ProsperiProp: broadening access to property investments
Local fintech start-up, ProsperiProp, is currently running its Initial Coin Offering (ICO) in order to raise the funds that will finance their business. Moneybags journalist, Isabelle Coetzee, finds out more.
Their ICO involves selling a cryptocurrency, called PROPX, which also represents one share of their business, until the end of October.
So far just over 137 000 PROPX tokens have been sold, and $18, 229 (R247 541.62) has been raised for their launch, which is set for the first quarter of 2018.
Once funded, this modern start-up aims to make top performing property investments available to everyone, regardless of their income bracket.
Typically, those interested in property investments need to pay large entrance fees in order to participate because fund managers find it expensive to manage countless, tiny accounts.
Llewellyn Morkel, founder and CEO of ProsperiProp, explains that blockchain technology allows them to remove most of the costs associated with managing millions of micro accounts.
“The word blockchain might sound foreign, but it really isn’t complex at all. Think of your bank statement. Each line on your bank statement is a record. The blockchain is simply a list of these records stored in blocks of data – one block linked to the next,” says Morkel.
“Technology makes it possible for us to provide premium property investment options to a market that has been overlooked because of the overhead cost and administrative burden of managing small cash investments,” he explains.
With its launch, ProsperiProp will offer their main cryptocurrency, called TREE, which will be available for approximately R25 per token.
Morkel explains, “The value of the coin is directly linked to a set of property assets that the company will own, and these property assets generate dividends. The profit portion of the dividend accrues to the coins, so the value of the coin increases over time as the asset base generates profits.”
The TREE tokens can be sold at any point in order to cash in the investment growth. It would be as simple as dialling a USSA string code (For example: *120*12345#), and following the prompts.
Morkel highlights the following in regards to ProsperiProp:
- The property assets are bought by a specially constructed Special Purpose Vehicle (SPV) fully owned by ProsperiProp. The SPV cannot enter into any other debt agreement apart from a loan that it receives from ProsperiProp which it uses to purchase the assets.
- The coins never receive any pay-outs. The value of a coin increases as dividends are declared and paid, which means that 100% of the dividends accrue to the coins. Dividends are reinvested, and the interest on the investment also accrues to the coins, which is reinvested.
- The value of the actual asset in the SPV accrues to the coin. This makes the coin is an asset backed cryptocurrency. The value of the coins are therefore made up of the actual value of the asset array, plus the earned revenues and interest.
- ProsperiProp will not be managing the investment process. A fund management company will manage the entire asset identification, purchase, and management process.
ProsperiProp will register as a Financial Service Provider (FSP) with the Financial Services Board of South Africa before its launch, and then it will do the same in the United States of America.
But, according to Morkel, the property investment token is only their first product.
In the future, “ProsperiProp will be implementing this concept on behalf of financial and investment companies all over the world to help them facilitate micro investment in their own projects,” he says.
“This model has the ability to unlock millions of dollars in venture capital around the world. In these cases, ProsperiProp won’t be the FSP, but the technology provider,” he adds.
Ultimately, ProsperiProp will offer South Africans, who are earning within the middle to low income brackets, an opportunity to invest in “the wealth creating power of property”.
If you’re interested in getting a head start, have a look at their website where PROPX can be bought through either other cryptocurrencies (like Bitcoin), or your credit card.