Investown — how did it all start and how is it today?

How the idea to start Investown was born

Establishing Investown was the brainchild of current Investown CEO Alan Pock, who has 12 years of experience in financial services and setting up financial technology companies (such as the Mortgage Marketplace). He founded Investown with three associates, and was later joined by a fourth. Their goal was to create a new product that would offer people something more than just a mediocre service. 

They completed nearly two years of preparation, which included solving a financial strategy, creating a web application, inventing a client-friendly environment, and recruiting additional workforce, and opened the investment application to users in April 2021.

“We knew that real estate is a stable type of investment, investors like it and it works at every stage of the business cycle. And we also knew that Czechs want to live a better life than just paycheck to paycheck. “

“In the Czech Republic at that time there was no service that would allow people to invest in real estate. “

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_{(Co-founders from left: Vít Strnad — CIO, Filip Suk — CTO, Dominik Vávra — Frontend Developer, Alan Pock — CEO)}

What was the idea behind Investown's business model?

Investown's original idea was to “give cities back to the people.” Hence the name “Invest” + “town” or “invest” + “own”. But with the transition to a new crowdfunding model, the meaning has shifted a bit (now we help create cities and bring people money from it).

We wanted to enable people to value their money simply and safely, which has always been a problem in the Czech Republic (and in the Eastern part of Europe). People invested either in risky assets or not at all, thus losing capital. In foreign countries (USA, France, Germany, Scandinavia) families commonly invest and support the local economy, but in the Czech Republic this was not the custom and is not yet. We took advantage of our experience in financial technology and decided to take the standard of living of Czechs to a better level by creating a simple real estate investing app. And in fact, to make investing fairly accessible to ordinary people.

“Our goal was to create as simple an investment application as possible that would be accessible to everyone. “

An important point for us was also to decentralize the Czech economy in a certain way — to make sure that people actively use and value their money and that small and medium-sized developers could build in the Czech Republic without obstacles. Most of the time, only large developers get financing from the bank — our intention was therefore to create a service that will help finance projects of small and medium-sized companies efficiently.

Simply create a new and smarter direction that will make people money and at the same time help build Czech projects using new technologies.

“We wanted everyone to have access to the real estate market — not just billionaires. “

Westerners invest quite routinely. In economically (so far) more developed countries, people know that it is not enough just a monthly income from work to live in dignity, that the value of money is gradually reduced by inflation, and the cost of living continues to rise. Then when something like a pandemic or a stock market crash comes along, relying only on employment is really not enough.

“Without passive income, a person usually has no chance of living a more enjoyable life than just paying rent, food and going on vacation to the sea once a year. “

Building capital by investing is also an important prerequisite for providing for the family and for retirement. In the Czech Republic, there is still distrust of financial and investment services. And a lot of Czech investors are also used to investing only conservatively. We wanted to open their horizons and help diversify their portfolio. On the contrary, we did not want people to have money dying in savings accounts where, especially in inflation, it hardly appreciates.

We want to show Czechs that it is possible to invest with minimal risk, simply and efficiently. Allow them to invest in what the top 5% of the richest people invest in, and allow all people to build wealth in real estate. And in essence, by doing so, to stop the ever-expanding economic scissors between the people.

“We are about increasing the financial literacy of Czechs — teaching them to invest and showing them that they can live much better. “

That's why we've created a smart, transparent, simple and secure way to invest.

Why real estate?

We wanted to make the real estate market accessible to all people. Thanks to Investown, ordinary people can participate in the realization of buildings in the Czech Republic, thus helping the development of Czech architecture and supporting small and medium-sized companies.

At the same time, and this is one of the main reasons, real estate is one of the least risky assets, thanks to which investors get fixed, regular and high returns, mostly for 1-3 years.

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How Investown's original business model worked

Different from the current one.

Investown from April 2021 to July 2022 allowed users to invest only in rental housing. Investown, in partnership with its subsidiary Investown Family, purchased properties for rental housing and then presented these to investors who could invest in them and then receive rental income. Properties in this model were owned directly by Investown — this differs from the current model as well.

Over time, however, our users wanted a greater choice of properties and higher returns, which could not be achieved when investing in rental housing.

Investown thus changed the business model to a newly established, legislatively regulated credit crowdfunding model in the Czech Republic.

In total, we bought over 200 apartments for 400 million crowns. We are gradually selling apartments, but with the current situation on the market it is more challenging than we would like. So far we have sold 9 of them, another 2 are just before the sale and another 9 are already on reserve. We are actively trying to sell them all gradually.

How the current model works — crowdfunding

Crowdfunding is a financing model in which a higher number of individuals (investors) contribute less financial burden to achieve a certain amount. At the same time, the mentioned smaller volume may not only be in units of hundreds or thousands, but also hundreds of thousands. In the case of Investown, crowdfunding thus makes the implementation of real estate projects accessible to people and companies who would not have achieved their interesting vision through the traditional way of financing.

Investors on Investown no longer invest in apartments, but in real estate projects - more precisely, in loans for the implementation of real estate projects. With their investments, they help to implement real estate or development projects throughout the Czech Republic. Investments function as a loan to the project owner, mostly for the construction or renovation of a property or the purchase of land. This means that investors invest in a loan that the project (some part of its implementation) is yet to be financed, rather than in the property itself.

The proceeds from the investments they get are then funded by Investown from the loan payment of the owner of the given real estate project.

Investown acts as a reinsurance agent throughout the process, whose task is to analyze the project on behalf of the investors, consider possible risks and inform them about them. Investown also processes all financial collateral with the real estate or other forms of collateral.

Investors will then receive the first return on investment in the project from two to four weeks after the target amount for the project has been collected.

Revenues with the new model range between 9.5% and 10.5%, which is more than double the earnings that the original model allowed.

The transition to crowdfunding allowed us to provide investors with more projects with much higher returns and the opportunity to participate in architecturally interesting Czech projects.

You can read more about crowdfunding in our article.

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Advantages of crowdfunding:

Fixed interest (same throughout the investment).

A greater number of properties in different locations and with a higher yield.

Greater security of accounts for users in accordance with European regulations.

Possibility to sell or buy investments in the secondary market.

More information about projects and greater prestige of real estate projects.

Better evaluation of the quality of projects — security of investment.

Autoinvest → we are currently working on this function. The investor sets the parameters according to which he wants to invest, and the application will do it for him. It saves a lot of time.

How does crowdfunding work?

1. We get a loan application for a real estate project.
2. We evaluate the quality and safety of the project.
3. We publish the approved project in the application.
4. Investors invest in the project until the target amount is reached.
5. After reaching the target amount, we send it to the partner.
6. We start paying monthly returns for the entire length of the investment round.

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Investown's cooperation with Česká spořitelna

Investown is the first startup in the Czech Republic to receive an investment from Seed Starter Česká spořitelna — a startup program that seeks business ideas with a strong vision and value for customers.

“We chose Investown especially because it fits perfectly with the mission of Česká spořitelna to lead clients and the whole company to prosperity. We want to increase financial literacy and health of people in the Czech Republic and we are glad that more and more of them realize that investing is an effective way to value their money, whether in the context of financing housing, education or old-age provision,” explains Jiří Skopový, manager of Seed Starter.

We are glad that CS is behind us, because it makes people know that they can trust Investown. Read more about working with Seed Starter here.

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Cooperation with the Czech National Bank

We are currently in the process of applying for a Crowdfunding Service Provider License (ECSPR Regulation 2020/1503). It was only possible to apply for this license last year, since it was only in 2021 that the European Union regulation that has the task of regulating crowdfunding platforms came out.

“We are one of the few crowdfunding investment companies that has been actively consulting with the Czech National Bank since the beginning of its business plan. “

This regulation is absolutely new for Czech legislation, but Investown is already implementing it.

We have been in the process of obtaining a license since last summer, and we are actively cooperating with the Czech National Bank on the adjustments and principles that we apply in the framework of crowdfunding. You could say that we are working together to create new legislation in the Czech Republic.

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What does the Investown team look like?

At Investown, we have a “flat structure”. This means that we try to avoid the over-layered hierarchy in management and especially micromanagement, which is often present in outdated corporate structures and hampers the talent of employees. We believe that employees who have more responsibility and autonomy are much preferred at work and are much more efficient. The flat structure speeds up processes including responses to user requirements, which is key for us.

Our team consists of the best experts in the field with startup and corporate history in the Czech Republic and abroad (London, USA, Copenhagen). For example, we have ex-leaders from IBM, Seznam.cz, Ernst & Young and winners of prestigious technology competitions. The team currently has around 50 people and is gradually growing. We also cooperate externally with the best experts in the Czech Republic.

For example, the most successful international companies, such as Google, Amazon or Netflix, operate in this way.‍

Maximum cooperation, friendly relations and mutual motivation work across the team, which helps us move our product forward much faster.

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Investown's internal mission

Investown's goal is to make people richer (both investors and owners of real estate projects) and provide them with a carefree, fun life. We want every European to have Investown who, thanks to us, will be able to value their money safely and thus reach their financial goals faster.
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‍Our goal is to:‍

1. Enabling people to plan and multiply finances and help them meet their life goals.

2. Enable the realization of interesting Czech real estate projects that expand the possibilities of housing or local recreation opportunities (for example, reconstruction of the historical guest house in Krkonoše and conversion into an energy self-sufficient hotel).

3. Enable Czechs to invest in interesting properties abroad (we are planning to do this next year).

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How Investown approaches users

We consider it important to listen to people and what they really want and respond to their demands as quickly as possible. We evaluate user feedback almost in real time, and if it makes sense, we introduce suggestions into production. Since the beginning of this year alone, we've released 17 updates to the app. That's the only way we can fulfill our mission of making people richer.

We are constantly improving the Investown app and our investors are literally “hungry” for new projects — multi-million dollar projects disappear within a few tens of minutes.

“INVESTOWN is being developed so that our generation has the opportunity to save on their dreams. Maybe on your own home. Just choose a property, invest from 500 crowns and you can start earning. “

Alan Pock, Founder and CEO of Investown

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Can anyone invest with Investown?

Yes (if he has an account with a Czech bank). The application can be used by both large conservative investors, investors in riskier assets, and ordinary people who do not have much experience in investing. Investing in real estate projects starts at CZK 500 — so... it's really for everyone. 🙂 Feel free to try it yourself with our app.

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