At the BNIC fireside chat, Bryan Smith, a South African entrepreneur, shares his transformative journey from traditional real estate in South Africa to pioneering equity crowdfunding in the United States. After relocating in 2012, Bryan navigated the complexities of the American credit system while leveraging the opportunities presented by the Jobs Act, which democratised capital-raising. His company, Capital Engine, has successfully raised over $200 million for US properties, making real estate investment accessible to retail investors. Bryan highlights the resilience of South Africans as a key factor in their success abroad and discusses partnerships with local firms like Easy Properties to explore US commercial real estate opportunities. As he continues to bridge the investment landscapes of South Africa and the US, Bryan is committed to empowering a broader audience through innovative financial solutions and technology, fostering a new era of investment accessibility.
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Highlights from the interview
In a recent interview, Bryan Smith, a South African entrepreneur based in the US, shared his journey of transitioning from traditional real estate in South Africa to pioneering equity crowdfunding in America. Having moved to the US in 2012, Bryan initially faced challenges, including adapting to the credit system and establishing a business. He highlighted the significant changes brought about by the Jobs Act, which democratised capital-raising and opened doors for smaller investors.
Bryan emphasised the difference between traditional crowdfunding and equity crowdfunding, explaining that the latter allows retail investors to buy fractional shares in real estate projects. This innovative approach has enabled his company, Capital Engine , to help clients raise substantial funds for US properties, with one client, OrbVest, raising over $200 million.
He also discussed partnerships with South African companies like Easy Properties, which are exploring US commercial real estate opportunities. Bryan noted the resilience and adaptability of South Africans as key factors for their success in international markets.
As he continues to bridge the gap between the US and South African investment landscapes, Bryan aims to leverage his expertise to create accessible investment opportunities for a broader audience. The conversation underscored the importance of innovation and adaptability in the evolving world of finance, highlighting Bryan’s commitment to empowering investors through technology and collaboration.
Edited transcript of the interview
00:00
Alec Hogg: Let’s just kick off. Your accent is South African, but you live in America now, right?
00:26
Bryan Smith: Yes, that’s correct! Thanks for having me here, Alec. I moved to the US in 2012, and it’s been quite the journey adapting to a new culture and business landscape. Over the past decade, I’ve learned a lot about the nuances of the American market.
00:55
Bryan Smith: To give you some context, I started my career in South Africa, where I worked with two public REITs in the early 2000s. One of those companies is still listed today, while the other launched during a time that turned out to be a significant market crash—though we didn’t fully understand that at the time.
01:24
Bryan Smith: The decision to move to the US was significant for my family. We moved lock, stock, and barrel. I applied for an L1 Visa, which allowed us to establish a new entity under my company, Black Star Properties. We brought the entire family, including our pets, which made for quite the adventure!
01:54
Bryan Smith: The initial years in the US were challenging, especially when it came to understanding the credit system. I quickly learned that establishing a credit score and opening bank accounts was crucial for anyone trying to start a business here. It’s not something newcomers often realise until they’re in it.
02:52
Bryan Smith: Around 2013, I saw a pivotal change with the introduction of the Jobs Act in the US. This act significantly democratised the capital-raising process and allowed us to build a technology platform focused on real estate crowdfunding. It was a revolutionary moment for the industry, allowing small investors to participate in markets that were traditionally reserved for wealthier individuals.
03:51
Alec Hogg: Is that similar to the crowdfunding we see in South Africa?
04:19
Bryan Smith: Not quite. What we focus on is equity crowdfunding. Unlike typical crowdfunding, which often supports causes or products, equity crowdfunding allows for breaking shares into smaller investment chunks that retail investors can purchase. This essentially lowers the barrier to entry and makes investing more accessible to a broader audience.
05:14
Bryan Smith: I remember when we listed back in 1999, during the height of the internet boom. Our projected P-E ratio was over 100 years, which created a fascinating—and somewhat nerve-wracking—environment for investors. It was a period filled with both excitement and uncertainty.
06:31
Bryan Smith: Our primary focus now is on private markets. We help South Africans navigate and invest in US properties, which opens up a world of opportunities that many might not have been aware of previously. This international exposure can really diversify their portfolios.
07:29
Bryan Smith: However, the capital-raising process can be quite lengthy, often taking three to six months. This is something we’re continuously looking to improve through our technology. We want to streamline the process and make it as efficient as possible for our clients.
08:57
Bryan Smith: One of our notable clients, OrbVest , has successfully raised over $200 million through our platform, which speaks to the potential of this crowdfunding model and the appetite for such investment opportunities.
10:07
Alec Hogg: It sounds like the technology has truly democratised investing, making it possible for smaller investors to participate in stock markets that were once out of reach.
11:32
Bryan Smith: Absolutely! We’re currently collaborating with Easy Properties to source US commercial real estate deals, allowing their investors to diversify their portfolios internationally. This partnership aims to make high-quality investment opportunities accessible to a larger audience.
12:02
Bryan Smith: When we started, there wasn’t a lot of technology available for this type of crowdfunding, so we had to build everything from scratch. Capital Agent, which we launched in 2017, is a culmination of that effort and reflects our commitment to capital markets and alternative investment solutions.
13:25
Bryan Smith: It’s also important to highlight that the private markets in the US are massive, valued at around $4.5 trillion last year, compared to just $1.25 trillion for public markets. This significant difference really highlights the opportunities that we’re tapping into.
14:51
Bryan Smith: One reason I believe South Africans tend to do well in America is their resilience and adaptability. We have a strong work ethic and don’t easily take “no” for an answer. This persistence often leads to success, even in challenging environments.
15:51
Bryan Smith: After my initial visa expired, my wife won the green card lottery, which allowed us to settle back in the US. It felt like a stroke of luck, and it enabled us to continue pursuing our dreams here.
16:45
Bryan Smith: We’ve also partnered with various clients in South Africa, including a coworking space initiative. We help them scale their operations by leveraging our experience in the US market, providing them with the insights and resources needed to succeed.
19:41
Bryan Smith: Our strategy is to leverage the knowledge we’ve gained in the US and adapt it for the South African market, introducing innovative concepts that can help local investors find success in their ventures.
20:33
Alec Hogg: The world is certainly changing, and it seems like you’re at the forefront of bringing innovative solutions from developed markets to emerging ones. Your journey is quite inspiring. Thank you for sharing your insights and story with us today.
20:50
Bryan Smith: Thank you for having me, Alec! It’s been a pleasure discussing these exciting developments and sharing my experiences. I look forward to seeing how we can continue to innovate and improve the investment landscape for everyone.
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