Bricks.co, a real estate startup, comes under fire

Real estate investment with 10 euro banknote. Here is the original concept behind Bricks.co, a startup created in April 2021 by Cedric O’Neill. A rather unique model in the paper real estate world as Bricks.co is neither a real estate investment company (SCPI) nor a real estate crowdfunding platform. What is Bricks.co Selling? Contracts for the sale of future earnings [ou contrats en royalties]. Specifically, a company buys buildings and then divides them into thousands of shares (called bricks) of 10 euros each. In this case, investors are entitled to receive a portion of the rent and capital gains from the building. However, the company remains the owner and manager of the assets. With breathtaking promises of profitability (rental and potential capital gains) ranging from 6% to 14% per year, the youngsters already have a well-filled hunting list: 35 properties totaling €45 million, 200,000 registered on the platform and 45 employees.

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A craziness that didn’t conflict – far from it – with their fundraiser at the end of April. While they planned to collect 5 million euros from the platform’s clients, the entrepreneurs earned 20 million. It must be said that the promise given to the participants was tempting: investing in a startup in the same way as for buying shares in buildings, that is, contracts for royalties that can be was exchanged at any time in the secondary market.

Discord over fundraising

But this unconventional fundraising effort was nipped in the bud, much to the chagrin of Cedric O’Neill. “When the authorities saw that we had raised funds from 11,500 people, they asked us to change our contracts from royalties to financial securities, as they believe that investing in a start-up does not carry the same risk as investing in real estate. . So we’re going to start with an equity format, but all of a sudden those who decide to stay in the fundraising are going to be faced with unsecured liquidity and could face having their funds locked up for 2, 3 or 5 years,” Bricks CEO lamented. co. The problem is that the status change was announced after a fundraiser from a Youtube video less than two minutes long that reported bad news without explaining the reason for the change.