Frequently Asked Questions
What is crowdfunding?
Crowdfunding is a method of funding a project or organisation by pooling the money of individual investors. It can provide a number of benefits beyond the financial including marketing, audience engagement and feedback. Crowdfunding allows good companies which don't fit the pattern required by conventional financiers, to break through and attract cash. There are a number of types of crowdfunding but the 3 main categories are:
- Reward or donation based crowdfunding – these are not investments
- Loan crowdfunding (often referred to as peer-to-peer loans or debt crowdfunding)
- Equity crowdfunding: This is what MercyCrowd is focusing on.
It's no secret that the property market has sky-rocketed in the last 10 to 20 years. An increasingly expensive real estate market has seen many people priced out of owning their own home, let alone property investment!
So the Katipult team decided to bring back the dream of home ownership and real estate investment for everyone. Katipult removes the need to have large sums of money at the ready or to get in significant debt in order to invest. Instead, it uses the power of crowdfunding to bring together smaller amounts across a broader audience. You can take your disposable income or your savings and turn them into high returning investments.
This is where community becomes incredibly powerful. Your savings become valuable again because they are matched with the funds contributed by other people to make a project a success. It's about bringing people together with the kinds of deals usually reserved for big investors or banks and enjoying the mutual benefits!
Crowdfunding also cuts out the middle man as investors and developers meet direct via our platform. That cuts out red tape, saves time, additional costs, and many of the fees associated with traditional property investment. Katipult connects interested investors to fantastic real estate deals with a few simple clicks of the mouse.
In short, real estate crowdfunding saves you time, money and a heck of a lot of legwork. And you get to discover a like minded community in the process. All while you learn and earn more in the wonderful world of real estate investing!
Yes. Katipult is a very secure platform. We use 128 bit encryption, the very same encryption that is used by major banks the world over. We also set a time limit of 15 minutes to inactivity so that your membership cannot be accessed without your knowledge if you forget to log out.
We promote a safe, supportive and secure member community. All of our investors and developers are vetted and approved before membership access is granted. Each of our real estate deals and projects are thoroughly checked and vetted before being approved. And we also continually monitor activity on our service to ensure your privacy and protection at all times.
Plus, Katipult is based on the highly successful 'all-or-nothing' crowdfunding model. That means your investment funds are only ever used towards projects that are successful in reaching their target amount. It also means the funds are held and verified prior to being added to the crowdfunding total. So any crowdfunding pledge made or any project that goes ahead is genuine!
From standard crowdfunding projects through to traditional real estate listings, we know that pictures truly are worth a 1000 words. Crowdfunding real estate is naturally a place where a photo is vitally important.
Projects and people who include pictures in their profiles help to build trust with other members on the service and sell the investment opportunities available.
This is why we require you to use photos when setting up a project or a member profile.
Photos are also great marketing tools. Don't forget, Katipult connects people from all over, so by adding photos, you can market and sell yourself as an investor or developer, and your project!
Yes. While property crowdfunding may be a new concept, we've made sure that Katipult is compliant with the appropriate state, territory and federal laws. This means we've dug into some very special time with our lawyers (and our pockets) to ensure we comply with the relevant legislation covering real estate crowdfunding.
What is equity crowdfunding?
Equity crowdfunding is the process whereby individuals or the "crowd" invest in an unlisted company (a company that is not listed on a stock market) in exchange for shares in that company.
Equity crowdfunding is a way to match companies who need funding with individuals who wish to invest. Investors become shareholders and have partial ownership of a company. In Real Estate equity crowdfunding, each company, also known as special purpose vehicle (“SPV”) will own a property.
Is equity crowdfunding a regulated activity
Yes. In the UK equity crowdfunding is regulated by the Financial Conduct Authority (FCA).
Equity Crowdfunding vs Debt Crowdfunding
With equity crowdfunding you are receiving shares for your investment in hopes that the company will pay you a dividend on your shares out of the company’s profits, or you are expecting the company share prices to increase to a point where you will eventually be able to sell your shares at a higher price. Dividends (if any) are not fixed in advance and can vary during the investment period. There is also no fixed term on the investment, you should be aware that shares are highly illiquid and consider investing money that you do not need imediate acces to.
In debt crowdfunding you are also investing in a security of the company (namely a debt instrument of some type) where your goal is to loan your money to the company with a fixed repayment term and the company pays you a specified interest rate during the term of the loan. One of the risks is the Company not being able to pay the intrest or loan.
Who can invest?
People resident in the United Kingdom, the EU or any other jurisdiction in which it is legal to make use of our website and who are either a "Certified High Net Worth Individual" or "Self-Certified Sophisticated Investor" (as these terms are defined in The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended)) or who can confirm that they will invest less than 10% of their net assets in this type of investment as a "Restricted Investor" (as this is defined in the FCA's Conduct of Business Sourcebook at Chapter 4.7).
You must not participate in a fund raise or make any investments via our platform if you do not meet any of these criteria and you must not complete the online registration process as an 'Investor’.
If you have any doubt about your ability to invest via our platform, please contact us at : firstname.lastname@example.org
What are the main risks associated with property equity crowdfunding?
Investing in properties involves risks, including loss of capital, illiquidity, lack of dividends, and it should be done only as part of a diversified portfolio.
Investors in a fully funded property purchase should be aware that their entire capital is at risk if the SPV Vehicle, holding the property asset, were to become insolvent.
The investment property is held in a SPV (Special Purpose Vehicle), with the investors holding comprised of shares in the aforementioned SPV. If an investor wishes to liquidate their holding they may do so by offering their shareholding to the other shareholders/Investors. However it should be noted that this form of investment is very illiquid and the other shareholders may not wish to purchase the offered shares. If this situation were to arise then the shareholder would be left with no option but to hold the shares until the investment is sold and the equity in the SPV is divided up amongst all the shareholders.
All potential shareholders should recognise before investing in such securities that it should be considered as a long term investment that could require the shareholder to hold their position until the disposal of the asset.
Investments are not protected under the Financial Services Compensation Scheme (FSCS). This type of investment is only for investors who understand these risks (please read the full risk warning here).
Can I lose more than the amount I invest?
No. You can lose all the money you invested but nothing more.
Can I cancel my investment
You can cancel your investment offer at any point before the shares are issued, you can do this by emailing email@example.com
Please note that once shares are issued, any investors wishing to get their capital back before the sale of the property will have to find a buyer willing to acquire those shares.
MercyCrowd has no obligation to buy or find a buyer for investors looking to sell their shares.
Before investing you should be aware and understand that unlisted shares are highly illiquid.
Who can become a sponsor?
People resident in the United Kingdom, in the European Union, Switzerland and the GCC who are either a “Certified High Net Worth Individual” or “Self-Certified Investor” (as these terms are defined in the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended), or who can confirm that they will invest less than 10% of their net assets in this type of investment as a “Restricted Investor” (as this is defined in the FCA’s Conduct of Business Sourcebook at Chapter 4.7). You must not participate in any fund raise or make any other investments via our platform if you do not meet any of these criteria, and you must not complete the online registration process as a Sponsor investor.
How am I categorised as a "client" for regulatory purposes?
In order to invest via this platform you must be categorised as a "client" for regulatory purposes. All investors are required to successfully complete the "Appropriateness Test". All UK individual investors are treated as retail clients.
All UK investors using this platform are eligible to complain to the Financial Ombudsman Service. Investments that you make through Mercy Crowd are not protected by the Financial Services Compensation Scheme (FSCS).
Different regulations apply in different countries and before being able to invest you will asked to confirm that you meet the eligibility requirements in your country.
How do I make a complaint?
We want to give you superb customer service but sometimes things might go wrong. We can usually resolve most issues straight away, so please email us on firstname.lastname@example.org or call us on +44 203 6035 794 to tell us how we can help. What you'll need to tell us so that we can help you:
- Your personal details,
- What's gone wrong and
- What you want us to do to put things right.
We'll be in touch with you as soon as we can and let you know what will happen next. We'll try to resolve your complaint within 3 working days of receipt – if we’re unable to do this we will write to you acknowledging that we have received your complaint and the next steps that will be taken. For more complex issues it's likely that we will need longer to look into what's happened and we may ask you for further information to help us reach an outcome. We'll give you regular updates. And once we've dealt with your complaint, we'll go back and see what we can learn from your experience to improve our service.
If you're unhappy with the outcome UK Residents can ask the Financial Ombudsman Service (FOS) to carry out an independent review of your complaint. In any event, you have the right to ask the FOS to review your complaint if we've been unable to resolve it within 8 weeks. The FOS can help UK residents with most complaints if you are:
- A consumer
- A business employing fewer than 10 persons that has an annual turnover that doesn't exceed €2 million
If you are unsure whether the FOS will consider your complaint, please contact them directly for advice. The service the FOS provides is free and impartial and contacting them at any stage of your complaint will not affect your legal rights. The contact details for the FOS are: The Financial Ombudsman Service
South Quay Plaza
183 Marsh Wall
E14 9SR Their phone numbers are +44 (0)300 123 9123 or +44 (0)800 023 4567. You can send an email to: email@example.com
When do I have to pay for my investment?
You need to pay at the time you commit to make your investment.
The funds shall be retained in an escrow account up to completion.
If you exit before completion or the project does not achieve completion then your funds shall be reimbursed to you.
Can I sell my shares at any time?
Yes, your shares can be sold however there is no guarentee that you will find a buyer to acquire thoses shares. Therefore you should only invest money that you do not require immediate access to.
MercyCrowd has no obligation to buy or find a buyer for investors looking to sell their shares.
Before investing you should be aware and understand that unlisted shares are highly illiquid. If an investor wishes to liquidate their holding they may do so by offering their shareholding to the other shareholders/Investors. However it should be noted that this form of investment is very illiquid and the other shareholders may not wish to purchase the offered shares.
If this situation were to arise then the shareholder would be left with no option but to hold the shares until the investment is sold and the equity in the SPV is divided up amongst all the shareholders.
All potential shareholders should recognise before investing in such securities, that it should be considered as a long term investment that could require the shareholder to hold their position until the disposal of the asset.
What fees will I pay?
Each marketed deal will state the fees paid to MercyCrowd & the estimated fees. The average fees charged are as follows:
1) 4% Platform fee. This is calculated on the amount of capital raised (The property Purchase price + Notary/SDLT) .
2) 10% Property Management fee (this is calculated at 10% of the monthly rental income)
3) 20% Success fee (This is calculated on the capital appreciation of each share, if any.)
Note: These fees can differ from time to time depending on the type of deal. Please refer to the Financial section of each deal for a detailed breakdown.