Buzzy Initial Coin Offerings are facing increased scrutiny, but one launching later this month from a house-flipping real estate tech company is drawing interest.
Los Angeles-based real estate tech startup Aperture is preparing for the public sale on Feb. 26 of Property Coin, an asset-backed cryptocurrency token.
“We really see the opportunity for Property Coin to come in and be truly the first crypto-denominated securitization or structured finance fund back by real-world assets, real estate assets,” Aperture Co-CEO Andrew Jewett said.
Property Coin is based on the Ethereum blockchain, a popular cryptocurrency standard that’s been used as the foundation for many new tokens.
Aperture says Property Coin will fit right in with its main business, flipping houses as an iBuyer and underwriting loans to smaller real estate investors (that business will also continue to be available to customers using U.S. dollars). Net proceeds from the token’s ICO will be invested in properties and loans nationwide that Aperture’s algorithm and staff choose.
Property Coin holders, then, will be invested in those real-world assets, which Aperture will later flip for a profit. Aperture will also reinvest 50 percent of its profits from the ICO in other real estate investments, aiming to create appreciation for its cryptocurrency investors.
The ICO will place Property Coin at $50 per token, with a minimum token contribution of $1,000 for U.S. investors — higher than other ICOs but lower than most real estate investments. In total, the company aims to sell $50 million worth of tokens through its ICO.
Jewett and fellow co-CEO Matt Miles launched Aperture in 2016 after working as investment bankers at the Royal Bank of Scotland, focusing on the mortgage and real estate space. This summer, they started looking into what an ICO could do for their company.
“Our experience as investment bankers financing mortgages and real estate was a well-defined path of how to do that and how to do that the right way, in a way acceptable to institutional investors and lenders,” Miles said. “Then we learned about the ICO market and see no one’s doing those things to ICOs. We’re adapting what we already know about financing assets to create a model to do that in the ICO space.”
The pair hope that their cryptocurrency will attract two kinds of investors: traditional cryptocurrency investors interested in diversifying their holdings and traditional real estate and structured finance investors interested in moving into cryptocurrencies.
The most similar cryptocurrency the pair found in their research was Tether, also backed by real-world assets: U.S. dollars. Property Coin’s co-founders hope that similarity won’t derail their project, since Tether has faced scrutiny from U.S. regulators, and plans to publish monthly investor reports to keep everything above board.
Miles and Jewett are also hyping up Property Coin as something innovative happening in the cryptocurrency space that’s not a blockchain project.
So far, employees at Aperture have bought tokens in a private sale but no one outside the company has participated. The company used those first sales to buy a property in Dallas.
“We think this is a super innovative product, not just for crypto, but also for finance,” Jewett said.
