“Twenty-six to 30 percent of investors around the world are moving into alternative investments with at least 10 percent of them participating in real estate. Yet the unaccredited investors aren’t allowed to do that, they have to keep their money in the place where the wealthy don’t want to put their money anymore. I find it fascinating, the debate on who gets to decide where people get to invest their money.”
“The legislation is there to do the right thing and not to protect those who have ulterior motives that are not in the interests of investors.”
The Massolution report said there are currently 86 real estate crowdfunding portals with as many as 30 more on the way. It is inevitable the market will settle, but how will things look when it does?
Mr. Picken sees people becoming specialists with specific verticals appearing in real estate, including sectors like medical, which is Wealth Migrate’s specialty. Even a year ago that was not as obvious as it seems now.
Mr. Picken also believes we cannot look at the available pie as having a set size. Currently only around 13 percent of people have access to real estate, meaning there is roughly six billion people who are not able to participate. As the barriers to entry lower and technology, action and attitudes improve, he sees the market size increasing exponentially.
“It’s not going to be a case of cutting up the pie and seeing who’s going to win or lose, it’s going to be a case of the pie increasing exponentially.”
Legislation needed, losses inevitable
In order for the markets to flourish players, especially the younger ones, will have to accept both legislation and the fact there will be times when many people lose money.
“Twenty-year-olds can have great ideas and program fantastically, but I’ve learned the hard way. I’ve been through one pretty good real estate crash like most people my age and I’m only 38. The guys who really know what they’re doing have been through two or three crashes, and its the crashes which really separate the men from the boys.”
Mr. Picken again returns to the dotcom era, where people failed to exercise prudence when it came to the internet. Websites were popping up like weeds and venture capital flowed freely. The implosion hit and the sector stabilized.
Those who survived that implosion were not focused on competing nationally, they were thinking globally. Those intent on surviving are wise to follow that pattern, Mr. Picken said.
“I don’t think anybody in the first world can even conceptualize how big the rest of the market is,” Mr. Picken said.
“Alibaba has 234 million active users. Not people signed up, but active users. There’s only 300 million americans in total.”
“A lot of people don’t know Chinese don’t have access to wealth. You’re not allowed to own land in China. There’s a billion people who have access to technology.”
“You just have to use common sense and ask ‘What is the big picture here?’ What will happen when a person can invest one dollar each? It becomes a blue ocean.”
Those companies better be transparent too, as investors want to have complete clarity on where their money is going and what cut the platform takes.
“The more transparent it is the more people will want to have access to it. I love Uber and everyone is talking about them. My colleague recently caught an Uber taxi to the airport and they charged three to four times times the normal rate because they were busy.”
“Immediately he became not so happy with Uber because they lost that trust and transparency. People don’t want to be screwed any more. Everyone wants people to make money.”
Mobile technology key
Mr. Picken sees mobile technology playing a key role in lifting people up from poverty. From his home in South Africa he can see squatter camps, an ever-present reminder of exclusion.
“This is very real to us. In the first world crowdfunding is nice to have. Where I am coming from it is a necessity. There aren’t a lot of options. They’re given nothing.”
“In the past you would use money grams and they would charge you 10-20 percent. In Kenya they’ve developed a system where I can send money from my phone to your phone. I’m not talking about internet banking.”
“Some of the biggest networks are going in there. For me that is a classic example of the unbanked where tens of millions of people don’t have access to banking, don’t have the identification and all the things banks require.”
“But they all have a cell phone. Two things will happen. The first is access education. I can go to Stanford University and learn from some of the best professors in the world from my internet access.
There are existing crowdfunding campaigns with the goal of giving every child in sub-Saharan Africa a tablet. Organizers believe they can bring people from illiteracy to literacy in 18 months.
After education comes the want or the need to create wealth for the middle class and that is where Mr. Picken sees crowdfunding having a great impact.
“This is our opportunity to create a better and sustainable planet for all,” he said.
Because of the high level of need in Africa, look for much of the innovation to happen there, not in the first world, Mr. Picken said. Already American cell phones are way behind African ones, because we have always had land lines. In Africa, no one has a land line so they can skip 30 years of technology and go straight ton advanced technology with which they can bank, invest and communicate.
“Where I come from people will pay their mobile account before they pay their doctors fees,” Mr. Picken said. “There’s only one way to do that and it is through technology.”
“Investment will allow people to join the middle class. Those poorest with access to investment products are getting the worst products with the most fees. That’s why the majority of the world stays poor.”
