The Entrepreneur: Jatin Ondhia, Shojin Property Partners

Founder: Jatin Ondhia
Company: Shojin Property Partners
Website: shojin.co.uk

Description: Shojin is an investment company that provides access to institutional-grade investment opportunities in the UK real estate sector, to investors around the world.

Jatin Ondhia, CEO and co-founder of Shojin Property Partners, speaks to Startups about international growth, business challenges, and his juice bar business venture.

The Business

Describe your business model and what makes your business unique:

Shojin is an FCA-regulated proptech company that lowers the barriers to entry for individuals across the globe looking to access institutional-grade real estate investment opportunities in the UK. The platform is designed to make property investment accessible, simple and affordable.

Initially, we’ve targeted affluent working professionals, with our platform empowering fractional investing in real estate developments. Primarily the projects we focus on are residential, PRS (private rented sector), senior living, and student accommodation projects.

Shojin is not a marketplace, crowdfunding platform, or a silent partner; the team identifies and vets promising developments, initially rejecting around 95% of the projects we identify. We then complete significant due diligence on the most promising projects and negotiate with the developer before co-investing the junior funding element alongside the provider of senior debt.

Due to our confidence in the success of investments, the company does not take large upfront fees. We invest our own capital into every project, and put ourselves in a first-loss position. We then share profits at the end. This alignment of interests is crucial for trust; not only will Shojin lose its investment first if a project fails, it only makes money when its investors get paid.

What is your greatest business achievement to date?

Our biggest achievement so far has probably been attracting so many investors from around the world, from almost 40 countries, as well as those in the UK who see the enormous potential of our proposition and the UK real estate market. We’ve obviously hit on something pretty special that has a lot of value for a lot of people.

Before Shojin existed, real estate investments like this were completely unattainable and inaccessible aside from for the wealthiest individuals. We have been opening this up to so many more people and in the future want to extend that further. Previously, most people would have to invest in equity funds that offered comparatively lower returns, while the richest people in the world would participate in property deals that sustained and grew their wealth further.

I think the realisation that there is so much demand for what we’re doing and the satisfaction that our idea was right, makes this feel like a huge achievement. It really was gut instinct – we were already doing this for ourselves thanks to the knowledge and experience Sandeep, my co-founder, and I shared.

How did you fund your business?

The business was self-funded by Sandeep and myself for quite a long time. Because we already had a successful property portfolio we effectively borrowed against that to fund the business. We tested on our own dime effectively.

What numbers do you look at every day in your business?

Our business is completely numbers-driven. We look at the margins on projects that are presented to us. We measure the risk vs return. Thereafter, when it looks like it’ll go ahead we look at the level of interest among our investor base. We look at response rates, followed by how many people express an interest in investing, then how many actually pledge to each project.

There is a lot of tracking and KPI data. Each month, we run a webinar to discuss the state of the market and projects coming online and look at how many people are providing us with their email addresses, from those with whom we engage and track that all the way through the funnel to those that convert to invest. We then overlay that with other demographic details such as location, gender, age, and profession to get a better sense of who our investors are, and can look for trends that might help inform future campaigns.

To what extent does your business trade internationally?

Today, 1% of the adult population controls 45% of global wealth, with real estate influential in building and sustaining fortunes. The next 9% (400 million people) have investible funds of between $100k and $1m but are typically restricted to mainstream equities, bonds, and funds – and therefore relatively unimpressive returns. That is why Shojin aims to continue broadening the pool of potential investors and enabling working people from all professions to invest in real estate.

We already have regional offices in Hong Kong and East Africa, with India and the Middle East to follow, and have attracted a global network of investors from almost 40 countries. We are confident that Shojin has a strong network from which to drive expansion and fund projects beyond the UK.

Where would you like your business to be in five years?

Shojin is currently focused on the United Kingdom due to the country’s reputation and attractiveness for inbound investment, but the fundamentals of the business are strong in whichever region it operates. We aim to continue broadening the pool of potential investors and enabling working people from all professions to invest in real estate.

This is not limited to the United Kingdom – plans to expand project origination into high-growth markets such as East Africa and India – where there are rapidly evolving and lucrative real-estate markets – are already underway.

What software or technology has made the biggest difference to your business?

The ability to process KYC (know your customer) and AML (anti-money laundering) electronically through third-party providers has had the biggest impact. The technology they use cuts out what would be a lot of manual work on our side.

Growth Challenges

How has the pandemic affected the market you operate in?

I’d need to talk from both sides of the market – our investors and the mid-market developers we work with. The pandemic did a number of things. It separated or removed a number of platforms from the market that weren’t performing so well. This helped to bring clarity to interested parties.

People were online a lot more, which led to the number of people engaging via our platform shooting up. Much as we wouldn’t take anything for granted, the pandemic weirdly worked well for us. People were more focused and engaged.

We also launched our webinars, almost by accident because of Covid. Being locked down we couldn’t organise events to meet investors. Yet we still had to engage. The net benefit of this is that our global audience was able to engage and participate more. We always have lots of very perceptive questions that help us to answer queries for many at once, as opposed to one-to-one at a physical event. We also make the recording available, which helps to ensure everyone is informed and has the same information. Face-to-face engagement does really help and while we love running events, the webinars are certainly here to stay.

What is the biggest challenge you have faced in business?

The biggest challenge has always been cashflow. Our model means that we make the bulk of our revenue at the end. Nevertheless, we’ve got to cover all our overheads on a monthly basis on what could be a two-year development project. This inevitably puts a strain on cashflow.

As we fuel the next chapter of growth of the company through plans for a Series A fundraising, we feel even more confident about the future.

What was your biggest business mistake and what did you learn from it?

Our single biggest mistake was when we lost money on one project. We were wrong to assume that all the detailed due diligence we did would be enough. The one thing we didn’t factor was the political risk in the planning process with local councils. We’ve learned since then that you have to cover every base.

Back then, the council themselves had given backing to this particular project along with the Mayor’s office, so we felt secure. However, Jeremy Corbyn was personally intervening in local council affairs, which during his time as Labour leader caused multiple schemes to collapse in London, including one of ours.

This directly cost the business over £1m, our “first loss” position, which unfortunately affected some of our investors too and could have affected us reputationally. We did recover from that and tried to make up for the losses some had made through moving them into company equity as compensation.  While this could be deemed a moral hazard, it is the only time we would do that as it was an early project for us and helped save our reputation. The result was that many have continued to invest.

We now take a blanket view on anything that requires planning permission – we won’t back deals if they don’t have planning permission. The returns can be great, but the risks are too high. Too many people involved in the planning process don’t understand what they’re doing.

What one thing do you wish someone had told you when you started on your business journey?

Raise money when you don’t need it. I had read it many times, so really should not have failed on that front, but I’m not sure I’d ever truly believed it until I was in the position of dealing with a cashflow squeeze.

Again, this is why we’re raising a Series A now. We’re already profitable and financially very healthy, but we have ambitious plans for expansion and need to stay focussed on business growth rather than worrying about cashflow.

Personal Growth

Did you study business or learn on the job?

I learned on the job. I studied accounting and law at university, but business is either in you or it’s not. The rest you learn on the job. It’s the best MBA you can ever do.

Growing up, I was surrounded by people who were in “business”. This is slightly different from people that are “entrepreneurs”. For example, my dad owned a shop. He wasn’t an entrepreneur or thinking each day ‘how can I scale this?’. Nevertheless, the fundamentals of business remain the same – the difference is the vision. Entrepreneurship is something I was only exposed to through books and the media.

I liked to think everyone I worked with at UBS was entrepreneurial. But it was only when I left UBS I really understood what  ‘entrepreneurial’ meant. People in banking were creative and thinking entrepreneurially, but at the end of the day, they had a basic six-figure salary, which provided a baseline comfort. There’s a huge difference between that and putting all your savings on the line.

I started a juice bar many years ago – then went back to investment banking when I realised I was more naturally aligned with finance and should stay close to my core knowledge and skills. People think they know how to be entrepreneurial because they have a great idea, but in reality, they are doing it within the confines of a corporate environment, they’re cushioned. I got to feel the pain and hunger of losing a lot of money and facing the realisation that my first business was not going to succeed.  I like to think that makes me a better entrepreneur now.

Being an entrepreneur can be chastening. You’re involved in everything and always mentally working. People underestimate what’s involved.  I love what I am doing now, have learned through all the highs and lows, and continue to learn every day.  I think I can finally call myself an entrepreneur.

What would make you a better leader?

I love getting involved in the nitty-gritty details, but as a leader, you have to step back and rather lead the team and encourage them.  I know this but yet cannot help getting stuck in.  This becomes inefficient if you really want to scale a team and let others lead their own divisions. I, therefore, need to spend more time coaching the team and developing each of them. I like to think I’m getting better at this!

When developing a team, you don’t just want to give them the answer – ask them to figure it out. If you’re too heavily involved and doing it your way – they won’t learn.

One business app and one personal app you can’t do without?

It’s an obvious one, but the business app I use most is Mail. If not in the office I’m glued to my email. And for personal use, I love Apple News – I’m a fervent reader.

A business book or podcast that you think is great?

Simon Sinek’s Start with Why. I’d also say Good to Great by Jim Collins, but that’s been knocked a lot recently.