Imagine a world where investing in real estate and other alternative assets is as easy as shopping online. That’s the vision Khushboo Jha brought to life with BuyProperly, an AI-powered crowdfunding platform that’s democratizing access to private markets. In this episode, Ava Benesocky and August Biniaz sit down with Khushboo to explore her journey from Amazon executive to fintech innovator. Discover how BuyProperly streamlines the investment process for both investors and issuers, making complex transactions simple and transparent. From navigating the regulatory landscape to building trust with customers, Khushboo shares invaluable insights for anyone interested in the future of finance. Tune in to learn how AI is reshaping the world of investing and opening up exciting new opportunities for everyone.
Get in touch with Khushboo Jha:
- Website: BuyProperly
- LinkedIn: Khushboo Jha
If you are interested in learning more about passively investing in multifamily & Build-to-Rent properties, click here to schedule a call with the CPI Capital Team or contact us at info@cpicapital.ca. If you like to Co-Syndicate and close on larger deals as a General Partner, click here. You can read more about CPI Capital at https://www.cpicapital.ca.
#avabenesocky #augustbiniaz #cpicapital
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About Khushboo Jha
Today, we are joined by Khushboo Jha, Founder and CEO of BuyProperly, an award-winning AI-powered platform revolutionizing access to alternative investments like real estate. Recognized globally, BuyProperly simplifies investing with low minimums and tailored education for users.
Khushboo, named “Woman of the Year” by Bay Street Bull and DMZ, brings 15 years of experience from Amazon and top consultancies. She holds an MBA from Wharton and a degree from IIT Karag-poor.
Khushboo Jha’s BuyProperly AI-Powered Crowdfunding For Real Estate Investing
Welcome back to the show.
We have a very interesting guest. I’ve personally been watching her journey in this business of FinTech and the business of crowdfunding. We’re very excited to have our guest on the show.
She has accomplished some incredible things as a young woman.
Giving a quick background on that, a firm like ours, a real estate investment firm, we go out there and we source these deals but we end up with a problem. We don’t have enough equity to close on these deals. That’s why we offer it to members of the public and investors. Historically, these investments were only available to people that the investment group knew. They couldn’t go and advertise these things publicly.
In the US after the JOBS Act in 2012 or 2013, legislation came out which allowed people to go and publicly advertise it. I believe there was a similar thing in Canada, which was the Northwest exemption. Only certain exempt market dealers could offer these deals. Now, Canadian issuers or Canadian investment firms can also offer these deals publicly.
If you are an investor looking for a deal, you are limited to the number of sponsors or investment groups that exist. You’re limited to the number of people you know. What if you want to diversify? What if you want to have multiple options? What if you want to invest outside of an asset class and refocus on multifamily? What if you want to invest in debt as a debt instrument? What if you want to invest in multifamily, industrial, or development? That’s what our guest has been able to achieve. She created a platform investors can go on to and invest in these vetted investment opportunities that the platform has. Why don’t you tell our audience a little bit of the background of our guest and you can start the show?
I would love to. We are joined by Khushboo Jha, Founder and CEO of BuyProperly, an award-winning AI-powered platform revolutionizing access to alternative investments like real estate. Recognized globally, BuyProperly simplifies investing with lower minims and tailored education for users. Khushboo, named Woman of the Year by Bay Street Bull and DMZ, brings fifteen years of experience from Amazon and top consultancies. She holds an MBA from Wharton and a degree from IIT Kharagpur. Welcome, Khushboo.
Thank you so much for having me.
Thanks for taking the time to be on our show. Let’s get started. What is BuyProperly?
BuyProperly: A Platform For Alternative Investments
It’s a platform for investing in private markets. Those private markets are private equity, commercial real estate, and private credit. These are asset classes that retail investors cannot invest in. That’s everybody from an intern at 20 years of age to people who have almost up to $5 million in investible assets because typically, wealth advisors stay away from alternatives, especially private alternatives because they’re not liquid and they don’t know how to navigate that space, etc. The platform simplifies that access by not just getting the deals but also making sure that the cost of taking a small check into a deal is sustainable. That’s what the platform does.
That makes sense. When you talk about wealth advisors or financial advisors, they’re hyperfocused on deals on their shelves, which is pushed by Wall Street. That’s the historic stocks and bonds portfolio. Rarely do you see them coming into the space of, for example, syndications, multifamily, real estate types of deals, and development deals. That’s why you don’t see a lot of wealth advisors in this space. It’s great to hear that.
The Genesis Of BuyProperly: Solving A Personal Problem
I always like to go a little bit back. How did the idea of starting BuyProperly come about for you?
To be honest, it came from my own problem. I used to work in tech. I was at Amazon. At some point, more than 60% of my compensation was stocks. All my bonuses and all my promotions kept growing in the stock value. They’re great stocks, so I have no complaints about that one. They’re great stocks to hold, but I felt like my entire net worth was sitting at the mercy of Wall Street or public markets. If the stock market crashed like I had seen when I was starting out my job in 2007 and 2008 where I had seen a big tanking, I was worried that I’d lose everything. I was like, “What can I do?”
I went and bought an investment property. It was too much work and I wasn’t sure I wanted to do more mortgages, more condo units, and so on by myself. I was like, “There has to be a better way of doing this.” I came across the whole crowdfunding concept. I was like, “Let’s see what’s there in Canada,” and I couldn’t find anything. I was like, “I want to be able to invest in private equity, private credit, and all of the fancy stuff that I have read about at business school to have a diversified portfolio.” Since it didn’t exist, I was like, “Maybe I can build one.” I am pretty risk-averse, so I didn’t jump in. I was like, “I have this great idea. Let’s do this.”
I went and spoke to at least 200 or 300 people to say, “Am I the only 1 who wants to invest in these things? Nobody else wants to do this.” I realized I had about 200 people sign up to say, “You have a product. Send it to me. I’m interested.” I didn’t have anything. I went and said, “If there is demand, why isn’t anybody doing it?” That brings us to regulations. You referred to the JOBS Act. There are prospectors exemptions in Canada, which after the JOBS Act, both those countries have the opportunity to create it.
The problem still is the cost. The regulation makes it possible. It’s real and somebody can do it. You guys raise capital all the time. You would know that if people were writing you $1,000 checks, is it worth the time, cost, compliance, and governance to take that $1,000 check? Most of the time, the answer is no. The unit economics doesn’t work. There’s a demand but unit economics doesn’t work, which means incentives aren’t aligned even if regulations allow it.
Coming from an Amazon background, I was like, “Maybe the hypothesis is that technology can make the whole process efficient enough that the marginal cost of taking a small check goes down.” That was the core assumption with which we started to say, “Over time, we will automate, simplify, and lower the cost of each part of this value chain, connecting people who want to invest to people who want to deploy capital and grow,” like you guys.
AI-Powered Crowdfunding: Over time, we will automate, simplify, and lower the cost of each part of this value chain, connecting people who want to invest to people who want to deploy capital and grow.
It’s brilliant how she went out and asked 200 or 300 people at first to make sure there was enough interest in order to get things going.
From Amazon To Entrepreneur: Khushboo’s Startup Journey
Aside from market research prior to that date, have you started any other companies? Were you involved in startups? Talk to us about that journey. It’s pretty complicated. You’re dealing with VC investors and early Angel investors in the 1st round and 2nd round. It’s a pretty complicated world. Did you jump in feet first? Tell us about your journey in that startup world.
I wish the answer was I already knew everything but I did jump in feet first. I did my market research. I knew I could make it happen, and that came from the Amazon experience because while I was there, I had launched two business lines for them from scratch. Amazon is very frugal. Only people in Amazon can understand that a big tech company can be that frugal. When you launch a new business within the company also, you get your salary so you’re not like a founder but that’s the end of the story. You get resources in proportion to the size, which is zero when you start. Getting resources like engineering and marketing is close to impossible. You have to build your presence within the Amazon marketplace.
When I launched a business line, which was a used electronics business line, nobody used to go to my page. Even though I was on the Amazon page, I had 4 visitors, which was me going 4 times a day to that page. I had to figure out how to drive traffic, how to have this coded, how to figure out the marketing, and how to get the word out.
This was a used electronics business. I had to find a third-party refurbisher in Kentucky who could refurbish all electronics for me. I figured out the entire end-to-end supply chain, pricing algorithm, marketing, and everything. I’ve done that two times at Amazon. The first is for the used electronics business that I launched for the US and then I took it all over Europe. It went country by country. I went to France, Germany, Spain, and the UK. Every country has a different regulation, so it’s not one country. You have to deal with them one by one. That’s what I had done.
The second business was a hazardous materials business, nothing dangerous. It is things like perfumes. They have alcohol in them, so they’re flammable, which means there’s a lot of regulation around how you handle them, transport them, label them, store them, and the building. Everything is different than the regular stuff. That was another business line that I had done for Amazon.
I was used to, for both of those businesses, dealing with compliance and legal across a multitude of geographies because they were both multi-country launches. I knew how regulations work and how often they would differ in various countries. Most times, they differed in their language or choices, but in the spirit, they were designed to protect common people. In the spirit, they would be the same. The logic would be the same with nuances. That was my past experience. A lot of that I distilled when we were building the platform to make it multi-country.
You had the experience and the background, but did you have any coaches or advisors, particularly in the startup business in FinTech?
Not when I started.
With the vision early on, was it focused on real estate or you wanted it to be a multi-asset class on the platform?
It was always intended to be a multi-asset class. I started by saying, “Where would I want to put my money?” The answer wasn’t, “I’ll put it all in real estate.” The answer was to say, “I want to grow my money in a diversified, safe way.” Normally, that would include more asset classes, so it was designed to be like that.
Fair enough. Was it focused in Canada? Did you realize there was an issue in Canada? What year did you guys start? By 2014 or ‘15, there were already crowdfunding platforms in the US. What year did you guys start?
We started working on this in 2019. We launched in 2020.
By that time, there were already platforms in the US. Was your focus market Canada when you started?
When we started, we started with Canada.
You’re both in Canada and the US offering the deals you offer. I’ve been part of your email list for many years. Let’s continue the conversation. Talk to us about one of your first deals that you guys ended up having on your platform.
Our first deal was a residential. It was a very small residential unit, something we were sure we could close in time, move on, and do quickly. We’d already, by that time, built a lot of due diligence models and AI models. Coming from that background, that was the easy part, building an AI model that reads up all of the MLS data, looks at all the macroeconomic data, GDP income vacancy, and everything, puts that all together, and identifies mispriced assets. The same thing as a hedge fund or any asset manager does, it’s like, “What’s mispriced in the market?”
We found a unit. We went live with that deal on April 1st, 2020, which was 2 weeks after the shutdown. We had gone remote. We had to close this unit. We were not allowed into the units. There were a lot of restrictions. We were like, “What did we get ourselves into? This is not the best of timings even if it’s a good idea.” We exited that condo after five years. We returned 1.75x in about 4 years.
We were both featured in the same article on Yahoo Finance. We learned about BuyProperly. When you first started talking about this unit, you were the issuer yourself, correct? You were the one that found the deal.
Yes.
When was it that you started partnering with other issuers on your platform?
After our first 5 or 5 deals. As a startup, we were also proving ourselves and proving the tech model works in this market. The easiest way to do that was to do it ourselves as an issuer. Funds didn’t want us. Carlyle wasn’t wanting to give us one of their funds to list on the platform. It was more of saying this model of syndicating investors completely online and doing their KYC and end-to-end management works and works well. The results speak for themselves because this property was doing distributions for 5 years and then returned 1.75x of the initial capital at the exit in addition to the distribution. The total returns have been significant on that one.
We want to take the journey of an investor coming through your platform. We want to take the journey of a deal coming through your platform. I’ll do the deal and Ava will do the investor.
Navigating The Investor Journey On BuyProperly
Walk us through the client journey on BuyProperly, learning the platform through your marketing efforts. I really want the reader to understand how user-friendly your platform is both for Canadians and US investors, please.
It did help that I was investing in both of those places, in any platform that remotely looked like mine or was in the same space. I have my money in all players in this space, my personal money. When we started out, we wanted it to be as low touch for the end customer as possible. Going by the Amazon experience, we knew where all drop-offs could happen. We were trying to minimize the friction of the investor. We wanted it to be real-time like Robinhood or Wealthsimple. That was the goal. We weren’t allowed by the Securities Commission. That’s a different story. We were asked to stay not real-time.
If an investor comes to a platform, like any marketplace, you browse through what’s available. Let’s say you like one. You’re like, “This is interesting. Let me find out more.” You can’t invest without creating a profile, so you create an account. You complete your profile information. We would collect all of the information from a financial services perspective. We collect your demographic information and also your risk information because we are at the backend. We have a suitability engine. We are checking whether or not you should be investing in this. We will do all of the checks and balances there, your risk, income profile, personal profile, investing goals and horizons, and other standard information. You fill out everything.
Is that considered KYC?
KYC, AML, photo ID check, and suitability.
In the US, they call it a broker-dealer. In Canada, they call it an exempt market dealer. Are you an exempt market dealer? A lot of issuers and a lot of investment firms have their own exempt market dealer shop. In-house, we don’t. Are you guys your own exempt market dealer? Do you utilize a third party? How does that work?
We have a partnership for that. We, as a company, don’t own the license but we have almost in-house partnership with somebody who does.
That EMD, Exempt Market Dealer, or in the US called broker-dealer, do they have access to the investor’s journey on your platform where they can see that, and if there’s any red flag or any issues, they jump in? Talk to us about that part of it.
As an investor, you’re filling all of this out. When you try to invest, we run a whole bunch of checks. We will make sure your information is correct. This is before even the broker-dealer sees it. If you’re a fraud, you’re not even wasting the broker dealer’s time. When you try to invest and put in $10,000 and say, “I want to invest $10,000,” we will run a KYC check, a photo ID, email, and suitability. We have a bunch of AI AML flags to say, “This information is not consistent. Therefore, we’ll park it and not go forward.”
If everything checks out, that’s when the broker-dealer comes in and gets involved. When they come in at that point, they get the outcome. They know, “The person has cleared this. Here are the issues,” or, “Everything is clear.” It could be both of those scenarios. You can sign documents on the fly. Broker-dealers or exempt market dealers have their own portal from where they can monitor, override, take action, and reach out to the investor in real-time as well as post-factual. They have their own portal, which is where they can track every bit of this.
The investors can log in and see the performance of their investments on their investor portal, which would be BuyProperly.
Demystifying Crowdfunding: Regulations And Investment Caps
I have a quick question before we go to the next question. The term crowdfunding is part of the lexicon of finance conversation but it gets confusing sometimes. It’s used as a platform or a process to raise money from everyone, but it’s also an exemption in Canada, which is called crowdfunding. Can you distinguish those two and talk about that a bit more?
That’s a very valid point. It’s something people are confused with all the time. Crowdfunding is a specific type of consolidation both in the US and in Canada. Within crowdfunding, there is a max. In Canada, you cannot take more than $2,500.
It’s $2,500 per investor, not $2,500 per deal. I want to clarify that.
There’s an annual twelve-month rolling max as well. You cannot take more than $10,000 max from a person ever across everything.
How about on a deal level? How big can the deal be?
The deal can be anything but you cannot take more than $2,500. It was $1,500 in the past. If you are doing a $15 million deal, you’re dealing with a lot of people. We, on the platform, aren’t specifically crowdfunding. We are putting together anything. You could be writing a $1 million check or a $10 million check and it is still work.
Crowdfunding is different from other exemptions in the sense that it has the least amount of reporting requirements and therefore, there’s a cap. If you were raising capital, you have to tell me. Maybe a PowerPoint will do. That also means you cannot take more than a certain amount of money because you’ve not disclosed enough risks and enough information to me to be able to make good judgment decisions. The idea is it makes it easy for you to raise capital but it also protects me from losing money.
What we do as a platform supporting crowdfunding will be like a small subset. Most of our deals are not crowdfunding deals. They are offering circular or memorandum. In the US, it’s offering circular. In Canada, it’s called offering memorandum. It’s a prospectus exemption, which means there’s no prospectus. The corresponding alternative document that we have is pretty comprehensive. It’s short of an IPO but it has extensive risk disclosures and market risk assessment included as part of the investment deal, which allows people to make a better judgment of whether or not to give you money.
That means those crowdfunding caps wouldn’t apply because we are providing much more documentation. That was one of the things we did. We templatized and automated the creation of that. We create those through code. One of the ways we’ve reduced the total cost was templatization and automation. A lot of things that you would need to do to create a comprehensive document can be put together with basic information within the system.
AI-Powered Crowdfunding: One of the ways we’ve reduced the total cost was templatization and automation. A lot of things that you would need to do to create a comprehensive document can be put together with basic information within the system.
What is the minimum investment an investor can invest on your platform?
It is set up as $2,500 but it could be anything.
It could be anything depending on the issuers that you partner with, what their minimum investments are, and so forth. Your investment platform caters to investors, but it also caters to firms like ours at CPI Capital who are general partners. You and I had a meeting. You walked me through all the features that BuyProperly has.
I must say that you really did a spectacular job hitting all the nails on the head when it came to providing groups like ours with everything that we need in an investment platform, more precisely fund managers who partner with both Canadian and US investors. Us doing lots of research out there, it’s very difficult to find an investment platform that caters to both Canadian and US investors. You and I discussed this. I’m speaking for you, but because you’ve been through the process as an issuer, that’s really how you were able to build out such an incredible platform. You knew pretty much all the pain points that existed for general partners and you were like, “I got to make sure all these points are in there.”
That’s exactly what happened. We started out as an issuer. It’s like an eating-your-own-dog-food kind of situation. We phased everything from issuing and people saying, “I want to add my wife later on,” or, “I want to change from my personal name to a corporate name. Can you move it to the corporation?” You signed the document so it’s like a new thing. It could also be like, “Do you remember the transaction I did last year? I am moving it to a trust fund. Can you move it to my trust instead?”
A lot of these things in the lifecycle of an investment, we were dealing with customers firsthand. We were a small team with small resources, which means every time we encountered one of these issues, we said, “How do we automate this so it costs us less time and frustration next time?” There was a core platform, but then we said, “How do we automate waterfall calculations? How do we automate when document errors happen? Do we need manual overrides at times? How will that work?”
Bit by bit, the system became robust. I always like to say we built a cannon to kill a fly. We had overbuilt it but it was largely working backwards from the customer. In fact, we have a lot of compliance things we check off, but when we started out, we weren’t trying to be compliant, which is why we built something. For example, we were encrypting data both in transit and when we stored it at rest. That wasn’t because we were trying to hit a certain compliance milestone. It was like that because we believe that that should be protected. We were like, “It is sensitive data. There are no guarantees. We should overprotect it.”
Working backward from all of the pain points is how we built it. Over time, it became very friendly to every stakeholder. We were playing that role from every angle. I’m also thankful to a lot of our customers, especially a lot of the Canadian customers because we were one of the first platforms. They were like, “Have you looked at this? There’s this platform in the US. They use this,” or, “There’s this thing in Robinhood that I think will be handy to you.” We used to get so many ideas from our customers who say, “What about this one?” or, “I’m a product manager. These are some quick changes you could do to make it easier.”
One, we were working backward and saying, “Fix every problem. Automate every problem.” Cross-border was a big one from the US to Canada, although it’s less a technical problem, more perception, mindset, and all of those other problems than anything else. We’ve built an infrastructure that’s SOC 2-compliant, FINRA-compliant, and SEC-compliant. Meeting all the broker-dealer requirements on both sides of the border as well as the cybersecurity requirements on both sides of the border was largely built to ensure that every stakeholder is having an easy time.
You work with an EMD on the Canadian side, and then you work with a broker-dealer on the US side?
Yes.
BuyProperly’s Due Diligence And Deal Evaluation Process
That’s interesting. Let’s talk about the journey of an issuer or an investment firm. I keep calling it an issuer, but that’s more of a legal securities term. We’re really talking about an investment firm or somebody who’s got a venture that they’re looking for capital for. Talk to us about the due diligence, underwriting, and analysis you do on these firms. Let’s say there’s a firm that buys multifamily, like a CPI Capital firm. What is the process in your due diligence on that firm for you to give it the thumbs up to be on your shelf or your platform providing their investment to your audience or investors?
There are three parts to any due diligence. From our end, we use AI modeling for everything because that’s the only way we can consume large amounts of data. We only have 1 or 2 financial analysts on the team but we are doing robust due diligence still at scale. We get a lot of inbound. Of the 3 parts, 1 is macroeconomics. We are constantly, from our end, tracking trends and updates macroeconomics-wise. That means we’re tracking things like GDP per capita, vacancy rates in regions, per-square-foot prices, how they are trending, interest rate impacts, and all of those things.
The market dynamics is something that we are consuming data and tracking. We have a sense of how things are trending or what are the things we would want to stay away from at the minimum. It’s like, “Let’s not put money in this.” There will always be assumptions, but at least we know the no-deal scenarios, like, “This is out.”
For example, if Nashville is an area we want to do business in, we’re like, “This geography seems very promising. All the data is not mature enough that we can’t fight it and it’s not so early that we don’t know. It’s an area of interest and an industry of interest.” We are constantly running industry data as well. If it’s a multifamily, we know the area and the industry and we are saying, “Okay.”
The next level will be the sponsor-level risk. We have a model on the sponsor risks. There’s enough data out there or at least some data out there of the past history to say, “What are the big drivers of evaluating a sponsor risk?” We give them a risk rating. We would not want to take on a deal that’s very risky. We are too small of a company to do anything and get away.
Customer trust is like a hard-earned currency and we cannot afford to lose it, so we are very careful. Even though we are a marketplace maker, we are careful to not lose the trust. We want to be more like Amazon and not like Craigslist to protect ourselves. To protect ourselves, the second layer is the sponsor-level risks. We have a model for that on various elements that go at the sponsor-level risk.
The third level will be the deal level. You may be a great sponsor. It’s a great geography, but that specific deal may not be well-positioned because of a whole bunch of factors. Maybe there is an issue. Maybe there’s a legal thing. Maybe they were growing cannabis before. Who knows what is going to come up to you? There’s a third level.
If all of these check out, then we are evaluating the deals to say, “Everything looks okay or within range.” We are not buying it ourselves and we want the customers or investors to make their own decision. We would want it to be within the band that says, “This is not a fly-by-night deal, person, or city that is stable and reliable,” and then it can take its own course.
How do you guys get compensated?
Since we are not a broker-dealer, our fees would be largely linked to the services we provide. That’s the due diligence, listing, and ongoing customer management. There’s a whole bunch of little services. If the issuer wants us to take on accounting, then that’s an additional cost for that. It depends on the services that we are helping provide both sides.
Issuers pay a fee and also the users of the platform or the investors pay a fee. The fee that the investors pay, is it a subscription type of fee or is it a per-investment type of fee they pay?
It’s a per-investment type of fee, not a subscription.
I have another question for you again on that investor journey. If an investor is investing in a deal and let’s say hypothetically they would’ve known that sponsor or that investment firm, and they could have invested directly with that investment firm or they could come through you, do they get the same economics depending on if they come through you or go directly to the investment firm? Do they get better economics coming through to you? Talk to us about that aspect.
They’re good comparable economics. We would make sure that irrespective of the channel that the investor uses, they get the same economics. A lot of them, especially if they’re not a large investor, might choose to still do business. The issuer would prefer they do business through us because then, they have access to a dashboard, portfolio view, and all of that.
There’s another thing, which is an alternate trading platform that we have. We have a secondary marketplace. If you had invested in a deal through our marketplace, you can list those unit shares for sale whenever you want to another peer. It’s as simple as clicking a sale button, like, “I’m ready to sell.” Maybe you invested $100,000 and you want to take out only $20,000. You list $20,000 worth of shares back on the platform open to all investors again who can then buy it.
Is that active?
It’s been active for two years.
That right there, for me to explain to some of our readers, is creating liquidity in a historically illiquid industry or historically illiquid market. That’s very interesting.
This is a question I wanted to ask you. How would you approach building out BuyProperly if you were starting all over? What would you do differently?
When we started out, I feet-first jumped in with passion. We started as the cool disruptor, AI-powered, and all of that stuff. Over the years, I have more appreciation of the other side, so people who are building the buildings or doing stuff on the ground and they can’t even be on the laptop sort of thing. If I were to do this again, I would focus less on disruption and more on bridging the gap between how much tech can do and where people are in the ecosystem in reality. I would probably build more bridges to make sure people who are not using technology as much as they could be are using more of it. We got started as too cool.
AI-Powered Crowdfunding: If I were to do this again, I would focus less on disruption and more on bridging the gap between how much tech can do and where people are in the ecosystem in reality.
How about as far as you having a crowdfunding platform relative to you being a sponsor of deals as well? Where is your focus and allocation of resources going? Do you see long-term that you will be doing both? Do you see focusing on one more?
They’re interrelated. If you ask us, we will be focusing more on the platform for the ecosystem. We are like the operating system for this industry. We are not developers ourselves, so we will let the people who are best at that trade do their thing. What we are good at is creating that OS or Operating System that brings people together to make this happen. That’s going to take a lot of our brain power and mental power.
Even if you look at Amazon, it’s not the Amazon retail that makes money. It’s AWS that makes money. AWS was built from the learnings of what you need to run a business and how robust the technology needs to be. It’s complimentary for us to have the marketplace because 1) We have almost 30,000 investors there. There are active investors on the platform that issuers can benefit from. 2) Whatever we learn as trends, behavior, and data about what investors are looking for helps us make the platform better. It feeds into each other, but where more of the work lies ahead is in the infrastructure so that more of the ecosystem can be tech-enabled and do more.
Those are great points.
To switch the conversation a little bit, talk to us about being a woman and an immigrant who was starting a startup in FinTech. How difficult could that be? You mentioned that you didn’t have a coach. Did you have an advisor or early backer? How did you manage all of this?
Rome was not built in a day and wasn’t built by one person. There are lots of advisors and supporters. A lot of my investors are big supporters. There are other founders in the ecosystem who, at various times, have heard me out, helped me out, made introductions, or whatever was required. I have been very fortunate to have an army of supporters behind me.
Being a woman, minority, or immigrant wasn’t even something that I realized until I started doing a startup. If you want to make it happen, you figure it out. Circumstances are what they are. Sometimes, it’s depressing to have to try harder. Sometimes, when you’re exhausted, you’re like, “I wish it were easier,” but it’s okay. If you have clarity on your goal, you figure things out. When you have supporters like my ex-colleagues, my investor, and the founders in the ecosystem who are writing me blank checks of support to say, “I’m here whenever. Text and I will show up,” makes it so much easier to do that.
Before switching the conversation, where do you see BuyProperly over the next 5 or 10 years? What is the division?
We are hoping we can become the Intel of this ecosystem of private markets. The private market has a lot of retail wealth transfer that’s going to happen. The private market would want a share of it. This confluence of retail investors getting into the private market is happening in a big way. It’s happening already and it will continue to happen for the next 5 to 10 years. We would want to be a core player in that orchestration while the big funds and the big bulge bracket, some of whom we’ve been talking to, are looking to enter the space in a big way. We would want to support everybody.
This confluence of retail investors getting into the private market is happening in a big way. It's happening already and it will continue to happen for the next 5 to 10 years. Share on XThe Impact Of COVID-19 And Market Volatility On Investments
Let’s switch the conversation a bit. You touched on this a bit. The company was formed right around when COVID happened. When COVID came around and touched on what was happening with the market when it came to equities, real estate, and debt and lending market, which had an effect all over the place, we had massive inflation as a result of quantitative easing and essential banks printing money to be able to save and send money to people so they don’t have to go to work and get sick with COVID. It had this seismic shift in the whole ecosystem of finance, real estate, and everybody’s day-to-day lives.
Aside from BuyProperly itself having difficulties in that stage being launched, were there any difficulties that any of your issuers have had over the years since COVID? Interest rates started going up rapidly. The Fed started increasing rates to fight inflation. Are there any difficulties you can speak of as far as any issuers on your platform or any stories you can share?
When we started in COVID, it was okay. Everybody knows ‘21 was crazy. Everybody was doing lots of deals and then the party was over. At least as far as our issuers were concerned, we could see that certain differentiation between higher-risk issuers versus lower-risk issuers. Lower-risk issuers had taken insurance for the interest rates. They were putting in a lot of safety measures, which meant that their promised IRRs did not look as attractive. They weren’t saying, “You would make 30% IRR.” They were saying, “You will make 15% to 17% or much lower.” With the bad market, they were still projecting 15% to 17% and nothing changed.
For us, it was almost like an awakening to realize that all of those extra layers of protection that some of these people were putting in were so valuable. One issuer that we were working with hasn’t gone down but they haven’t fared as well as we have projected. Most of the others, surprisingly and thankfully for us, have stayed stable largely because we were extra conservative. We were like, “We are not dealing with people we know. If they don’t know us, let’s look at the data so we could be more objective.” It wasn’t because we liked somebody and we were like, “The data works. Let’s go with that person,” or, “The data doesn’t work. It doesn’t even matter how we will justify this.”
COVID meant we were not meeting in person. We were not doing any lunches. We were not going to any holiday parties. Those weren’t things. You met somebody on Zoom, got an Excel, and looked at the numbers. That kept us more objective. When we didn’t get numbers, we didn’t go far. The market has been very hard in ‘23 even for the best of folks. That’s external macroeconomics. We are beginning to see a little bit of a softening and a little bit of cheer coming back. We are seeing that things are not all that bad.
Are you noticing more deals coming on your platform?
A lot.
That’s fantastic.
It has been so crazy that every day, I have to say, “There are too many good things. It’s a good problem to have but I cannot look at all of them. Probability-wise, I can only get 2 of these done before the year ends, so let me choose which 2 I’ll put my attention on.”
I thought of something. Do you know the saying that people have been saying to survive until 2025? I’m going to switch it to thrive after 2025.
That’s nice. Thank you so much for sharing all that information. We’re excited to watch BuyProperly continuously grow. We’ll get you back on the show again in a little bit to hear more about what you guys have done. Let’s get to the second segment of our show.
Ten Championship Rounds: Khushboo’s Influential People And Books
It’s the Ten Championship Rounds of Financial Freedom. Are you ready for your question?
I’m getting a little nervous.
Everybody is, but they’re so much fun. Here we go. This is the first question. Who’s been the most influential person in your life?
It was my dad in the beginning for a long time but that has switched to my mom. My mom’s a lawyer and my dad’s a doctor. They have very different personalities. It’s my mom. A lot of the things I am doing are things she said were important but I didn’t value them until much later in my career. That’s my two-part answer.
The next question is, what is the number one book you’d recommend?
The Psychology of Money. That’s what I can think of from 2024’s re-read. It’s a very interesting take on how different people deal with money and how some of the things you saw as a kid or growing up and circumstances determine what you think of money.
We’ll have to get that one. Next question. If you had the opportunity to travel back in time, what advice would you give your younger self?
I used to do a lot of things, but in hindsight, I would say, “Do even more things. Try out even more things outside of your comfort zone. Do more new, different things every year.”
Do more things outside your comfort zone. Try out more new things every year. Share on XI love it. We’re both moms so we can give that advice to our little ones. The next question is, what’s the best investment you’ve ever made?
You are not going to like me for saying this, but I bought some Ethereum long ago. This was in 2015. I bought it for £15. It was really cheap. I didn’t even think about it. I threw some money. I went to a meetup and they were all gung-ho. I said, “Fine,” and put in $100. It is not £15. Long ago, it became much more. I exited 200x or 300x. $100 became $3,000. It was fun.
What’s the worst investment you’ve ever made and what lessons did you learn from it?
There was a pre-construction condo that I bought that was my first pre-construction condo. I bought that in 2010. The market was at a low point. It was the worst time. I had cash in my bank. I was straight out of school, living with my parents, and earning a lot of money as a consultant. It was perfect. I still haven’t got that. It got delayed. That was 2010. It’s been fourteen years and I still haven’t got the keys to that condo. It’s a level of delay that I had never imagined.
Next question. How much would you need in the bank to retire? What’s your number?
My bank is pretty empty so retirement seems like a very far-fetched dream. More than the money, I’m not the kind who would like to retire. I like doing things. I want to continue to do things and new things. There’ll be even newer opportunities as the world grows and technology grows. There’s always something that’s keeping me excited so I don’t think there’s a retirement horizon.
That’s her answer. She’s got that entrepreneurial spirit.
You might be cash-poor but you’re equity-rich because BuyProperly in itself is probably worth a lot of money. Let’s keep going.
I would like to believe that.
Next question. If you could have dinner with someone dead or alive, who would it be?
I would like to have it with a woman called Indra Nooyi. She was the CEO of PepsiCo. She was probably closer to my mom’s generation. She, as an immigrant coming from a conservative family, rose up to become a Fortune 500. She’s the person to be. As the CEO of PepsiCo, she did a lot of innovative things. Changing a large org is also a big deal. I have read her book. I have read her interviews. I have to know what her secret is or what is that fire in her that allows her to change the world around her this much and learn from her.
Was she born in the US?
She was born in India. She moved to Yale for her MBA. She worked in BCG many years ago and then rose up the ranks at PepsiCo. She moved PepsiCo towards healthier snacks, which is a deviation. She was spotting the trends way before everybody else did. There’s a whole host of things that’s going against the grain of society and expectations of your company and your team. She was constantly doing things that would not be happily accepted all the time again and again.
Next question. If you weren’t doing what you’re doing now, what would you be doing?
Working on maybe a different idea or startup, maybe something like a health and wellness thing. Being a founder, that’s one thing I’ve become very cognizant of. My biggest tool isn’t how many hours I can put in, which was my belief for a long time. I was like, “I can outwork people. I can outsmart people.” That’s not how long-term sustainable things happen. Your mental and physical well-being is the biggest tool you have.
Your mental and physical well-being is the biggest tool you have. Share on XThat’s so true. I love that. This is my favorite question. Book smarts or street smarts?
I wish I had both. I started as book smart. I’m trying to be the other one.
That’s awesome. What would you prefer?
A little bit of both. One is intellect. The other is wisdom. You need a little bit of both.
You need a little bit of both for success. Last question. If you had $1 million in cash and you had to make 1 investment, what would it be?
I believe a lot in BuyProperly, honestly. I wouldn’t mind putting it all back into that one. If I had one choice, I’d probably put it away for my daughter towards her education. Education is expensive, and education is a powerful tool.
Let the audience know the best way that they can reach you, please.
You can reach me through my website, BuyProperly.ai/ca, wherever you are. You can also reach me through LinkedIn. I’m pretty active on LinkedIn.
Thank you so much for sharing your journey and about BuyProperly and answering all of our hard questions.
We appreciate you. Thank you.
Thank you for having me.
