Toronto-based real estate tech startup Perch announced the opening of its mortgage investment fund, Perch Capital, to retail investors. While originally launched to a closed group of investors in May 2022, high demand early on led Perch to expand access less than 1 year later.
Interest in the alternative investment space is rapidly growing in Canada. Companies like Wealthsimple recently announced the launch of Wealthsimple Private Credit, and Purpose Investments also launched their private assets platform last month.
Historically, these types of investments were only accessible to accredited, institutional investors. In other words, high minimum investment requirements meant catering to ultra high net worth individuals. With more players now entering this space, there’s been a clear trend in democratizing alternative investments as people look to diversify their portfolio.
“The past year has been tough for investors. Many traditional investment portfolios saw equities and bonds take a big hit. Few asset classes were able to post a positive return. Those living on fixed incomes have been particularly hard hit by high inflation and are feeling squeezed,” said Alex Leduc, CEO of Perch.
“Now is the perfect time to broaden access to the Perch Capital mortgage investment fund. We believe that in the long-term this will become a key component of most people’s portfolios.”
Unlike high interest savings accounts or GICs which offer guaranteed but limited returns, alternative investments such as mortgage funds can provide an opportunity to earn higher returns on a risk-adjusted basis. Perch Capital has a target yield of 9.00% on a 1-year term, with distributions paid monthly.
Perch Capital handles deal flow and risk mitigation at scale by utilizing Perch’s automation and analytics technologies, which results in lower operational costs and higher potential returns for investors.
By working with registered Exempt Market Dealers, such as Tactex Asset Management and AcreageWay, Perch Capital is able to broaden access to Canadian investors.
Last October, Perch raised $4 million in Series A funding from investors including the National Association of Realtors’ strategic venture arm, Second Century Ventures.