Japan’s Crowd Realty gets $2.1M from banks and property giant to decentralize P2P deals

The webpage of “Kyomachiya No. 2 Fund” that made use of Umamachi, Kyoto’s historical townhouses
Image credit: Crowd Realty

See the original story in Japanese.

Tokyo-based Crowd Realty, which provides the real estate-specific crowdfunding platform under the same name, announced in late December that it has fundraised from Mitsubishi Estate (TSE: 8802), Shinsei Corporate Investment, Shinsei Bank, and Mizuho Capital. This is a follow-on of the series A round that the company announced last month (which raised a total of 350 million yen from Mitsubishi Tokyo UFJ Bank, Mitsubishi UFJ Capital, and Kabu.com Securities), and the amount of money procured this time around was 230 million yen (about $2.1M US). The total procurement for the series A round combined with last month’s is 580 million yen (around $5.2M US).

Crowd Realty was established in December of 2014. The company secures seed funding (estimated to be in the tens of millions of yen) from Global Brain in November of 2015, followed by 20 million yen (about $181K US) from the SBI FinTech Fund in December of 2016.

Crowd Realty Founder & CEO Takeshi Kito
Image credit: Masaru Ikeda

Regarding the meaning behind the funds raised this time, Crowd Realty Founder & CEO Takeshi Kito explained through a comparison to REIT (Real Estate Investment Trust) in an interview for The Bridge. With REIT, when an estate (issuer) intends to raise funds, an investment bank intervenes to provide access to the market (investor). In real estate crowdfunding, Crowd Realty aims to create an environment where real estate properties and markets (investors) can trade.

The Real Estate Specified Joint Enterprise Act was partially revised in 2017, and as long as it is within the scope of small recruitment, the environment for new entrepreneurs to enter real estate crowdfunding has been set up. Kito believes that a number of successive new entrants may join real estate crowdfunding much like what occurred several years ago in the field of general crowdfunding.

When this happens, Crowd Realty will not only act as a real estate crowdfunding company, but also as a platform that can participate in the market on behalf of other real estate crowdfunding companies. As more and more businesses participate, the market for real estate crowdfunding will become increasingly liquid. As the name direct financing indicates, Kito said he would like to aim for the formation of a P2P market, which connects real estate properties directly with investors.

To realize Kito’s vision it becomes necessary to develop and introduce a dApp (decentralized app) so that proper transactions are guaranteed even in the absence of an authority. Kito is not one to be swayed by buzzwords, and during the interview he avoided terms like Blockchain and smart contracts, but in reality it seems these techniques will become the nucleus for the realization of Dapps.

Business collaboration scheme with major investors joining this round
Image credit: Crowd Realty

In order to be a platformer, neutrality is required for all businesses that trade on that platform. Crowd Realty has so far procured funds from multiple companies and VC firms across varying industries, and such a background seems to be affecting the company. If the liquidity of securities cannot be secured in the market, transactions will not be established, but in the world of crowdfunding, it will become important for the company to foster communities that are frequently talked about with ICO (initial coin offering).

In the future, Crowd Realty would like to directly or indirectly engage in the formation of international nonprofit groups and consortiums to optimize the ecosystem, distributed networks, global institutions and regulations.

Translated by Amanda Imasaka
Edited by Masaru Ikeda