How AKRU wants to use blockchain tech and investment tokens to change the game
Many people know the importance of putting your money to work through investing — especially in property. But thinking it’s a good idea and having the funds to start that process are two very different things. So how can the average person with a few thousand spare dollars get in on the investment game? Cincinnati real estate startup AKRU has the answer, and it comes in the form of splitting large investments into pieces.
“AKRU is a platform for fractionalized real estate investing,” said founder and CEO Mohsin Masud. “Our mission is to democratize commercial real estate and provide equal access to this massive investment segment, which only the top 1% have access to right now. And we’ve developed this product using blockchain as the underlying tech.”
Blockchain is often associated with cryptocurrency and things like Bitcoin, but for AKRU it’s a way to make the process make sense. Rather than traditional methods, the company uses “tokens” to represent users’ investments. The tokens — which represent pieces of a property — are offered at a certain price and then fluctuate like the worth of a building does normally.
“We tokenize each individual asset separately. For instance, building number one is made up of 10,000 tokens where each token is initially being offered at $1,000. So 10,000 tokens equals $10 million, which is how these buildings get fractionalized. Building two is a separate series of tokens, which would be similar, depending on the value of the asset. We’re not using a traditional public ledger, and that’s what’s so unique about our platform. We’ve got a security token that represents the underlying asset. Every real estate asset gets a security token series associated with it, and every asset is held independently.”
One major appeal of AKRU’s platform is that it allows investors to be more nimble. Rather than getting a report once a month that explains how the property is doing, investors can keep track of information regularly, from the property’s performance to whether tenants are paying their rent on time.
“We provide a price guidance every quarter that breaks things down into, “Hey, you bought this for a thousand dollars, we think this is now worth $1,100 or $1,200 or $900,” or however the asset is performing,” Masud said. “We also have fully integrated property management software with our platform, so we get real-time information on how an asset is performing. We don’t have to wait for 30 days before a property manager submits their reporting on an asset, whether it’s retail, multi-family housing or any other kind of asset.”
Behind everything AKRU does is the goal of bringing real estate investment to more people across the world. There is an obvious and significant barrier to buying property in a traditional way, which keeps a large portion of the market out of the game. AKRU wants to change that, even if your investment is just a few thousand dollars.
“Globally, commercial real estate is valued at about $280 trillion, which is the single largest asset out there. Commercial real estate transacts an average of $350 billion dollars worth of assets every year in the U.S. and that’s an average number from 2000 to 2020. The majority of the investors in commercial real estate are wealthy individuals or corporations and entities. What AKRU does is enable people to invest with us, say, $1,000 in an asset of their choice. We fractionalize that asset and break it up into smaller shares or pieces, list it on our platform and people can start investing.”
The company is poised for growth, and currently has 115 restaurants on its platform, with 1,500 non-accredited investors on a waiting list and about half a million dollars on the platform in investor accounts. Now, they’re planning new distribution partnerships and working with wealth managers from larger firms like Morgan Stanley and Wells Fargo as well as boutique firms. Between the company’s mission and its blockchain-based functionality, they believe they’ll only grow more popular as more people crave their improved security.
“If you own GE or Apple stock, you can request the actual certificates for your investment; traditionally they’re held by your brokerage,” Masud said. “With AKRU, your tokens are recorded and held in your wallet on a public blockchain, which has wide use adoption and is very decentralized. What that ensures is, even if AKRU shuts down tomorrow or AKRU does not pay its bill for Amazon web services or anything else, your record of ownership is not going to disappear. Your record of ownership is forever recorded on that public blockchain, and that’s the whole purpose of us using that technology.”
AKRU is one of many emerging startups riding the wave of FinTech success in Cincinnati. As the company has grown, connections to Cintrifuse and other Ohio organizations have allowed for networking opportunities that helped lead to a $2 million funding round in September. And as the company expands from Ohio real estate to buildings outside of the Buckeye State, they want to help contribute to the startup scene that helped bring them early success.
“The magic of Ohio has been the support that we get from organizations like Cintrifuse and the community,” Masud said. “The startup environment in Ohio ensures that we stay and grow in Cincinnati, which gives us a great environment for that growth. We’re excited to be here. We have offices across three different continents, but we’re headquartered out of Cincinnati and looking to expand our employee base up to 250 people over the next few years. We see that as giving back to the state that’s helping us build the company at such an early stage.”