Just How Did Emoov Manage To Raise £18 Million From Investors ?

It has certainly been full steam ahead at Emoov in 2018. Merging with Tepilo and Urban.co.uk in May saw it leap ahead of Yopa to become the second largest player in online estate agency after Purplebricks. This July the company raised £1.2m from investors in just 24 hours, taking total investor funding to around £18 million in four years.

So how did Emoov manage to raise this £18m and what, if anything, does this teach us about the online estate agency model and future prospects for it?

Crowdfunding pays dividends

As with other fast growing tech companies Emoov has proved to be a smooth operator in utilising the crowdfunding model.

An initial ‘seed round’ using Crowdcube raised $3.2m in 2014, with a further seed round and equity crowdfunding raising £1.5m and £2.6m respectively in 2015. The company’s ‘series B’ round added a titanic £9m in 2017.

Summer 2018 saw investors particularly eager to splash the cash. An initial target of £1m in equity crowdfunding saw £1.2m raised in just 24 hours with a private ‘by invitation only’ offer, with £1.9m in total raised by the end of the round.

Who’s investing?

Previous calls for investment have notably involved institutional investors and high net worth individuals including JXC Venture, Episode 1 VC, Maxfield Capital, Spire, Startive Ventures and Gaby Salem of Wharton Asset Management. James Caan, Simon Clausen (Freelancer.com), the founder of Benugo and the founders of Quidco and Voucher Codes Europe have also jumped on board.

The company’s latest investment offer, launched under the headline of ‘Don’t Just Join The Emoovement, Own The Emoovement’, appeared to be pitched at enticing smaller investors.

Emoov says the initial 600 investors stumped up amounts ranging from £10 to £500,000, with the majority handing over between £1,000 and £10,000.

Equity in exchange for media power

Not all the investment pot has been raised through crowdfunding, nor indeed in cash.

Media group Northern & Shell provided a cash injection as a result of the Tepilo merger, in which it already held a majority shareholding.

Emoov has secured a deal with Channel 4’s Commercial Growth Fund to provide what its CEO calls “media power”. The broadcaster will provide major TV advertising campaigns in exchange for an undisclosed share in the company.

The Tepilo merger also brings the benefit of advertising partnerships with Sky, Channel 5, plus the Express and Mirror Group newspapers.

“Emoov was the first company that really ticked the boxes for us.”

James Cox, Principle of JXC Ventures, explains the attractions: “Having followed the PropTech sector for a number of years, Emoov was the first company that really ticked the boxes for us. Their unrivalled tech platform allows for rapid growth, with a focus on optimisation rather than removing the human element from what is still a ‘people business’.

“The new marketing team, along with investment leveraging this strong core, will create significant shareholder value over the years to come as the market shifts towards the online sector even more rapidly.”

Plans to further dominate the industry

Russell Quirk, Emoov Founder and CEO, says the merger will help the company to grow operations, and help the company to “further dominate the estate agency industry.”

“We already have the foundations in place to put our sights on an IPO.”

But future fundraising needs could take Emoov in a completely different direction with a possible market listing. Russell Quirk says: “We hope that the proof is very much already in the pudding given the fantastic success we achieved last time we crowdfunded, and we hope that the newly enlarged Emoov group will be an even more attractive proposition to Crowdcube investees this time around.

“In contrast to our last campaign, we already have the foundations in place to put our sights on an IPO. However, we wanted to offer one last opportunity for non-institutional investors to support the enlarged company, and to benefit from the anticipated uplift in value that our continued success is likely to deliver.”

What could possibly go wrong ?

Then a relative minnow Emoov returned a profit in both 2012 and 2013 before falling into deficit and posting a loss of £583,824 in April 2017. Revenue growth was flat during 2017-18, however CEO Russell Quirk forecasts 550% revenue growth by 2019 and that the business will return a profit by 2020-21.

Online estate agency also still occupies but a small share of the estate agency market (just 6% according to data company TwentyCi) illustrating just what a huge amount of investment will be needed to make a real impact.

“With a traditional high street agent, the homeowner only pays if the agent sells their home”

The fixed fee online estate agency model itself is certainly not short of critics. Examination of listings by Emoov’s competitor Purplebricks by analysts Jefferies claims that it sold just 51.6% of properties within 10 months rather than the advertised 88%. This is similar to the success rate in the wider estate agency market, somewhat reducing the benefits to householders of paying less but paying regardless of a sale.

Equity Analyst Anthony Codling of Jefferies says: “We have benchmarked PB’s performance over the last 14 months against the performance of more than 7,000 different estate agency brands in the UK. Our analysis suggests that PB’s success rate is near the middle of the pack.

However, although only just over half actually sell their home, everyone has to pay. With a traditional high street agent, the homeowner only pays if the agent sells their home.”

Although Jefferies’ analysis was vigorously contested by Purplebricks, it still contributed to a worrying 13% plunge in the value of the company’s shares and shows how sensitive Emoov could be to market sentiment should it too pursue a market listing.

Looking ahead

It would take a very brave person to accurately predict the future fortunes of online estate agency. Right now Emoov seems to be riding the crest of a wave of investor confidence.

However, those who have put their £18 million behind the Emoovement will be hoping the company can put clear blue water between themselves and their competitors both on and off line.

Should they be disappointed it will be interesting to see how keen investors are to put more money into this or indeed any online estate agency operation in future.

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