[Interview] “You can be a landlord too”: CEO of Elysia, JungGun Lim

What if you could make a real-estate investment with the price of a cup of coffee? If you could own a commercial building in Gangnam, Seoul? ‘higher than the God,’ being a landlord is just a dream for most of people. Real estate investments requires substantial amount of money. However, things have changed – anyone can become a landlord, thanks to the blockchain-based real estate co-investment platform, Elysia (https://elysia.kr).

Real estate investments are considered the best investments in South Korea. However, winning the newly-built apartment applications is nearly impossible, and people are told to invest in properties as soon as they have a large sum of money. In fact, the real estate prices often go up for several years without falling.

There are many cases in which it’s impossible to invest in real estates due to the high initial investment cost. For those, CEO of Elysia JungGun Lim founded his company where people can invest in properties with small cost.

Mr. Lim has an interesting first encounter with blockchain. Unlike most of programmers who majored in computer science, he studied chemical engineering. However, like most people who end up studying something other than their main interest, he started having curiosity for programming.

“Once I got interested in programming, as a part of startup club with a program development project, I started working as a CTO,” and “around the time I wanted to start a company, I learned about blockchain technology and it was a complete shock to learn that an ecomonic system can be consist of just a few lines of codes,” says Mr. Lim.

Real estate investment was not his first blockchain business model. There were several trials and errors. The most challenging part, as most of projects are probably already experiencing, was the ‘revenue generation.’ “At first I thought the system would work if I just created it, but there had to be a flow of revenue somewhere,” said Mr. Lim. “I started thinking about a model that could run the economic system more intuitively, which led me to co-purchasing artworks; after some technical exchange, business direction was set on co-purchasing of real estates.”

Elysia’s platform has a complex structure. First, Elysia establishes a subsidiary company to make a real estate purchase, and then sells the stakes of subsidiary company to others for indirect ownership of the real estate. Elysia only issues the tokens that are used internally, based on its established subsidiaries. It sets up a new subsidiary whenever a property purchase for public offering is made, and tokens are issued for each subsidiary building.

These tokens are given to shareholders based on the stock holdings. Because these tokens are on blockchain, it’s used to prove the ownership of the shareholders. They can freely exchange shares by exchanging the corresponding tokens, which are also on blockchain for added transparency. Revenues are then distributed according to the recorded equity ratio, and the tokens cannot be taken out to public.

The Elysia tokens that are currently listed will serve as a ‘distribution network,’ which connects the Elysia’s internal proof-of-ownership token and the public. With the listed Elysia token, one can purchase other real estate tokens within the Elysia platform. Conversely, if the person returns a token to Elysia to cash out the real estate token, Elysia will return Elysia tokens according to the value.

Such complex structure is due to the problems of reality and regulatory barriers. Registering the shareholders take a lot of time, and there was also a problem of securities violation when selling and distributing STO (Security Token Offering).

“After much contemplation, subsidiary was the best solution for purchasing the properties,” and “it was important to easily buy and sell company shares online which would be possible with blockchain technology,” says Mr. Lim. He explains “I wanted to make an environment where you can exchange real estates on mobile.”

As the owners of the property, shareholders can participate in all the decision-makings such as sale, repairs and determining the rent prices. However, since they are so many of them, such decision-making does require the process of opinion gathering.

Normally there would be a shareholder’s meeting but Elysia is working to develop an easier process. The shareholders are able to hold an online-meeting, but it’s limited. Mr. Lim says “we’ve requested a technical cooperation to Sandbox to see if there’s a capacity to build a more convenient online meeting platform.”

The ‘trust’ is the current issue. Since it is a new platform, the investors are reluctant to invest due to the lack of trust. Elysia expect to solve the problem of trust by taking a stake together with the investors. It shows a sense of responsibility towards the investment. “we don’t have a fixed ratio, but we try to take enough to give the investors a sense of comfort. It depends on the demand but we’re thinking about 10~20%,” says Mr. Lim.

So far the public reaction is promising. Not a lot of people are participating, but there’s a constant, stable revenue. Mr. Lim says “at first a lot of investors were skeptic, but they’re now investing more and more because of the profit,” and “right now, we are thinking of ways to return the revenue to the investors more quickly.”

“Become a landlord with the price of a cup of coffee.” It’s a slogan the CEO used when Elysia platform first came out. He says the main goal of the platform is to ‘lower the bar’ of entering the real estate investment. He wishes “Elysia to be a new alternative approach to investing in real estate properties,” and that real estates become “an easier investment area” for the public.