Max Crowdfund is an ambitious direct marketplace lending platform focused on real estate lending. It currently operates in the Netherlands, Germany, United Kingdom, Belgium and New Zealand. In this interview, we talk with Max Crowdfund CEO Felix Berkhout to learn more about the details of their story, use of blockchain technology, investment offerings, business model, ownership structure, and future plans.
The Story of Max Crowdfund
Could you tell us a little about when and why Max Crowdfund was founded?
To answer this question, we must go back in time a bit. In 2016, the parent company Max Property Group B.V. was founded by a number of real estate experts in order to set up a number of real estate funds in the Netherlands, Germany and United Kingdom. The company’s mission was to make real estate investments accessible and transparent to everyone.
In 2017 we came up with the idea to set up a real estate crowdfunding platform, where everything is automated, and people can invest starting from as little as €100. The platform went live in 2020, after obtaining regulatory approval from the Dutch Financial Authorities (AFM). Max Crowdfund published and successfully funded its first project in October 2020. As of today, more than €20,000,000 in capital has been raised to fund over 60 real estate projects.
Max Crowdfund Ownership Structure
Max Crowdfund is owned by Max Property Group B.V. (MPG), of which you are the CEO. Who are the people behind MPG, and how is the ownership structured?
Our team is growing fast. We have 3 directors, of which I am the CEO. Then we have Anne Visser, the COO of Max Property Group. He is one of the founders of MPG. Erwin van Kekem, former Co-Founder and CTO of crowdfunding market leader Collin Crowdfund, joined Max Property Group in 2019 as its current CTO.
We also have a board of excellent advisors with whom we have monthly meetings to discuss everything regarding the development of the platform and the company.
We have a team of skilled professionals, with a passion for what they are doing. In fact, all our employees invest on the Max Crowdfund platform as well. We do not obligate our employees to invest on our platform. They see the great results which the platform brings, and therefore want to participate.
Max Crowdfund Management Team
What is your own background, and how did you become interested in the crowdfunding industry?
I started working for Alex in 1999, which was my very first job after my studies. Alex was a bank where private individuals could invest independently via the internet. The bank was the first in the Netherlands to make independent online investing available to private investors. I have enjoyed working here for 10 years. At one point I was approached by a joint partner of Alex and Max Crowdfund to join the board of advisors. Because I had a good feeling about Max Crowdfund, I immediately said yes. Since the platform has grown, I have been asked to become the new CEO of the company, as previous CEO Mark Lloyd wanted to focus more on the platform in the UK.
What skill set do you think is needed to run a real estate lending platform like Max Crowdfund?
I think it’s important that you combine different skills, such as leading a team, managing the technological aspect and the commercial thinking. When you combine these three, you have already covered a big part of running a business. I think we at Max Crowdfund master the perfect combination of these aspects. Of course, we are still young and we still have a lot to learn, but that will come with time. Fortunately, there are already enough investors who have invested with us from the start and still do so with complete faith and pleasure.
Investing Offerings at Max Crowdfund
Could you briefly explain what type of investments you offer at Max Crowdfund?
Creditworthy companies registered in the Chamber of Commerce are eligible for a loan. Max Crowdfund also mediates loans for associations, cooperatives, and foundations with a business purpose. The purpose of the loan must always be related to real estate for example development, rental, sale, or for bridging/temporary financing. With the upcoming European regulation, we will be able to offer equity deals which will also allow investors to become co-owners of certain properties and benefit from its commercial activities.
You mention on your website that you make property-backed investments globally accessible, more affordable, and transparent by using blockchain technology. Could you elaborate on how you make use of blockchain technology and how this benefits investors?
Blockchain provides transparency, which is something we hold dear at Max Crowdfund. Max Crowdfund is currently registering all investment opportunities (once they have been subscribed) on the blockchain and thus everyone has access to this information. Blockchain is all about transparency and this technology allows anyone to explore all the history and details about every transaction on the blockchain.
Investors can view their balance account, portfolio status, and performance and receive monthly, quarterly, and annual investment reports. An investor can make additional investments, as well as new deposits or withdrawals in seconds. Besides, in-depth investment portfolio performance and statistics are available to view. This makes Max Crowdfund simple and transparent for everyone.
If I decide to place money at Max Crowdfund and build a diversified portfolio, how much can I expect in net yearly return after losses and delayed payments?
This depends on how much you invest, which of course you decide for yourself. Everyone can start investing from as little as €100. The only fees charged to an investor are 0.1% monthly administration fee based on outstanding investments. To give an example of this: If the interest on a loan is 10% on an annual basis, we are talking about a gross interest rate. With the administration fee of 0.1% per month, you therefore pay 1.2% on an annual basis in administration fee. With a gross interest of 10% per year, you ultimately have a nice net 8.8% per year. Our users can, however, earn a loyalty discount of up to 50% on these fees by increasing their portfolio and the amount of loans they participate in.
How do you calculate your returns? What method do you use to decide when a loan must be written off and accounted as lost or with minimal chance of recovery? Do you use an objective or subjective way of deciding when to write off loans in the actual returns?
When we are talking about loans, it is determined by supply and demand. It is based on what the fundraiser is willing to give and what the investors accept as a reasonable interest rate.
A fundraiser must provide us with certain documents, which we will examine. When the required documents are not delivered, the project will never be published in the first place. We also use a risk rating model where a list of questions is answered, and a score is formulated. From that score we can make a conclusion. We take in consideration things like collateral and charge, but also the developer’s previous experiences. At the moment, we have a 100% success rate, which of course we would like to keep. We are not going to publish a project if we don’t think the project will succeed.
How Max Crowdfund Handles
How do you ensure that the loans listed on Max Crowdfund are safe for investors to put money into?
Before we publish a loan on the platform, we do an extensive due diligence on both the project and the project developer. This investigation is done by an independent Investment Committee and various papers must be presented by the project developer. If even one document is missing or contains incorrect information, a project will not be approved for publication. It is of no benefit to us as Max Crowdfund if the project has little or no chance of success in advance. After all, we want to maintain the 100% success rate.
In addition, we always want to have the first right to the mortgage, so that if the developer does not comply with the agreements or goes bankrupt, we can execute the property and claim other securities. With the capital raised, we aim to repay the investors after the deduction of all costs. If it eventually turns out that executing the property is necessary, there may be a loss of capital for the investor. This of course offers more security for the investor, which is the most important thing for us.
If Max Crowdfund, for some unlikely reason, should go out of business, what will happen to the investors’ money?
The investors' money is in an escrow account, which means that if Max Crowdfund B.V. goes out of business, we can never access that money. Investors therefore receive their money back in this account. We can never access the money in an invested account - this all has to do with security. A designated party will take over the administration of Max Crowdfund in the event of bankruptcy.
The future of Max Crowdfund
What’s next for Max Crowdfund? Where do you see the platform in 5 years?
We are currently in the process of applying for the upcoming ECSP license. This is required for every European crowdfunding service provider. With this license we can operate throughout the European Union, so we can publish more loans in different countries and attract more investors. Because of this license our platform is expected to grow tremendously.
Besides the EU, with Max Crowdfund we aim to have the platform up and running in every interesting country around the world. Currently, the Max Crowdfund platform operates in the Netherlands, Germany, the United Kingdom, Belgium and even New Zealand. In the next 5 years we will add more countries to our portfolio, with which we will gain more investors and thus our platform will grow even more.