The eighth marquess of Bristol talks to Property Week about his hopes and aspirations for Brickowner, the property crowdfunding business he founded two years ago.
Fred Bristol loves property and he wants everyone else who loves property, irrespective of their means, to have access to the same opportunities usually reserved for the privileged few. And he knows better than most about the privileged few: he is the eighth marquess of Bristol.
He is also the founder of property crowdfunder Brickowner, which he launched in 2015 with the aim of “democratising property ownership”, as he puts it. So exactly how does the platform work and what are the marquess’s aspirations for it?
Bristol has worked in the property industry since leaving the University of Edinburgh in 2004. After gaining a bachelor of commerce degree, he moved to Estonia, where he lived for six years while managing a Baltic property fund.
The idea for Brickowner came to him during his time in eastern Europe. The administrative expense and cost of man-hours involved in taking on a new client with less than £50,000 to invest made the transaction unviable.
Bristol witnessed the frustration caused by this threshold on both sides of the transaction: among asset managers contending with a limited number of investors; and investors locked out of opportunities because they lack sufficient funds.
I wanted to work with investors because I thought it was a good opportunity
In 2015, five years after he had returned to the UK to develop property sites in Essex, Suffolk and Lincolnshire, a series of events galvanised Bristol into action.
“I was looking at buying residential property in a particular area of Lincolnshire. I wanted to work with investors because I thought it was a good opportunity and there was a bunch of people I knew who wanted to get access to the investments,” he recalls.
“Around the same time, I was speaking to a guy I knew called Toby Stone, who had been helping start-ups in Berlin use technology to get off the ground. He said: ‘Fred, I’ve found a way to solve all the problems we encountered when we were property asset managers - technology can get rid of them all.’”
By automating the process, argued Stone, the paperwork and man-hours needed to complete anti-money laundering and know-your-customer checks would be reduced significantly. Technology would also speed up the whole process and eradicate many of the manual running costs, making it possible to accept smaller investments.
Stone became co-founder and, with the expertise of Maulik Sailor, the founding chief technology officer of buy-to-let crowdfunder Landbay, Bristol began building and testing a platform that connected ordinary people with as little as £100 to asset managers who generally would not get out of bed for an investment of less than £50,000.
“I like the idea of being involved with ideas and projects that have the ability to create change and make a difference,” says Bristol.
“I believe Brickowner has the ability to have a massive positive impact on the way people invest in property. By levelling the property investment playing field, everyone can access the best opportunities, not just the wealthiest 1%.”
I like the idea of being involved with ideas and projects that can create change and make a difference
Essentially Brickowner acts as an aggregator, bringing together lots of people who want to invest small amounts of money, he explains. “By pooling these sums through the site, we can access an investment opportunity that may have been previously out of reach for these people.”
He is not talking here about crowdfunding the purchase of a £200,000 buy-to-let property. Bristol wants to connect someone who may have £1,000 to invest with an asset manager looking to raise millions for the purchase of commercial buildings.
“You could have a situation where a building comes on the market for £10m and someone puts in an offer that is accepted,” says Bristol. “On exchange, they may only have £6m of their own capital, which means they have to raise £4m before the deal can complete. An asset manager would syndicate that out, and Brickowner would say: ‘We can raise £500,000 in three months.’ We put the opportunity on our platform, pool the investments and give it to them as one sum.”
Education: Studied business studies and French at the University of Edinburgh between 1998 and 2004. Graduated with a 2:1 BComm.
Most admires: Marcus Aurelius. “He was one of the great stoic philosophers - his book Meditations was a huge eye-opener for me.”
Worst business decision: “Any business decision that involves taking the easy option in a time of weakness.”
Bristol claims that Brickowner is the first model of its kind, in that it is the only platform that is dedicated to retail investors and is purely UK focused. Others, by comparison, target professionals and look overseas for deals. Regulatory and reputational struggles in many traditional areas of the financial services sector have played into Bristol’s hands, delivering him customers who want more control over how their money is managed.
“The demographic of people wanting to invest smaller increments of money has gone up exponentially in the past 10 years because it is harder to get a mortgage,” he says. “They’re sitting on cash in a low-interest-rate environment thinking: ‘What should I do with my money?’”
Over the same period, the level of public trust in the banking sector has fallen, he adds. “People don’t inherently trust portfolio managers who make decisions on their behalf the same way they used to. Platforms provide greater transparency to users, who can see the latest valuations of their investments by just going online.”
Brickowner also allows users to respond quickly to changes in sector performance and invest in the appropriate assets, says Bristol.
“The property market is cyclical, and within the master cycle there are mini cycles,” he elaborates. “Right now, the prime central London market is looking really shaky, which could affect someone looking to invest in residential property. Loans, on the other hand, are offering a good return at low loan-to-values so an investor looking for an income could opt to lend money.
“Our platform lets people decide what they want. Someone retired may want an investment that will give them a steady, regular income whereas someone younger may want to build up a capital base.”
Last year was all about building and testing the platform. This year is all about growth across three metrics: number of users, average investment and repeat business.
So far, the figures look promising. The number of users joining the platform is currently growing 16% a month, according to Bristol, and in the last two to three months, the average investment made by Brickowner’s users has risen from £1,100 to £1,500 - Bristol wants to push this up to around the £10,000 mark.
In a relatively short period of time, the platform has also managed to generate 26% repeat business. “Users will only return to us if they trust us,” he says. “People need to get used to our platform, which is why we have set our minimum investment threshold at £100.”
Any higher and “people will not feel comfortable trying us out”, he says. “To get repeat business, all parties need to feel like they have had a good deal. My friend’s father, who owns a successful global company with more than 10,000 staff, told me that. He obviously knows what he’s talking about.”
So what is the next step for Brickowner?
With the testing phase complete, Bristol can see what type of person wants to invest through his platform and they are mainly 35- to 65-year-old men. It bothers him that more women are not engaging. “We took images of people off the website to avoid sending messages that we wanted a particular type of person to invest with us, but we’ve still ended up with men.”
Nevertheless, Bristol says he is happy to work with the audience he has and armed with this user group knowledge believes he can now target people more effectively.
This practical approach sums up Bristol’s attitude to his business, but also his general outlook on life. When asked if his public profile as marquess of Bristol has helped or hindered his business ambitions, he responds: “Both. Like anything, you play the hand you’re dealt to the best you can.”
He does not feel like he has anything to prove to anyone - the need for external approval or acceptance, he claims, is driven by insecurities he does not possess. Instead he prefers to focus on what is in front of him and, in the words of Winston Churchill, keep buggering on.
“This is my business motto,” he says. “With persistence and perseverance most things can come good.”
So don’t expect Bristol to give up on his ambition of democratising the property investment landscape any time soon.