"Our greatest value is technology, which we apply both in the design and reform process of our projects and in the investment process. And with the blockchain as a differentiating element to provide that extra level of traceability and security."
José María Soler
CEO of Steinn Kapital
Steinn Kapital, the first real estate crowdfunding platform based on blockchain in Spain
Steinn Kapital is the first real estate crowdfunding platform based on blockchain in Spain. They presented their project in partnership at ConstruMat 2019 in Barcelona, but first we interviewed their CEO and co-founder: José María Soler.
José María, you have been linked for a long time to interior design first and then to real estate investment. Tell us about your previous professional experience and how you go from designer to developer.
My background is as an interior designer. I finished my studies and when I was 24 years old, in September 1985, I set up my first design studio: Da VInci Taller de DIsseny. We started doing projects for all kinds of clients: residential, hotel, industrial, offices. A little bit of everything. The company grew little by little and from 1990 we began to carry out promotions for our clients, generally chalets, in which we were in charge of absolutely everything: the project, the construction, the decoration and even the furniture.
From this experience we began to value the leap to make promotions for us, since we already did for our customers, and decided to do it for us and created a second company dedicated to real estate development: Promovinci.
In 2007 we became 17 people on the staff, between the design studio and the developer, but with the crisis we ended up closing the two companies in 2012.
Fortunately in 2017 it can restart the activity with a new project called Invest House, starting with the reform of small flats in Lleida and that has been growing until we plan to launch this new project in which we are now.
How did Steinn Kapital come about?
Steinn Kapital arises from the idea of adding crowdfunding and blockchain. I had known about crowdfunding platforms for a long time and I was struck by this way of working. I saw that it was a great opportunity to somehow solve two problems:
On the one hand, bank interest rates for savers were close to zero and having your money in the bank didn't bring you practically anything and they could even charge you for the mere fact of having it deposited there. And I thought that the investment in real estate crowdfunding was a safe way to offer a return to this type of savers.
And on the other hand, at the same time, the banks were very closed to granting loans for real estate and the real estate crowdfunding I thought could be an excellent way to finance real estate developers.
In addition, I knew all about blockchain, ICOs and STOs and thought I could link blockchain and crowdfunding.
Why did you decide to use blockchain? What value do you think blockchain technology can bring to your investors?
My partner told me about blockchain, it interested me and I spent a whole year researching on the subject, attending different talks in Madrid and Barcelona and analyzing pros and cons of this technology. In the end I came to the conclusion that it made all the sense in the world to unite blockchain and crowdfunding, especially to provide a higher level of transparency and security for investors.
In the end, when an investor puts his money, his savings, into a project he has to be very convinced and very sure that they are going to take care of his money and give him the expected benefits. And that requires trust and transparency. And that is precisely what the blockchain can contribute to crowdfunding.
Where does the name Steinn Kapital come from?
The part about Kapital is clear to me, even though we wrote it with K. And the part about Steinn comes from one of my travels. The great hobby of my life has been to travel and there is a country that I especially love and that is Iceland. And Steinn means "rock" in Icelandic.
I was clear that I wanted to use an Icelandic word in the name and it seemed to me that Steinn had enough strength and sonority, as well as evoking the strength and solidity that we want to offer our investors in their investments.
What is the regulatory status of Steinn Kapital with respect to spanish Act 5/2015, known in Spain as the Crowdfunding Act? Are you a PFP?
No, Stein Kapital is not a PFP (Participatory Finance Platform, acording to the spanish regulation). We are a direct crowdfunding platform. That is to say, we do not intermediate to finance projects of other promoters, but we only offer investors to invest in our own projects that we develop as promoters. We are self-promoters and offer to co-invest with us to interested investors through participation accounts.
In the medium term, we do want to request authorisation from the CNMV both to be able to intermediate in third party operations and to be able to tokenise our projects and offer our investors to invest in tokens backed by the real estate assets we offer.
So, since we are not intermediaries, but self-promoters, we do not need a licence as a PFP, from the CNMV. And since we do not offer to invest in tokens, we do not need authorisation from the CNMV either.
And how do you apply blockchain technology?
At the moment we use blockchain technology to provide transparency, ensuring traceability of the entire investment process. From the signing of the participation accounts contract, to the different work certifications necessary to develop the project, all this is reflected and registered in the smart contract implemented in Ethereum. In other words, we use blockchain as the notary of all transactions.
As I mentioned before, we are also working to implement blockchain technology in the investment process itself through tokenization and the implementation of a STO for each project, but this is something we will not be able to offer until at least next year. Equally, we can't accept payment in crypto currencies for now either. But until we have the authorization of the CNMV for all this other part we will not be able to offer tokens.
Do you accept foreign investors?
Yes, like any Spanish platform we accept foreign investors, but they must first obtain a NIE (an authorization issued by the Spanish government for foreigners and which must be applied for at the Spanish consulate) in order to invest.
Do you co-invest in the projects?
As I said before, we are self-promoters and, therefore, we always co-invest in our developments. But we don't set a ceiling beforehand and we don't have a pre-established fixed percentage.
You have started with two projects, one in Barcelona and the other in Lleida. What return do you expect to offer your investors? And what commissions does Steinn Kapital charge investors?
In the Barcelona project we offer 7.20%, which means an IRR of 10.8%. And for the Lleida project we offer 10.82%, which means an annualised return of 16.24%.
And these returns are net. There is no commission on profits to investors.
And what is Steinn Kapital's business model?
Our business model is to buy flats to reform them and add value to that reform, which is where we have experience. As interior designers we can do spectacular projects and in which we will also incorporate domotics and the latest technological advances in each project. Each home will have an iPad integrated in the wall, from which we can control the whole house and, in addition, the wifi will be distributed throughout the home by electrical impulses, which ensures greater coverage.
What would you say is your greatest value and what makes Steinn Kapital different from other real estate crowdfunding platforms in Spain?
As I mentioned earlier, our greatest value is technology, which we apply to both the investment process and the reform. And with the blockchain as a differentiating element to provide that extra level of security.
In addition, we believe that we can do the refurbishment a little better than our competitors. The use of technology and blockchain is objective and the assessment of the design and execution of the reform may be subjective, but we do believe that with our refurbishments we also bring extra value to the investor and that differentiates us.
How do you see real estate crowdfunding in Spain? And the tokenisation of real estate assets?
Blockchain is a very incipient technology and in which Steinn Kapital are not the first, but we are among the first to apply it to real estate crowdfunding. Even the regulator does not have things clear either and there are still many things to be defined.
But at Steinn Kapital we are convinced that crowdfunding, blockchain and tokenisation are here to stay. Being first is a risk, but it is also an opportunity. This is an adventure for us, but we hope it will be very positive.
Finally, what are Steinn Kapital's future plans and what new real estate projects do you have underway?
We have a new construction project of six townhouses in a high standing residential area near Lleida, which we will open on our platform next week. The work will not be completed until early next year and we will subsequently launch another ten. In other words, we want to close this year 2019 with eight homes and next year make another similar project of ten new-build homes and also reform between ten and twelve floors in Lleida and Barcelona.
In the meantime, we will continue to work to obtain authorisation from the CNMV and to offer our investors maximum transparency thanks to blockchain technology.