FinanceEstonia´s 10 intriguing questions for Crowdestate


As a member of FinanceEstionia, Crowdestate was interviewed by FinanceEstonia, about how the field of co-financing lives and how an Estonian investor differs from the rest of European investors. The company’s founder Loit Linnupõld answered the questions.

What is the business you do?

Launched in early 2014, Crowdestate is one of the oldest and best-known real estate crowdfunding platform in Europe. Crowdestate helps professional real estate companies raise the necessary capital and brings their capital needs together with the consolidated investment wishes of their nearly 60,000 international investors. The majority of real estate projects financed by our investors are residential development projects.

Today, we have expanded to six European Union member states – our head office and a large part of the team are located in Tallinn, and smaller teams work in Latvia, Romania, Italy, Portugal and Slovakia. One of the fundamental principles of our activity is to have our own team in every market where we want to operate – otherwise it is not possible to know a specific market and be aware of its peculiarities.

How big is your team?

Today, our team consists of 13 people, seven of whom work in Tallinn and the rest in other countries we operate at.

On your website it says that you are a leading real estate crowdfunding platform in Europe. Why does the investor like real estate crowdfunding?

It is likely that everyone will have practical contact with some kind of real estate property in one way or another- as a buyer, seller, principal or even as a tenant. Unlike many other exotic asset classes, real estate as an investment object is relatively transparent and understandable. Throughout history, real estate has been the foundation for investment portfolios, after which different asset classes, such as suitable stocks, bonds and other financial instruments are added.

About only six years ago, the ordinary small investor did not have the opportunity to finance projects of professional real estate developers, and investing in real estate was (at best case scenario) limited to owning an 11-16 square meter kitchen somewhere in a former dormitory or hotel in the suburbs. The technological solutions we have created have radically changed real estate investing – with just a few minutes and a few mouse clicks, it is possible to invest in projects of professional real estate companies in different countries.

With Crowdestate, we have eliminated all the factors that have prevented retail investors from investing in real estate so far, and we offer access to carefully selected real estate investment opportunities. In addition, we allow you to start investing in real estate with very small amounts and we have created a solution where investing does not require previous professional experience or knowledge. We also significantly reduce the time it takes to prepare and make an investment.

How intense is the competition in the crowdfunding field? There seems to be a lot of players on the market.

If at some point new real estate crowdfunding platforms arised like mushrooms after the rain, the picture is much clearer today. Many of the platforms that had created their website were unable to start their business and have now closed down. As a result of our recent analysis, there are around 130 real estate crowdfunding platforms in the European Union. Only a tenth of these are serious businesses that have been able to attract 10,000 or more investors and that have helped finance real estate projects worth tens or more millions of euros.

As a business model, real estate crowdfunding is clearly a scale business, where profitable operations require a large number of investors, a large and regular volume of financing, and a clear mind. While Crowdestate has made a profit in all its years of operation, the big majority of today’s real estate crowdfunding platforms in the European Union are operating at a deep loss.

How does an average Estonian investor differ from the rest of Europe? Are Estonian investors more likely to invest more or perhaps do they keep a more conservative line?

The Estonian investor differs from Western European investors primarily in its very high return expectations and simultaneous desire to avoid risk. While Western European investors are also satisfied with the average single-digit annual return, the Estonian retail investor expects a double-digit return on an equivalent investment. Such high expectations inevitably lead to the need for such investors to participate in investments which are at higher-risk and which are significantly less-demanding and more flexible in contractual restrictions.

The conservatism of Estonian investors is also evident in the choice of the country where the investment is located – while cross-border investment is common and perhaps even preferred by Western European investors, many Estonians prefer the domestic market when making real estate investments.

Where are the most active investors in the world?

Although investors from more than 100 countries invest in real estate through Crowdestate, the majority of them come from the European Union, and Crowdestate’s main markets – Estonia, Italy and Romania. Over time, the focus of investors has shifted towards Western Europe, where investors’ return expectations are lower and average investment values higher. While a few years ago Estonian investors dominated the list of Crowdestate’s investors, the share of Estonian investors has dropped to about one-fifth today, thanks to the tens of thousands of new investors from other European Union member states.

How has the current pandemic affected investors’ interest and willingness to invest? Or is it at all?

All crises come unexpectedly and the changes that come with them are radical. When all the banks stopped lending money in a timespan of only 2 weeks after the economic crisis of 2008, the current pandemic caused retail investors to behave in a very similar way: at the end of March 2020, the vast majority of crowdfunding investors suspended all their investment for about six weeks and did not resume until May.

If we also add here the three counterfeit platforms of Latvian origin (but registered in Estonia) who disappeared with tens of thousands of investors’ money at the end of 2019 and the beginning of 2020, then the fear of retail investors is completely understandable in this light. Today, investors interest in investing has recovered and the main constraint on business growth is the lack of high-quality real estate investment opportunities that are in line with investors’ high return expectations.

At the end of last year, a crowdfunding regulation entered into force in the European Parliament, setting a common standard for the sector and platforms. How does this affect you and what steps do you need to take now?

The long-prepared European Union Co-financing Regulation is positive news for all honest crowdfunding platforms as well as for investors investing in them. Crowdestate has been following the development of the regulation for a long time and has made the necessary preparations for its entry into force.

Due to Crowdestate’s business model, we need two licenses to continue our operations: operating a customer account and executing investors’ payment instructions requires us to be licensed as a payment institution in accordance with the PSD2 Directive and subsequent legislation; operating in the crowdfunding field entails the need to apply for a crowdfunding license in accordance with the European Union Crowdfunding Regulation.

Crowdestate submitted an application for a payment institution license to the Financial Supervision Authority in October 2020, and this application is currently being processed. To the best of today’s knowledge, it should be possible to apply for a crowdfunding license from 10 November 2020, and Crowdestate certainly intends to do so.

Thinking about the Estonian economy more broadly, what is the biggest challenge facing our economy and financial sector right now? How to overcome it?

According to the era, the biggest challenge is returning to normality, where people would be able to live their normal lives without today’s restrictions. We can say that, despite the current restrictions, everyone is doing well, but the endless vagueness has led to a general uncertainty about the future for both companies and individuals, which is reflected, among other things, in their investment behaviour.

As another keyword, I would like to point out the spread of the state and state-owned enterprises. Today’s crisis should be an ideal opportunity to think more deeply about the functions and roles needed for the country to function. The situation where half of Estonia’s most valuable companies are essentially monopolistic state-owned companies and where taxpayers’ money is taken at risk and competes with the private sector is not normal.

Thirdly, I would like to point out openness. Estonia is a small country and economic success can’t be achieved by restricting the free movement of labor, goods and capital. Under the leadership of the last government, there has been a clear decline in Estonia’s openness, and a radical turnaround is essential here.

Despite the crisis, the traditional financial sector is well capitalized and there should be no significant risks. In the crowdfunding field, the next wave of market clean-ups is likely to come over the next 18 months, with the smaller crowdfunding platforms that do not meet the requirements of the EU Co-financing Regulation needing to close down.

Cooperation between traditional banks and crowdfunding platforms continues to be a Baltic-specific challenge. While in other European countries the financing of real estate development projects as a symbiosis of commercial banks, crowdfunding platforms and real estate developer’s equity is a common practice, in Estonia there is still a long way to go. Many banks prefer to see oriental money hidden behind lawyers among the owners of their real estate projects rather than capital raised by small domestic investors.

nanceEstonia celebrates its tenth birthday this year. What could be considered FinanceEstonia’s biggest achievement so far?

FinanceEstonia is a good example of cooperation between companies which are operating in the financial sector and often competing in everyday life. Improving a particular field requires the joint contribution of all companies operating in that field, and FinanceEstonia has been very successful in providing this as a neutral cooperation platform. In the field of crowdfunding, it would be worth highlighting the self-regulation valid from 2016, ie the Good Practice of Crowdfunding, which separates transparent crowdfunding platforms operating in the interests of investors from all other wannabe platforms.

If you had to introduce FinanceEstonia in one word, what would it be?



Crowdestate is one of the very first real estate crowdfunding platforms, established in early 2014.

Start your real estate investment journey by signing up on Crowdestate to access a wide range of pre-vetted real estate investment projects.

Have questions about real estate crowdfunding? Here is our blog post about 7 things you should know about real estate crowdfunding.

Link to the original interview (in Estonian) can be found here
Learn more about FinanceEstonia

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