Drew Sterrett is the Co-Founder and Co-CEO of a company that is looking to change the way property ownership works. His company, LEX Markets, wants to make it easier for people to invest in property. He does this by listing real estate as stocks through initial public offerings (IPOs).
Property buyers can buy shares in a property through an IPO and become part-owners of that asset. In this way, LEX is looking to democratise access to property ownership and bring liquidity to the real estate market.
With funding over US$27.5m from numerous venture capital firms, Drew is on a mission to make LEX the go-to-market for real estate investing.
Drew is a Harvard alumnus and worked in Capitol Hill before launching LEX. He started his real estate career at Tungsten Partners, a real estate investment fund, where he researched, evaluated, structured, and managed property deals. His real estate background includes the USA, Spain, and Italy, with more than $1bn in assets under management.
In this interview, Drew talks about his motivation for starting LEX, the future of property ownership, and how fintech is helping to drive innovation in the real estate industry.
Here’s what he had to say:
Drew Sterrett (Full Q&A Interview)
Q: What inspired you to start LEX?
A: I was working in Real Estate Private Equity at Tungsten Partners where I was structuring real estate deals and observed first-hand situations where there were no attractive solutions to recapitalise equity in individual real estate deals.
I quickly realised that I was working on compelling deals that I didn’t have access to since the investment minimums were multiples higher than my life savings. I started wondering how the oldest and largest asset class in the world had no public and liquid market that everyone could access.
I teamed up with a few friends who would eventually join me as co-founders. We wanted to solve real estate’s access and liquidity problems in one place. We came up with the idea to build a fintech platform that could serve the needs of investors and real estate owners and that would allow both accredited and non-accredited investors to participate in our offerings. That was the beginning of LEX.
Q: With fintech in mind, where do you see the biggest opportunities for the real estate market moving forward?
A: This is going to sound funny, but, LEX.
Andrew Carnegie famously said that 90% of millionaires become so by owning real estate. Many of today’s wealthiest investors have proven him right. But the rules of real estate investing have always favored the rich. High investment minimums, accreditation requirements, long minimum hold times, and private offering structures make it difficult or impossible for average investors to participate. Only wealthy investors are allowed behind the velvet rope. Until now.
By turning individual buildings into public stocks, we have built a bridge that allows anyone to invest in institutional-quality real estate. Property owners can use LEX to recapitalise their assets without losing control or selling outright and investors can buy shares of individual buildings while opening up direct and tax advantaged ownership. As a property shareholder, investors can earn income and trade their shares on our public market whenever they need to exit their positions.
So, we view the platform we’ve built as a key piece of the future of commercial real estate investing.
Q: If there was one piece of wisdom you could share with other leaders in the fintech industry, what would it be?
A: Seek advice and ask for help. I’ve spent so much time over the past few years building a network of people who believe in LEX and are willing to help us succeed. That’s not just investors either, that’s people from different industries who are willing to share their perspective with me and the team. It’s been hugely impactful to have so many accomplished people in our corner. Outside of that, empower your people.
Q: What are the best ways fintech companies can accelerate their growth?
A: There are so many ways for innovative fintechs to drive growth. Outside of the obvious playbook of growth hacking or spending money on marketing, I think there are three key things founders should focus on to accelerate sustainable growth:
Match product with purpose
Develop an incredible support system
Educate the market
Today there are so many fintech platforms that intersect just about every asset class. What we’ve found at LEX is that we have a focused product and a clear purpose. Our mission is to empower wealth creation by solving real estate’s access and liquidity problem. Everything we do at LEX, from product, marketing, or business development has that purpose in mind. That’s been a valuable tool for growth.
As I mentioned earlier, build your network of stakeholders. Find mentors, advisors, early-adopters, investors, and create a community. You need a large group of people with great conviction in your product in order to grow. This group creates a flywheel of productivity that enables every facet of your business from business development to recruiting.
Lastly, education. So many fintech platforms are offering a first-of-its-kind product. Don’t take for granted that people immediately understand why they might need the product. At LEX we spend a lot of time educating our customers on both sides of the marketplace. If you’re going to create new access to an asset class, as we have at LEX, you need to teach people why it matters.
Q: Please summarise your life in three words.
A: Fast, fun, rewarding.
Q: What is next for LEX in the coming five years?
A: We always say that we want to make taking buildings public as common as taking companies public and investing in iconic buildings in your favorite city to be as easy as buying stock in your favorite brands. So in five years we want it to be common for skyscrapers to go public and we’ll spend every day for the next five years working diligently to make that so. We want everyone to own real estate as part of their investment portfolio. If we do this right, we see a future where Modern Portfolio Theory 3.0 will include real estate as its own sector – moving it outside of the alternatives bucket.
Q: Last, what is the one thing you want everyone to know about Drew Sterrett?
A: I love to read. Despite my busy schedule, I’m committed to daily reading. I have a goal to get through at least one book per week. I read titles across various genres and subject matter in order to learn about new topics.. One week I may be reading a great business book and the next I’m likely to return to a favorite: Sir Arthur Conan Doyle’s Sherlock Holmes.