London-based Fractal Homes has raised $30 million in a seed round aimed at what the proptech startup claims will reinvent second home co-ownership across Europe. The funding is earmarked to help the startup scale its operations within the UK ahead of a targeted expansion in the Middle East later this year.
The $30 million arrives via a split of equity provided via White Star Capital ($4 million) and debt via an undisclosed London-based private credit fund ($26 million).
Where the company aims to separate itself from an increasingly crowded space is by targeting Middle Eastern clientele who are interested in co-ownership of a luxury second in Europe, whereas other players in the market focus on holiday destinations and are serving mainly European/North American clientele.
“Initially we will predominantly focus on a Middle Eastern clientele wanting to buy a second home in London for work and leisure. The attractiveness of European capitals for Middle Eastern buyers as centres of business, culture, and entertainment coupled with a good market entry point seeing the recent appreciation in USD; makes it a very opportune time for buyers to consider the fractional ownership model,” explained co-founder Wadih Abou Bechara.
The company plans to grow its HQ in London, with a particular focus on sales, marketing, and engineering hires. Fractal is also looking to expand its presence abroad later this year with a base in Abu Dhabi. The debt portion of the funding round is slated to be used towards the acquisition of luxury properties in sought-after destinations in West London including the areas of Knightsbridge, Notting Hill, Chelsea, Kensington, and Mayfair.
Further explaining the startups’ modus operandi, co-founder Labib Kaddoura commented, “Fractal Homes’ platform makes it easier for buyers to own and enjoy second homes in desired European cities. We make second home ownership more accessible by splitting each home into eight equal parts reducing both the initial capital outlay required to buy the home and also the often-overlooked high cost of running a property. Fractal fully manages the property and takes care of cleaning, maintenance, and all operational aspects that come with the running of a home to give buyers a hotel-like experience.”
Fractional pieces of each property are sold, and once completed, co-owners legally own the property through a UK limited company that is registered for the sole purpose of purchasing the property. For each fraction purchased, the owner is guaranteed a minimum of six weeks of home occupancy per year.
Once established in the UK, Fractal Homes founders say that expansion into other holiday and business destinations, such as Paris and Madrid are targets for future growth. Down the line, the company sees potential in ski resorts as well as Mediterranean beach destinations.
“We were immediately impressed by the calibre of the Fractal team, who have identified a key pain point in home ownership that can be solved through the combination of technology and an innovative approach,” commented White Star Managing Partner Eric Martineau-Fortin. “The Fractal team’s ambition is strongly aligned with our views of growing connectivities between the GCC region and Europe.”