Raluca Negrea & Petrica Butusina - Local Innovation: Build21

Hi guys, [music] I am Ralanra. I'm one of the co-founders and head of operation at B21. Here with Petrika Bhushina. Uh he's chief product manager and starting this year he's also part of the founding team. Uh the case we are presenting today it's bill 21.

Uh we are a real estate developer. Um what is different from the other real estate uh developers from the market is that we are using blockchain both as in infrastructure but also as principles because we think that blockchain principles fits the way we see that real estate should be built in Romania but everywhere in the world. So what we are doing as a real estate developer we build only 21 real estate projects. The first one are apartments. Uh all the projects are residential in Romania in big city in the middle city if it's possible if not closer to the the center of the city and uh all our business model it's built to sell what we are building in the end we sell to people that want to live in uh in our homes.

Uh so this is mainly the the the business model. Um the dream that we have it's to build beautiful and smart homes for um that can that people that are classified as mid app um um midterrap class in Romania should be a able to buy it. Uh so good quality, smart homes, nice design but affordable for uh what we call consider middle class here in Romania. And also another dream that it's related to how we construct is that the lifespan of what we build should be at least for one century. This mean being durable and good enough to resist in 100 years but also has a relevant design for the years that are coming.

I don't know if you know but if you live in Europe the house where you are lived has been designed to be good for 15 years. If uh nobody else evaluate that building that it's and for lunch his life uh lifespan this is it. If you go to the bank they will say you need an evaluation. So this is um another thing that we are promis promising to the people that moves day one in the apartments and the homes that we build is that they will feel that what we have built will have an immediate impact in their quality life because they will have enough natural light. The air uh the fresh air would be continuously uh something that will um they will have in their homes.

uh the comfort of the temperature, the acoustic in the house. Um then again I've mentioned durability and uh healthy of the structure of the building where they are moving and another thing that it's important from us the interaction that they have with the neighbors because as as a real estate developer we keep in every project that we do a space that we manage and where we encourage community development. So this is us as business and the main question is why we choose blockchain. Um one of the main reason it's because we are community first. So we didn't start this business thinking let's do something on the blockchain.

We start this business thinking let's build for the people that will build in the homes that we built. Who are the best to be involved in this? the experts, the engineers and the architecture that are thinking of how these houses should be built. And this is one of the main community that we have focused on and that we already have on boarded. Architects and ex uh and structural engineers that are signing on our projects that has the quality that I mentioned previous and that are designed to be relevant and durable for the 100 years that I mentioned.

Then we also thought about I've told you the people that will going to be there. There should be for real a community or just people that afford the price to live in our homes. They should be a community. This is why we decided we have to keep these spaces and do stuff that are relevant that once you go and buy something that is built by B21 from the way it has been built and what happening in the common spaces that we are managing there you will know if it's for your lifestyle and if it's proper for your family or not. And uh the third community that we think it's important is the community of investors.

And we thought about who should be able to invest with us the developers to put money together with us with the developers. So something like this should exist and also should had priority when we are distributing the profit. So um here so the question is what's the link between actual bricks physical bricks and the blockchain and why do we actually need the the blockchain? So

back again

back again to the community we are building a bunch of communities. Of course we have the experts and the res the investors communities that are the basic layer of of the of the project but then we also have a long series of um residents community one community for each building uh we are going to develop in the future. Uh thinking about this um it's important to mention that in real estate when you create a building you actually create an SPV company for that specific building. So under the bill 21 company there are going to be 21 SPV companies that are going to develop each project and each project is going to have uh its own residence community. Based on this you can notice that everything will need to be super modular.

So that's why we built everything on a factory smart contract architecture meaning that we are going to be able to easily deploy any community based tool for each of the projects uh in the same way. Uh this is also important uh if you think about the future proof scenario of the of the of the company. uh we know that we are going to build 21 projects but we also know that in the future when we will become an example of how blockchain can actually solve certain aspects of the web to industry then it will also come with a requirement for us to share the the technology. So if we right now develop for ourselves a modular system then we'll at no point in time we will be able to switch to a software as a surface with all the architecture we are building right now.

And the idea is also if you are a member of our of any of this community you can propose stuff then you can get involved by voting and again you'll be accountable maybe if you're the expert if you are signing that the quality of the project is having mentioned stuff because this is Yeah,

similar to the the communities we are also going to talk about the tokenization. So in the in the same way we deal with the community building tool the that has at the basis um factory smart contract architecture it's the fractionalization of the investment. So what we are doing is we are also having a factory architecture behind it. So we can generate for um a specific project the whole infrastructure for the for the token tokenization and then why why is this important for us to to use this tool because if you go the web to root you can have uh small large just large investors at the table. Right now um small investors are not allowed to participate in web two real estate opportunities just because their investment uh barrier is super low.

So what we are doing is breaking a joint venture contract which is actually existing in the real world and we are binding tokens to that specific uh um contract. Nowadays everybody when they think about real estate on blockchain they think how are these guys going to solve the ownership of the apartments. It's not really established right now and it's not really possible legally to own something on the blockchain especially in some jurisdiction. It it is done in some areas but not in Romania especially in Europe. Uh but what we are actually tokenizing is the joint venture contract between the real estate developers which is us and the investor that want to participate in taking profit after we actually develop the the building.

So it's like a promise of over the the profit of the sale of the real estate and we are doing this with the same approach as business model each project has some SPV which is sele but it's its own unique purpose. Uh once you sign the contract with that SPV you have clarity that the project has the authorization to be built. You know what will be built, you know the concept, you know how it going to look like. And you also have a perspective of how much you get in return for the money that you put. The minimum return that we promise it's 40% per project.

A project can be built depending how on how build it is in one year and a half. We're going to start with small projects, the the first ones, but there going to be also project that will be built in three or four years because we're going to be much bigger. So um this is what it's already done and we you we can do it fractionalizing the investment something that we want to work on and we have put a lot of energy in terms of the legal framework of how to do it how to exit the investment before returning of the profit because this is also something that will be possible in the uh European countries but we'll need to develop some technical parts for this and if you're curious happy to share how we're going to do it.

Another part of the of the project that makes us different from the web two competitors is actually the the smart home system we are going to to sell to the future owners of the apartments and actually you we want to solve certain problems that we have noticed along the years in the market. One of them is uh the full history of your apartment. Sometimes in the past I had some issues with my family. some member of the family passed away and at one point I need to to get one of the properties of that member because it was inherited by me and at that point I didn't know where to take all the documents all the history of the property and so on and I think this is a solution we are going to solve actually we have solved it solved it at the Ethereum Bucharest hackathon with our application which is leveraging a super cool IPFS like architecture based on the ratio and edge node protocol and um we are mixing this with the blockchain in terms of the um linking of the storage you have in the edge edge cloud uh because right now you also care a lot about your privacy. You don't want to have your data about your property stored in a um cloud.

You don't have control over it. And what we did is using the R1 um IPFS is basically coming with a super smart idea that you can encrypt your store store the information and decrypt it just with digital assets. So when we actually sell an apartment, we handle a green card of of the apartment and we actually allow the people to have full history of the building from uh sale contract to the property details and other modifications you you actually are going to build in time.

The type of material that we have put in the project, the certification that we get when we were building. Exactly. the certification that we get for the building and how it evolves years after year and so on.

And think about it like like a storage that grows in time with with your prop property. At one point maybe you think about demolishing a wall. You need all the papers. You are going to store all this informations in this uh in this uh storage of of your apartment linked to a certain NFD. Afterwards, at one point in time, maybe you decide you want to sell the property for a better investment or any other reason.

you are going to handle this green card of the apartment to the new owner and he will actually get the whole history of your of your property. Another uh smart way where we are actually using the the storage in this IPFS like architecture is that we are going to also store data. Our buildings are also going to be full of IoT devices and uh they are always producing data in a and being stored in a in a secure way in an IPFS like architecture. We are going to produce provable data and we are also going not just to store them on on this IPFS we are also going to uh record these events on the blockchain. This is important because at one point in time I I know that we are going to reach a certain moment in time when insurance companies will ask real data.

Uh because if you have maybe a building that was built in a in a good way and you want to actually prove all this data, you can use your IoT from your house like earthquake sensors put on your structure to temperature to light to heating and so on. you can prove this data and get maybe a bit better premium because you can actually prove the information you are delivering or maybe I don't know you live in a country that has a lot of earthquakes but your building wasn't affected in the past and you and just prove okay this is all the history of my structure you cannot uh charge me a higher premium just because an earthquake happened in that area I can prove it didn't affect my my structure

so if you want to buy an apartment. Next announcements of what we are building is this autumn. Join us. This is our Romanian telegram, but if you are looking for bill 21, we will also have an English version of the telegram. If you want to invest again this autumn, you will be able to invest starting 300 euros.

There will also going to be an upper limitation, but we will announcing uh because it's related to the dimension of the project. We have the locations for the projects. Usually, this is what we are putting as a company. We we put the land we put also some money to the development because we know the idea it's fresh and it's pretty stressful for people to start investing with us. But actually the one that right now are in our investors communities are the kind of people that will like to have their name on the on the building because their their thought is like this.

I hope somebody 150 years will gonna walk in near this building and will ask oh my god who have thought to do something like that. So join us on telegram on any other channel if you want. Thank you [applause]

guys. Thank you very very much. Um awesome. We've actually already got our first question here from Infram. Um, based on the history of real estate in Romania, how can you slashwe prove that the materials used in construction and stored on the blockchain are what's actually being used in the real world?

So, one thing that we do it's also that you will if you buy in pre-sales an apartment from us, you will have realtime monitoriization of the construction site. So, you will see what's happening in the construction site in terms that you'll have drone footage and photos of what is happening there. Then video stream take it from the heads helmets of the people that are working on the construction side and then again the providers that we are working with with for the materials are also have to give us certain types of certification and their codes for the products that we are using to to build. So some of them will be like I don't know how to say in English var what's the English for var because it's the healthiest thing that you can put on the wall if you live in that

yeah it's fluster I think so we will have this kind of materials and I know it will going to be difficult for the um material provider to give us certification on that but we're going to do our best but otherwise we're going to have other types of materials that are the classical materials that

is going to be Yeah, and

that's the most important thing. We've seen many companies. It's not only Romania. I I've been seeing real estate companies selling dreams and executing crappy buildings. I've been seeing company that promised buildings and gave back nothing and people got scammed up.

Building trust is super important. Project can help get help on it. and this uh live stream from the from the side with a very transparent low certification system. I think it helps uh at least a piece of mind of the investor to see every day how is the property he's going to own in the future uh being being bu so every day you see now they they put the pillars now now they just land in the past next week they are doing something else on the site so they are going to see this in a full of the site

from my point of view I think on any contra construction site you should have this kind of information and see what's happening but That's just mine. [laughter]

Good to know. We

are going to become amazing of how transparency works after we actually implement this inspection to the site making transparent people.

Nice. Um Oh, plenty more questions coming through. Okay. Um from zero knowledge 238, why €300 as a price point? Is it about the magic number three?

No, [laughter] it's actually a number that was proposed by the investor that decided to join us. So I propose it 100, but they say let's do it 300. And I think okay, it's a good proposal. Let's start it from here. You

believe in magic?

Yes, they believe in magic probably. I don't I don't believe in numerology, but maybe there some of them do.

Perfect. um what guarantees do we the investors have that the construction will be finalized?

So the community of experts that you've seen on that uh page are the architects and the structural and engineers that are actually the best one in Romania. None of them will going to put their name on something that will not going to happen because they were going to lose [snorts] business that it's hundreds thousands of millions [laughter] in Romania. This is the first and this is that was the toughest thing for us to do together this community of experts that endorse us and guarantee for what we're what we are doing. What can happen and this is something that is market related is maybe there will be delays in what we deliver because I don't know somebody asked me what is happening if the war comes in Romania from Ukrainia. I don't know.

We will see what happens if we're going to be listed as being a junk country and the banks will not gonna give people money to uh loans to to people to buy apartments. I don't know. We will see. So if markets um I don't know situations like this can happen. Yes, this is a risk you are exposed as an investor and it's the market risk otherwise you know the location where we are building.

you know in what project you invest you know you you do not invest in all the company to be exposed to the entire portfolio. So you will be able to gather all the data you need about that location that part of the the city where we are building in order to know that if we will do it or not. So

also one thing is that behind the security because we didn't mention that much all the assets we're going to mean and create the political security or tokens uh they they are linked and legally binded to contract that has been audited and it's going to be fully enforced in in even if something bad happens. Think about that. The SPV is going to own the the the site. It's going to actually own everything. In the future, if anything bad happens, you can always enforce.

It's not going to be the case. But even further than this, we we will have in our contract something that's even more important. Sometimes the return of investment can be upper lower based on the market. Of course uh another thing that we added in this physical contract is that priority to return of investment it's always uh to the investors not on on the owners of the SPV actually. So uh even if uh the company will get uh less of the of the return they have imagined uh they will always the company will always make sure the investors that join through through the SPV will get paid first.

It's in the contract.

It's in the contract, guys. Here's a cheeky question. How many buildings have you built before? What happens after you build 21 of them?

So, how many builders did we build before? I'm just looking at the other co-founder in the business, which is Adrian Vasillesco, who is a structural engineer. Only him has three million square meters in his portfolio. If I'm looking at all of us that are involved in this business, the architects and the engineers, uh I think we have built 10% of what has been built in Romania and 90% of what is really good built in Romania. So this is what we have as portfolio as members of the uh of the team.

Uh this is the first time that we are together and not one against the other because usually when we build especially architects they are pitching in front of a developer to and fight who should put his concept on the market. This is the first time that we are stressing them to put together a concept. So in this format the first project is the one that we are announcing this autumn.

Okay. Gotcha. Um what chain is this going to be built on? uh IBM compatible I'm going to [laughter] I'm going to be

so as an investor or as a person that you buy from us you should not even have to know when what chain are we

complete blockchain abstraction there okay

okay good stuff built for the normies um what are the projected costs of a two-bedroom apartment [snorts]

so we are building right now looking at the how how the market is like looking right now. So the type of quality that we are building it will be 2000 two 2000 to up to 3,000 per square meter really depends on the location where the the apartment it's u it's built.

Okay. Gotcha. Um we can end on this question. What a friendly question this is. Do you have a securities issuing prospectus approved by the ASF?

We are highly regulated by SFA and we also start the discussion with them and announcing them that we are going to put this project on the market. Yes, we're going to have white paper that we have to present to them and be approved. uh we decided to work on this with Deote and maybe some of you also know Andre Bourbon who is our advisor and supporting from I don't know starting three years ago because every time somebody asked me when you start the project it was years before first problem was to solve the legal framework the second one was to convince the expert to join us

perfect does anybody else have any other questions from the crowd that they'd like to say out loud [snorts] doesn't look like it. Okay. Well, guys, thank you so so much. Let's give a big round of applause to uh to Bill 21. Thank you so [applause] much.