Italy Crowd Returns to Club Deal Formula to Cope with Inevitable Authorization Delay

On November 11th, real estate lending crowdfunding platform Italy Crowd, like many crowdfunding platforms, will undergo a temporary freeze on its real estate project crowd collection service until Consob verifies and authorizes its adjustment under the new European crowdfunding regulations.

In a statement, the company Italy Crowd announced that the BoD has therefore decided to return to offering its customers the club deal solution, with which it had operated for five years before adopting the Lemonway system and becoming its Paying Agent.

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Italy Crowd has financed 44 projects, raising more than €4 million to date, thanks to more than 2,000 investments

When Italy Crowd debuted in January 2015 by bringing real estate crowdfunding to Italy for the first time, it did so precisely through a model that was then called “hybrid,” now more commonly identified in the “club deal” formula. That is when a not-so-large number of investors join together in a cordate in order to financially support a particular project, subsequently dividing the proceeds of the sale.

Through the proven formula of the Partnership in Participation, anyone can evaluate the projects made available by Italy Crowd Proponents and sign the contract directly with them.

Also with this method, the investor will not have to pay any service to Italy Crowd, it will be done exclusively by the Proponent on the successful referrals. Users will be able to have the funds from their investments received directly into the Proponent company’s bank account, and it will always be the Proponent company that will reimburse them directly to their IBAN once the property is sold.

“We tested and closed the first deal with the Participating Association formula in 4 days,” explained President and CEO Augusto Vecchi, “which is an encouraging sign, considering that mei in the coming months we will not be able to do collections through traditional crowdfunding. I am talking about months, because those who filed the application for compliance with Consob before us are already on their second, if not third, request to supplement documents.”

“We have some tough months ahead, but our users will be able to continue to collect returns from expiring projects and consider investing in our Proponents’ real estate proposals. We plan to keep the club deal formula active, even when we have obtained authorization in accordance with the new European Regulations.”

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(Featured image by bepart64 via Pixabay)

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