Speed Rent Speed Home, the next prop unicorn or next undercorn mule - invest via ECF Equity Crowd Funding 🏘️
I recently tested ECF (Equity Crowdfunding) using Pitchin (https://pitchin.my) to participate in SpeedRent ECF. SpeedRent is an upcoming rental platform that allows tenants to rent properties without the deposit. ECF is where a company raises money from public by giving away a bit of the company shares. Pitchin is the arranger of the deal.
Renting without paying deposit is a new concept whereby tenants don't have to pay the standard 2 months and 1/2 month rental and utility deposit. SpeedRent supposedly takes a cut in the rental amount and allocates some of it to deposit insurance. The insurance is used in the event there is a tenant default to the landlord. Tenants supposedly have to be carefully screened by SpeedRent also.
One slot is around RM 5,000. It seemed that it was oversubscribed by 800% and the largest investment was RM 300K. The valuations for the company is quite big and overvalued considering it only giving out 7.86% of the company.
This investment has got several risks, they are :
- getting sue by real estate companies (operating without REN license)
- technically speaking, a real estate REN license is required to do housing transactions (unless is owner of property), there were recent news that the real estate board was against these apps
- many rental defaults
- tenants not able to pay their rents on time and the deposit insurance pool is insufficient to cover all landlord losses
- not able to scale
- at the moment the platform need to scale far beyond Malaysia as the market here is just too small.
Of all the points the last point "not able to scale" would be the critical factor. If the company cannot scale beyond Malaysia, the investment would be quite hard to get returns.
In terms of competition, another company called RentDax is in hot pursuit to challenge SpeedRent. RentDax is also doing the same business model was SpeedRent with doing no deposit rentals. However SpeedRent has 1st mover advantage therefore more exposure to the market. Marketing wise I see SpeeedRent moving fast also, having billboards, digital marketers at forums, IG, FB etc.
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| From the Speedrent social media page |
I don't encourage people to use ECF with money they need as the risks in ECF is extremely extremely high. ECF also does not pay dividends, it's basically buying a tiny miniscule piece of the company.
While I'm not from finance, ECF are high risks investments. I don't really think much about the company's top line (revenue) and bottom line (profit), I ask myself the following questions :
1) What is this company trying to disrupt and how big is this industry.
> Real estate industry that's a billion dollar industry.
2) Can the business model scale.
> Probably via automation and mobile
3) Founder's background
> The founder Whei Meng is a serial entrepreneur, has a record of building businesses from ground up
While I'm not from finance, ECF are high risks investments. I don't really think much about the company's top line (revenue) and bottom line (profit), I ask myself the following questions :
1) What is this company trying to disrupt and how big is this industry.
> Real estate industry that's a billion dollar industry.
2) Can the business model scale.
> Probably via automation and mobile
3) Founder's background
> The founder Whei Meng is a serial entrepreneur, has a record of building businesses from ground up
📌Note: While I'm a user of SpeedRent, I've yet to use its services yet. At the time of writing, the company has rebranded to SpeedHome already. The company is doing tenant and landlord education awareness at their offices. I do see the younger generation (millennials) more receptive to this SpeedRent concept whether is landlord or tenant.
After participating in ECF on SpeedRent, Pitchin the notes arranger will send an electronic certificate to all participants. Apparently the shares are placed in a nominees account in another Pitchin subsidiary.
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| Certificate of ownership |
https://propfessor.blogspot.com/2020/09/risks-of-ecf-equity-crowd-funding-story.html
🔗Links
📌Speedhome Referral Sign Up Link :
For 1st time users you can sign up using my link and Speedhome will give you a RM100 discount voucher. I myself will also get an RM100 discount voucher.
