Crowdestate posts higher revenues despite “limited funding capacity”
Crowdestate swung into profit and grew its revenues last year, despite a “significant drop” in investments into the platform due to muted market conditions.
The Estonia-headquartered peer-to-peer property lending platform reported a profit of €82,500 (£70,504), up from a €68,800 loss in 2021.
Overall revenues grew by 16 per cent year-on-year to €1,082,500, despite revenues from fundraising falling by nine per cent. Crowdestate attributed the overall revenue increase to successful debt recoveries from funded projects from previous years.
In 2022, Crowdestate raised €14.7m for 183 investment opportunities, a “significant drop” from €18m for 122 investment opportunities in 2021.
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“The real estate market across Europe has been affected by high inflation rates and rising interest rates,” Crowdestates said in its annual report. “We must acknowledge that lower development activity in our domestic markets has impacted our results, but the main reason for the decline in business volumes is still limited funding capacity. In the second half of 2022, we did observe a recovery in development activities; however, investor interest in funding projects clearly lagged behind.”
The growth in the number of investors slowed last year, increasing by seven per cent to bring the total number just above 64,000.
“The pace of investor growth has been slower compared to previous periods, and we believe that the main reason for this is investor uncertainty regarding economic conditions,” Crowdestate said.
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The platform, which operates in seven markets in continental Europe, said that uncertainty regarding availability of projects and funding led it to reassess its expansion plans last year and focus on existing operations instead.
It postponed the hiring of additional staff in its existing markets and did not enter any new markets, although it continued with limited preparatory work.
It said it will resume its plans once it is confident that the property market has recovered and it has enough funding capacity.
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Looking ahead, Crowdestate said it anticipates “a recovery in the development markets and renewed interest from crowdfunding investors this year.”
“We have laid the groundwork to significantly increase the participation of institutional investors in project financing,” the firm added. “As we will see that the above-mentioned assumptions are valid, we are prepared to reopen operations in the Italian market, and we have also made preparations to enter at least one new market.”
Crowdestate obtained its crowdfunding licence from the Estonian Financial Supervisory Authority in May 2023, under the new EU rules which enable authorised firms to expand more easily across the bloc.