PropTech Interview: Mike Bristow CrowdProperty


A strong understanding of the challenges faced by a given industry is key to ProfTech success according to Mike Bristow, CEO and co-founder of Birmingham-based marketplace lending phenomenon CrowdProperty.

CrowdProperty is one of the UK and Europe’s fastest growing tech businesses (Deloitte, FT). In just seven years the innovative property finance firm has funded £360 million of property projects with £220m of lending, funding the development of 1,845 new homes. Having now successfully expanded into Australia, securing £1.5 million in local seed funding on top of £4 million raised for the UK business, CEO Mike Bristow discusses how he and co-founders Andrew Hall and Simon Zutshi created one of the world’s most successful PropTech and FinTech businesses and why Birmingham and the West Midlands has been key to the company’s phenomenal growth.


Understanding the challenge

The UK is spectacularly consistent at building 200,000 homes every year. The problem is that we need more than 300,000 to keep up with demand. With a combined 75 years of property development experience myself, Andrew and Simon were acutely aware that access to readily available finance was one of the biggest barriers building new homes. The 2008 financial crisis made this much worse, with small developers hit double by reduced bank funding to small and medium sized business and enhanced restrictions and requirements for property lending. To put it in context, in 2008 the UK built 200,000 new homes, 30 per cent of which were built by small builders. In 2017, again the UK built 200,000 homes but only 10 per cent were by small developers.

There are two ways of interpreting these figures; one you can correctly identify small developers as a market in decline and do everything you can to avoid it or two, as we did, understand that there are real pains and significant barriers to growth for this group and ask how can we help unlock them? Subsequent surveys of small and medium sized developers validated our personal experiences, with better sources of finance identified as the main obstacle to building new homes.

This isn’t just an issue for developers but also a societal problem, as not only does it restrict the number of homes built, but also the types of development that can go ahead. Small developers are incredibly good at converting and refurbishing existing properties, developing small parcels of land and city centre densification. All of which are essential if we are going to make the most of existing resources and reach that target figure of 300,000 new properties a year.


The FinTech solution

Having identified a real pain in the market we set out to create a better lender for small and medium sized property developers. Any lender needs capital however and we didn’t have hundreds of millions of pounds to lend. The restrictions to bank lending hadn’t just affected property developers and there had been a huge upsurge in alternative finance to meet demand. One particular success was marketplace lending. I had some first-hand experience of this market having worked closely with one of the founders of the biggest marketplace lenders, Funding Circle. Up until this point, however, no one had successfully created a marketplace lender that satisfied the capital requirements of property, which is exactly what we set out to do. Our aim was to create a very efficient system that matched capital to investment needs with a low overhead cost. This would lead to better lending to SME property developers and better investment opportunities for everyday people.

Technology underpins everything we do, and it’s all built by employed software engineers here in Birmingham, something that is incredibly important to us as a business. Fundamentally the technology allows us to serve developers more efficiently with better more streamlined analytics, due diligence and underwriting. On the investor side it allows us to fractionalise lending opportunities, giving 16,000 individuals and institutions the ability to invest. The loan management platform we have created is unique within our market and specifically developed for property development. As a result, we now have the competitive advantage of the data set and analytics needed to enable machine learning and artificial intelligence, improving efficiencies further.

Seven years on we have proven the concept. Not only are we the preferred choice of finance for many developers, but we also have many of those same global institutions who struggled to lend to SME developers asking to invest through our platform.

The key way we look at all of this is that we apply market-leading technology for efficiency, and deep asset class expertise for effectiveness of our lending. By its nature, you cannot fully algorithm property development lending, but you can speed up decision-making using better access to data and analytics to give competitive advantage. This combination of in-depth property sector knowledge, PropTech sector specialismsand FinTech systems has meant that we have never lost a penny of capital or interest in seven years, something which no other SME property development lender has been able to achieve.


The fundamental benefits of being based in Birmingham

We’ve recently expanded into the Australian market and all of the technology that has enabled that expansion and is in use there has been developed here in Birmingham. For me, there are four major benefits to being based in the West Midlands, as a FinTech / PropTech business.

1. Fixed costs are much lower than a traditional financial services hub, such as London. As a result, we can recruit more people, build a better resourced business and scale faster than if we were based in the capital.

2. I sit on the investment committee for one of Europe’s most prolific PropTech venture capital funds, Pi Labs. One of the biggest challenges a lot of the London-based businesses they invest in have is attraction and retention of talent. Being based in close proximity to similar businesses leads to a lot of competition. In Birmingham there is a really strong talent pool that continues to grow, and it is possible to attract and retain staff for a lot longer.

3. Building a strong brand as an employer. We talk openly about what we are trying to achieve here in Birmingham, both to inspire other tech businesses but also to encourage people to want to work with us and it makes a bigger splash in Birmingham.

4. The final point is geographical advantage. Fundamentally we are backing physical assets all around the UK. We can get out and about and visit those sites from a more central position.

Piecing those four things together and the West Midlands is a very powerful place for us to be based, allowing us to create a stronger, more resilient business.


Creating an ecosystem for success in the West Midlands

We sit at the intersect between FinTech and PropTech. The Kalifa Review rightly identified that supporting and encouraging more FinTech firms in all regions is crucial to the UK maintaining global competitive advantage. The logic of this extends to PropTech, LegalTech and InsurTech.

Of course, we can build more leading tech businesses in the West Midlands and a body like SuperTech is key to that. It’s a lonely and difficult job as an entrepreneur, particularly at the start. What you want is an ecosystem around you. You want to be among like-minded individuals and businesses, have access to your target market and have a supporting voice that believes in what you are trying to achieve.

From an investment perspective, I know from experience that venture capital funds absolutely want to invest in West Midlands businesses. With the right level of ambition, a clear business plan and growth trajectory articulated well, ProfTech businesses can secure the funds needed to help solve the pain point of their target market. SuperTech, really has a dual role in this, both in fostering ambition amongst the region’s technology firms and acting as a lightning rod to attract focus and investment into the region.


What next for CrowdProperty?

We are at the early stages of realising CrowdProperty’s potential. Total lending to UK SME developers currently stands at circa £12 billion per year in a wider development finance market of circa £45 billion. We compete for the best projects and through a combination of our technology and relentless focus on providing the best service to developers and investors we are the preferred choice. Earlier this year we closed a £300 million funding line from a major global investment manager to complement our existing institutional backers, which is yet another game changer in unlocking our scalability. In the last six months we’ve hired three c-level executives. Our aim over the coming 12 months is to increase staffing numbers by 50 per cent and the amount we are capable of loaning by 300 per cent. We’re rapidly scaling the UK to the point where we will be making a material difference to the number of homes built each year, while proving that our model works in internationally in Australia.

Ultimately, our business is founded on a principle that could be applied to any aspiring ProfTech business – In-depth knowledge of a specific pain point of a given sector and a belief that through technology you can solve that problem. For me, ensuring that technology and the organisation is relentlessly focused on meeting the needs of the customer is key to growth.

01 Dec 2021

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