PropMix EB-5: Who is investing and Why?
Over the last few months, we have seen a sudden rush to complete the EB-5 application submissions.The EB-5 community and our attorneys have been extremely busy processing the documentation for proof of funds.
Analyzing the profile of EB-5 investors in PropTech and PropMix, we observed a few interesting patterns regarding their backgrounds and needs and their reasons for investing in PropMix. PropMix investors predominantly belong to the following categories:
- IT employees and Practicing Doctors in USA with an H1B visa
- Business owners in India and USA
- Practicing doctors in USA who are on H1B visa
- IT employees outside the USA who have tried the L1A visa
- Parents who would like to send their kids to US grad and under-grad universities
When asked what made them invest in PropMix the most common reasons we heard from investors were the few key aspects of the business and the investment model as reasons why they chose PropMix:
- The opportunity in the Artificial Intelligence and PropTech for exponential growth
- An established business with rapid pace of growth
- Opportunity to convert their loan to equity in the company
- Ability of the business to handle economic recessions
Investors are convinced that Real Estate Technology, or PropTech as it is commonly referred to, has immense potential in the coming years with the combination of Artificial Intelligence (AI) and Real Estate Data. PropTech companies are expected to do well since this is mostly untapped market and offers great returns for disruptive product offerings enabled by Artificial Intelligence. Unlike a typical real estate project which offers a steady, linear growth in revenue, PropMix offers exponential growth with a market opportunity across the globe.
Our investors have been impressed with the track record of PropMix so far. The founders with several decades of experience in PropTech and AI bring a broad spectrum of experience and expertise that is critical in sustaining and scaling the business. PropMix’s revenue has been growing at more than 200% year-on-year over the last few years. Our targets are ambitious, but we just need around 1% of the addressable market to achieve our revenue targets. That provides comfort for investors regarding the return of their capital.
Unlike a Real Estate project which offers a consistent return and a limited upside, PropMix offers a steady return on the invested capital and the option to create wealth through the equity route. The initial investment will be in the form of a loan to PropMix during the period of EB-5 qualification. Once that period is over and the green card is received, the investor gets their principal amount back. At that point, PropMix is offering all EB-5 investors the option of investing in the equity of PropMix at a discount to the prevailing market valuation. This provides an extremely valuable option for the investor to quickly grow their equity.
While business cycles are quite unpredictable, the current expansion in the US economy has been the longest ever, growing steadily for the last 10 years. This has created apprehensions about an impending recession in the US economy. The impact of such a recession on the business and the ability of such a company to create the sufficient jobs as mandated by the EB-5 rules has been a concern voiced by many investors. PropMix is a recession friendly business that generates revenue from various real estate transactions – home sales, home refinances, or home rentals. The ratios of these transactions may change during a recessive economy but the total volume will continue to exist, This allows PropMix a great deal of flexibility to participate in transactions in any economic cycle and generate revenue.
We hope this information will be useful to investors who are rushing to complete their EB-5 filings in a timely manner.