<

Startup Spotlight — PropHero

In just 16 months, this new venture has managed to raise close to $10M in funding over two rounds, and win “Proptech Startup of the Year” and “Most Innovative Startup — Consumer Proptech” at the 2022 Proptech Awards hosted by the Proptech Association Australia.

Founded in June, 2021, PropHero provides investors with a full end-to-end solution that includes investment strategy consultation, data-driven analysis and support from a personal property coach. The software analyses millions of data points from real estate in every suburb, with advanced AI algorithms helping identify the best properties for clients to try and maximise return on investment.

The startup kicked off just over a year ago and now has over 40 employees based in Australia, Spain, Argentina, India and Indonesia.

Co-Founders, Pablo Gil Brusola and Mickael Roger, are experienced and enthusiastic property investors, who wanted “an app for that” to streamline this complex process. At the same time, they wanted to make property investing more accessible for a new generation to invest with confidence.

Rogers said they’ve now helped around 250 clients find investment properties and they expect to double that number by the end of 2022.

PropHero was launched with the ambition to make property investment simple, time-efficient and more profitable by using data, proprietary AI algorithms and an online platform to offer an end-to-end property investment service. It’s the “next gen” in buyer’s agent services.

Investors

• Feb 16, 2022 — Pre Seed Round — Global Founders Capital, The Fund, AfterWork Ventures, Jelix Ventures — 1.6M
• Oct 5, 2022 — Seed Round — Fifth Wall, Samaipata, Afterwork Ventures, Jelix Ventures — $8M

#FifthWall

Founded in 2016, Fifth Wall, a Certified B Corporation, is the largest venture capital firm focused on technology for the global real estate industry. With approximately $3.2 billion in commitments and capital under management, Fifth Wall connects many of the world’s largest owners and operators of real estate with the entrepreneurs who are redefining the future of the Built World.

#Samaipata

Samaipata is an early stage founders’ fund investing in network effects, across Europe. The fund was created by two entrepreneurs, Jose del Barrio, co-founder of the leading food-delivery platform in Spain, sold to Rocket Internet for $100 million and Eduardo Diez-Hochleitner R., senior executive, prolific BA and current Chairman at MásMóvil.

Business Model

You might be expecting a tech company like this to have the typical SAAS model pricing but this one is quite different.

There’s no freemium trial, no monthly subscription, no “choose your plan” option. It’s more consultative with a tech platform to automate and manage a lot of the process.

Being a real estate solution, the general public is used to bigger numbers than your typical video streaming or accounting software subscription. If you use a buyer’s agent to find your properties, you would also be used to paying larger fees for service.

I was a little surprised by the fees, but I can see how this model works for them and would result in bigger profits. If you were thinking of hundreds, think again. It’s more in the thousands range with a fee to get started and a larger fee on successful purchase of a property.

PropHero has taken the full-service, all-inclusive approach rather than a do-it-yourself software service. What they’ve essentially done is take the “buyers agent model”, made it mass-market and bundled it with custom built software.

You get a property coach, and custom recommendations based on your goals. They say a large percentage of their properties are “off-market” which would be an advantage. The software works out all the financial numbers and recommends max price etc. to make purchasing a worthwhile investment for you.

The Process

First step is to book a consultation call. They are quite freely available as of writing.

Being in the market for property myself, I actually did book a call and spoke to someone based on the Gold Coast.

I’m not a huge fan of the hard-sell consultation calls with inexperienced sales people, but this was different.

It was informative, with a demo of how the process and software works, fees were clearly explained. Nothing hidden or too hyped up, and at the end they offered to send me an email with all the details and a link to get started. No pressure.

Insights

I can see how this would be a great option for overseas or interstate buyers especially. They literally even do the inspection for you so you never have to visit the property. Just run the numbers, take the recommendations and they will manage the whole process even to the point of finding tenants.

There’s a lot of leverage points for PropHero beyond the software, and success fee charged. They would literally have bulk buying power, could direct a number of investors into particular suburbs or estates, and take a cut from recommended third parties including mortgage brokers, property services etc.

I would imagine their consult approach to be costly initially but also likely necessary to convert more customers at their price point and warm up the market.