Elevate: Paul Toon
The founder talks tapping into the £5.8 trillion property market, the challenge of creating a unique trading model and how his business raised £2m
Name: Paul Toon
Company name: Elevate
Date launched: 01/07/15
Tell us what your business does:
Elevate is making property more accessible for investors and homebuyers, and is making home ownership more flexible.
We enable anyone, anywhere in the UK to invest in buy-to-let property online from as little as £100, and give them the ability to trade their “shares” on the electronic marketplace we operate. We help fund both the deposit and the mortgage required to purchase properties which means investors can earn from capital growth, rental income or interest income secured on the property.
Where did the idea for your business come from?
We had been researching the concept for lending online to high-tech companies, and many of the people we spoke to kept asking if we could apply our software to the property market and make it easier to invest in.
How did you know there was a market for it?
We saw how the public took to marketplaces with peer-to-peer, consumer and businesses loans, and then equity crowdfunding for early-stage companies, and knew that the residential property market, at £5.8 trillion, was much larger and more familiar to the public.
We also saw a regional property crowdfunding company get some traction and, after a lot of research, realised that there was strong demand for a transparent, automated marketplace that made property investment simpler and ownership more flexible.
What were you doing before starting up?
I managed venture capital funds in Paris and London for six years, investing in technology companies across Europe and North America with a focus on software, healthcare and energy.
Have you always wanted to run your own business?
Yes – I always knew it would be in finance or property, and beginning in finance certainly helped develop some interesting ideas for my next step into property.
How did you raise the money?
Our first round of funding came from a friend who founded a cancer biotech company which I had invested in when I was a venture capitalist. He ended up selling the company to Amgen in a $1bn deal and wrote a cheque to kick-start the company after our first discussion about the idea. We’ve since raised almost £2m from over 30 private investors.
Describe your business model and how you make money:
We enable anyone, anywhere in the UK to invest in buy-to-let property online from as little as £100, and to be able to trade their “shares” in an electronic marketplace we operate. We charge commission on the amount of the funding we raise, and we receive fees for managing and trading investments in the properties.
What challenges have you faced and how have you overcome them?
We had to design – from scratch – a trading system for reselling shares in the equity and mortgages of our properties. It hadn’t been done before with unlisted properties so there were no precedents to look at, and we knew we had to make the interface as simple and intuitive as possible.
We had the entire team (designers, developers, investment staff) reviewing prototypes for several weeks before setting up beta access for some of our shareholders along with external testers. We got there in the end thanks to some great creativity and team effort.
What was your first big breakthrough?
Our first major breakthrough was when we crowdfunded our first pilot property; a terraced house in Merseyside that we bought at a discount and refurbished.
It proved that we could source attractive investment opportunities, and process the funding of the deposit and mortgage from different investors across the country entirely online. We believe it was the first time that anyone in the world had funded both the equity and debt of a property in this way.
What advice would you give to budding entrepreneurs?
Firstly, test your product extensively with potential users before launch to make sure there really is appetite for it and take their feedback on board. Also prepare for it to cost more and take longer than planned to generate revenues.
And finally persistence and passion make all the difference; learn from the setbacks and stay focused on getting that first big breakthrough.
Where do you want to be in five years' time?
We’d like to be the main destination for anyone looking to invest in property online, and we aim to make fully-flexible home ownership a mainstream concept, so that people can buy houses and release equity far more easily than is currently possible.