eventually, it paid off.

What were you doing before setting up BitOfProperty?

I’m originally from Estonia, did my bachelors in Stockholm School of Economics in Riga and worked a couple of years at Gunvor AS, a global commodities trading house. The entrepreneurial spirit has been inside me for quite some time already, and I have been continuously looking for ways to apply it.

In 2016, I started brainstorming ideas for a real estate crowdfunding business with my co-founders Taavi and Timo. We also had input from a friend of mine at a venture capital company in Singapore to make local connections.

On January 27 of 2017, I quit my job and stepped on a plane to fly to Singapore and find funding for our idea. It was my first time doing fundraising for the company, so it took four months and about 70 meetings, but eventually, it paid off.

In May 2017, we received our first funding from Spaze Ventures and year after that, in May 2018, our lead investor in the seed round was the Japanese real estate information giant LIFULL Co. Ltd, providing its services in 57 different countries around the world.

From the first funding onwards, it’s been a crazy rollercoaster ride, where we’ve been focusing on crystallising the vision of what BitOfProperty is to become in the future.

Image credit: BitOfProperty

Can you share with us what is BitOfProperty and how does it work?

BitOfProperty is here to make real estate investing simple. We enable blockchain-based liquid investing into international real estate starting from small amounts.

The problems investors are facing today are that they have little options to invest in international real estate since the property market is knowingly capital intensive, involves a lot of paperwork and finally, you have to spend the time to manage the property to have stable rental income. Each country also has its legal structure making it difficult to prove real estate ownership.

This is why we have built a platform which enables to invest and match investors’ demand in international properties starting from small amounts. We take care of sourcing, due diligence and management of the selected properties. Each investment is recorded on the public blockchain, which is accessible to all investors.

We have our MVP (minimum viable product) live together with the first version of the smart contract and have tokenised two properties on the platform. More specifically, once the property is listed on the platform, it will be automatically tokenised. After a successful investment campaign, each investor will receive tokens of the respective property according to his/her contribution. These tokens are tied to the property and governed by the smart contract, which consists of the name of the property and the amount invested.

We are integrating additional parts of the investment agreement into the smart contract to strengthen the ties and make it legally binding.

How did the idea come about?

The idea of BitOfProperty was born when we (founders) started to look for ways to invest in real estate. What we found was that real estate investing was expensive, legally difficult and managing properties is an extra hassle, but you need to do it to get cash flow going. That’s when we started looking for ways to bring real estate investments to the masses – starting from small amounts, providing transparent ownership structure, carrying out due diligence process for investors and making sure they don’t need to worry about managing these but can enjoy the stable real estate backed returns.

What were the initial challenges you faced and how did you overcome them?

One of the initial challenges that we faced was how to validate your idea in the market. Before building everything outright and features/functionalities that might not be needed, we tried to keep our product as lean as possible to see what is the public view on this and investor interest.

Secondly, we had to also take the leap of faith with our first properties on the platform and see how people responded to them. This is the only way how we could get feedback and get into the build-measure-learn loop.

Lastly, one challenge that is common for all fintech startups is regulation and the impact it has on the business. As we wanted to test our idea, product and properties as quickly as possible, we had to find a way where we could go to the market the soonest. This is how we ended up operating under Estonian jurisdiction and following the regulations here, as they were easiest to comply with.

Image credit: BitOfProperty

BitOfProperty recently secured funding from LIFULL. What does this mean to BitOfProperty?

Well, first of all, it means great recognition to the team and the company, as we see that we are not in this alone. It gives us strength and hopes to share the same vision of decentralised international real estate investment platform with LIFULL, the largest real estate listing site in Japan and #1 real estate data aggregator in the world.

To fulfil this vision, we are actively working together to take the necessary steps and work hard on building the company further. Sharing knowledge and finding common grounds to utilise the blockchain and platform integration, and making connections is what we have been doing until now.

Now that BitofProperty is gaining traction in the market, what’s next?

This year, we are looking to source properties from three new countries. We want to bring investors more variety to be able to choose properties internationally. This helps them to diversify their portfolio by country, size and deal type.

Also, we are expanding the platform’s investment and trading functionality. This Autumn, we are coming out with a new deal structure, where investors can invest into properties on an ongoing basis. This functionality will be followed by the marketplace, where investors can sell their ‘BITS’ whenever they wish.

Our lawyers are working hard on the legal side of the smart contract to make it legally binding and better suited for the new functionalities that we are adding to the platform in the coming months.

The keyword for us currently is user experience. With all these changes/add-ons, we have been closely following what our investors and public have told us. We are firm believers in being customer focused and following lean methodologies. Thus every move we make is based on close monitoring and receiving feedback from investors/public.

Mark Ko

Mark Ko

Besides tech, I love chicken rice. Point me in the right direction and I'll go and try it. :)
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