DESCRIPTION OF BUSINESS

EXECUTIVE SUMMARY

Smartlands is a company that has launched two working products: A tokenisation and fractional ownership investment platform, and a digital banking mobile app. The investment platform has almost no competition and can be considered to have a first-mover advantage within its industry. The digital banking application has been crafted to be attractive for crypto investors, with a wallet supporting most major cryptocurrencies. Additionally, both products complement and strengthen each other.

The team has a proven track record in building high-quality working products but lacks real estate experience. Therefore, it’s difficult to judge whether they can succeed in this particular project. Smartlands’ technology is primarily not open-source, and there are no 3rd party technology audits of their work to evaluate.

Smartlands appears to takes compliance very seriously, which they showcase by establishing in the UK, one of the strictest financial jurisdictions in the world. They plan to take advantage of Liechtenstein’s Blockchain Act, a new legislation that is exceptionally friendly to blockchain and tokenisation of assets, to register their token offerings. They also have a partnership with an international law firm that provides legal expertise and recently strengthened up their Compliance department with the recruitment of a new Compliance Lead.

Finally, this project has a strong social media presence, particularly on Twitter, with 15.1k followers, frequent posts, and a sizable number of mentions. They intend to raise £400,000 in exchange for 2.53% of their equity on the Seedrs platform. This raise is part of a broader strategy to offer 13% of their ownership to fund further development and reach their business goals.

Our researchers gave Smartlands a final rating of 73/100. A breakdown of this rating is available at the end of the report.

PRODUCT DESCRIPTION

The ‘Smartlands’ investment platform.

Smartlands is a Fintech company based in London, England, and founded in late 2017. Smartlands intends to lower the entry barrier for retail investors to participate in real estate projects that usually require a high minimum investment. It aims to do so through a process called fractional ownership, which allows users to purchase tokenised shares of a real estate property. The tokenisation process enables the fragmentation of shares to a minimum size, allowing users to surpass the high entry levels that high-return real estate deals tend to have. It is possible to tokenise many other kind of assets with this technology, adequately characterised as ‘Fractional Ownership’.

Additionally, the platform plans to offer three funds for retail investors. These funds are:

a) Disruptive Technologies Fund: Planning to acquire minority stakes (up to 20%) in companies in a range of industries, namely Fintech, disruptive AgriTech, IoT, Big Data and AI, and Robotics and Drones.
b) Precious Metals: Fund created to acquire physical gold, silver and platinum metals; or shares of a relevant ETF depending on the acquisition, holding and disposal costs.
c) Last Mile Industrial Logistics Fund: Focuses on the acquisition of last-mile (urban) industrial logistics units with identifiable problems, providing for a prompt increase in occupancy rate and lease rates. Focuses on smaller assets to avoid competition and form a diversified portfolio.

The digital banking mobile application ‘Smartee’

Additionally, Smartlands has developed a digital banking mobile application, called Smartee.Within the app, users can own EUR, GBP, and USD accounts linked to a single credit card that can be used for payments and withdrawals. Their app is also a wallet for several major cryptocurrencies.

GOALS AND OBJECTIVES

Smartlands’ goal is to make investing more convenient and accessible for retail investors by significantly lowering entry barriers via fractional ownership. They aim to evolve from an investment platform to a global digital banking ecosystem.

SUCCESS FACTORS

We identify the following as factors that could lead Smartlands to successful development:

  • A clear understanding of the need for holistic banking solutions, reflecting in the creation of Smartee.
  • A first-mover advantage in blockchain-based real estate fractional ownership, with only one competitor. Very few global competitors outside of the blockchain scope.
  • Availability of diverse investment options within their platform, with precious metals and disruptive technologies funds.
  • Two working products, a fractional ownership investment platform and a digital banking app that complement each other.

MARKET CONDITIONS AND COMPETITION

MAKET CONDITIONS

The fractional ownership of real estate is a relatively new model, which means that there is a lack of competitors and data in the sphere. Fractional ownership presents a solution to the most common issue that investors run into when trying to participate in high-value deals, which is the need to be an accredited investor and be required to invest amounts of up to $100,000.

COMPETITION

RealT is Smartlands’ main competitor. They provide a similar model, where properties are listed and investors can purchase tokenised (ERC-20) shares of their ownership. The company then rents these properties to tenants, and a property management company is responsible for collecting rents. The collected amount is then turned into DAI (a cryptocurrency pegged to the value of $1) and proportionally distributed among shareholders.

Another competitor of Smartlands is Luxury Fractional Guide, which is a directory for the fractional ownership of luxury vacation homes. This company has a high entry barrier, as the cheapest fraction of a property listed on the website sits currently at $40,000. Properties in this platform are also not tokenised, making the process less liquid and actionable. Additionally, co-owners need to reach a collective agreement to rent properties and hire property managers company, requiring much more active involvement. Other competitors outside of the blockchain scope include Compound and bitOFproperty.

Why is Smartlands different from its competition?

Smartlands is different from its competitors as it offers tokenisation and fractional ownership of real estate properties, as well as other investment vehicles like a Precious Metals and a Disruptive Technologies fund. They have also developed and launched a new digital banking mobile application that offers all the functionalities of a traditional bank and the ability to send and receive different cryptocurrencies and tokenised assets. The combination of both factors is expected to complement and bring more investor traffic to the investment platform.

TECHNOLOGY REVIEW

The Smartlands platform consists of three parts: Platform Core, SDK, and frontend applications. According to them, the technology developed by the company ‘has reached the level of scalability that allows for simultaneous launching of multiple STOs at lightning speeds.’

Diagram explaining the Smartlands platform structure. Source: https://smartlands.io/company/

The Smartlands process is fully automated and integrates compliance, nominee, custodian, AML and KYC services. Smartlands is now working towards complete decentralisation of its core platform functions and becoming a fully automated AI-powered decentralised global investment ecosystem. By 2022, the plan to fully automate their platform is set to execute. The company intends to launch the Smartlands Chain test net in H2 2020, and the main net with a proof-of-stake consensus mechanism by H1 2021.

For more details on the technology, click on the source below:
https://smartlands.io/blog/smartlands-platform-architecture-high-level-review/

ROADMAP

The company provides a very detailed roadmap, of their future and past operations, starting from their founding in 2017, until 2024. You can find the full and more detailed roadmap here.

The Roadmap has multiple items, segmented by Quarters.

Roadmap Highlights

2017
Proof of concept.
Utility token sale on the Stellar network.
2018
Beta wallet launch.
On-chain governance voting system launched on Main Net.
Vilnius and London offices opened.
Smartlands platform goes live.
Partnerships with Coilers(Real Estate), CMS (Legal), Globalcap(Finance), Onfido(KYC & AML).
2019
Registration with FCA.
First tokenisation of real estate in the UK.
Smart-X ambassador and Joint Venture Franchise programmes launched.
Soft Launch of Digital Banking product – Smartee.
2020
First Smartee contactless cards distributed.
Listing of security tokens on centralised regulated exchange.
Creation of decentralised P2P secondary market for security tokens on Stellar network.
Smartlands Chain testnet launch.
Note: Per our research, none of the 2020 items have been completed at the time of writing.
2021
Smartlands Chain Main Net launch.
Smartlands becomes a fully decentralised global investment ecosystem.
2022
Tokenisation of index funds for institutional wealth managers/pension funds.
2023
Tokenised real estate portfolio passes the $1 Billion mark.
2024
Smartlands is a fully automated decentralised global investing and digital banking ecosystem
powered by AI.

TEAM

Ilia Obraztcov - CEO at Smartlands Holding

Previously worked for one year as the VP of Technology at Smartlands. Ilia became CEO of the company in September 2019. Worked as a Principal Architect, CTO, and Remote team lead for Pando Innovations. Participated in several California-based startups, building products and providing support/implementation for their execution.

Arnoldas Nauseda

Arnoldas served as the CEO of Smartlands from June 2018 until September 2019, and he currently serves as Chairman of their board of Directors. Previously served as the CEO of many companies in the Fintech industry, including Vertablox, Axifina, and Open Circle Capital.

Iaroslava Tkalich - Chief Marketing Officer at Smartlands

Iaroslava has been CMO at Smartlands for more than one year. She was previously a Business English Teacher, CMO at Paytomat, a cryptocurrency wallet with 10,000 downloads on the Google Play Store. She also served as a Product Manager at a telecommunications company, Lifecell Ukraine.

Team members’ past successful projects.

Ex CEO Arnoldas Nauseda is involved (since 2015) with a successful robotics company called Blue Ocean Robotics. The company raised $12 million in December 201914 and the demand for their UV Disinfection Robots has dramatically increased during the Coronavirus pandemic. He served as a Business Partner from October 2015 until April 2017, and from then on as a Board member.

CMO Iaroslava Tkalich also served as a CMO at Paytomat, a cryptocurrency wallet.

Team members’ past controversial or failed projects.

No controversial projects were found, but our researchers have identified quite a series of failed/abandoned enterprises, especially from former CEO Arnoldas Nauseda. Namely:

  • Vertablox
  • Axifina
  • Max Invest

LEGAL AND COMPLIANCE SPECIFICS

JURISDICTION

Smartlands is a limited company (LTD) registered in London, England. They have ongoing plans to register a company in Liechtenstein, to take advantage of the country’s blockchain-friendly Jurisdiction.

PARTNERSHIPS AND LEGAL AGREEMENTS

Smartlands and UK Sotheby’s International Realty entered an agreement to explore the possibilities of fractional ownership in a luxury real estate market. Smartlands signed a Cooperative Agreement with IIP Securities, a US-based broker-dealer, to use IIP’s broker-dealer licence to access US capital and further investments on the platform.

Smartlands and Archax, a forthcoming institutional-grade digital assets exchange, have entered into a strategic partnership for Smartlands’ property-backed security tokens to be listed on the upcoming London-based Archax exchange for secondary trading.

LEGAL RISKS

Researchers were unable to find any legal compliance audits issued for Smartlands’ planned or intended business jurisdiction for the token offerings, i.e. Liechtenstein (as explained with more detail below). Therefore, researchers could not determine the extent of compliance with relevant jurisdiction.

A UK-based platform that attempts to both provide investment funds and tokenise real estate faces realities that are difficult to overcome in the current financial and legal climate. These issues have pushed Smartlands to look into the new Liechtenstein Blockchain Act (LBA). Essentially, the LBA is a set of new rules that contribute to and expand on the existing framework for tokenisation of ownership rights. Providing for the Token Container Model, the LBA enables issuers to tokenise virtually anything defined as an asset with legal ownership attributed to it.

As with any new attempt by states to set regulations to facilitate innovation and growth, there is always a risk of regulations being inadequate, or suffering from the potential loss of political momentum. Changes in a country’s dynamics in politics and the political landscape, in general, or a decline in innovation-oriented political forces could result in regulation efforts being abandoned or unused. Smartlands has announced plans to receive three types of licences from Liechtenstein by the summer of 2020, but hasn’t detailed any specifics.

LEGAL ADVISORS

CMS

Smartlands partnered with international law firm CMS to provide legal advice on asset tokenisation projects. The company strengthened their Legal department with the recruitment of a new Compliance Lead, Arunas Mickus. He previously worked in Australia, Lithuania and the United Kingdom, gaining experience in various compliance roles, particularly working for e-money institution startup Monese.

KYC AND AML

Smartlands employs a unique KYC procedure, asking for personal information and ID verification documents, and requiring users to pass an appropriateness test. This test measures the interested investor’s basic knowledge of UK regulation regarding security tokens.

TOKEN OFFERING

Smartlands has offered 2.53% equity in exchange for a raise of £400000, which gives the company a projected valuation of £15,810,276 or $19,595,256. They expect to use this capital for expanding their internal engineering team, funding a freemium model for customers in 2020, and ‘obtaining the rest of the necessary licenses to move forward’.
Smartlands shares will be available to trade on Seedrs secondary market31 once the campaign is over. This is expected to make their shares liquid, allowing investors to exit quickly.
The campaign can be found at: https://www.seedrs.com/smartlands?utm_campaign=smartlands&utm_source=cpg

 

Smartlands’ Token Offering.

 

Smartlands’ crowdfunding campaign is run on Seedrs32, a UK-based equity crowdfunding platform. Seedrs is the leading online platform for investing in the equity of startups and other high-growth companies in Europe and has been named the most active investor in private companies in the UK. As a crowdfunding platform, Seedrs allows all types of investors.

SOCIAL MEDIA AND VIRALITY

Smartlands most popular and main social media platform is Twitter. They currently have 15.1k followers on Twitter, and a substantial amount of 3rd party mentions, particularly during the crowdfunding campaign on Seedrs.

The company is also present on Telegram where they have an active community of almost 2000 people. In there, team members engage and answer questions from their community. Smartlands Youtube channel has 297 subscribers and has published 22 videos so far. There are a fair amount of 3rd party-produced videos analysing Smartlands’ offering and products. It’s unclear upon examination whether these sparked from genuine community interest or were enticed by the Smartlands team through a rewards program.

REFERRALS AND AMBASSADOR PROGRAMS

The company has a continuously running ambassadors program34. Potential ambassadors need to be interviewed and approved by the team. Once this happens, Ambassadors enter in a unique agreement to get rewarded by attracting users to Smartlands, with defined goals and rewards.

Additionally, Smartlands runs a referral program for their crowdfunding campaign on Seedrs. The program offers to pay £25 in investment credit for every successful referral, and £25 in investment credit for those accepting referrals. To receive investment credit, users must invest at least £150 within 30 days.

RATINGS

DISCLAIMER

This Report is for informational purposes only and/or all or any of its content thereof, should not, may not and will not be taken to constitute, either as a whole or in part, any investment advice or recommendation or similar, regulated, or authorized advice, and D-Core by producing, disseminating, giving away, or making available this Report does not, should not, may not and will not be taken to advise on investments, or carry out any similar activity, or any regulated activity or any other authorized activity. D-Core is not authorized by the Financial Conduct Authority or by any other competent EU or elsewhere or otherwise competent authority to carry out any regulated activities and/or any activities within the scope of these authorities’ competence.

D-Core excludes and disclaims all liability and/or responsibility whatsoever and/or howsoever caused, arising out of any actions, or omissions taken, or made by any authorized and/or other recipient of this Report in reliance on, or arising out of, or in connection with any or all content of this Report. Any authorized and/or other recipient of this Report acknowledges, accepts and agrees that they carry out their own independent research and act in their own sole risk in reading or using any or all information contained in this Report. In any event, recipients of this Report are urged to seek professional advice before making any potential investment decision in relation to the project described herein. Any authorized and/or other recipient of this Report accepts this Disclaimer in full. For the avoidance of doubt, this Disclaimer is binding against any recipient of this Report whatsoever.