The demise of the original eMoov in December last year reminded everyone in the tech world that spending £7.5 million on a brilliant platform does not bring automatic proptech success.
The sector is one of the most lauded concepts within the housing sector, a phenomenon fed by an almost constant stream of government initiatives, conferences and exhibitions as well as a constant flow of cash being ploughed into it.
And yet most consumers, while grateful for the easier life the tech involved can deliver, are unaware of the term.
Developers, house builders and estate agents on the other hand are usually willing proptech users of one kind or another, although it’s only the big players who have the financial muscle to invest in this relatively unproven technology either directly as backers or as early adopters.
Proptech sectors are legion and include data analytics, the internet of things, work flow management, smart homes, artificial intelligence, virtual reality, blockchain, chatbots and automated property valuations, to name a few.
But is there a correct way for proptech firms to ‘line up their ducks’ in this volatile and ultimately risky sector?
We asked some of the UK’s leading proptech entrepreneurs what they think is the magic formula that makes the difference between success and failure.
A home sharing platform that matches prospective tenants to their ideal set of sharers, and then helps them find their ideal property.
“A fresh perspective has aided our success and in a world as busy as the proptech space it’s important to offer something new in order to get cut-through,” says Tom.
“For us it was looking at the flat-share space and focussing on people, personalities and compatibility rather than simply listing spare rooms to rent.
“Liquidity in a given area is also key. It can be tempting in a space that changes so quickly day-to-day to try and move at the same pace, but this can cause issues from an early stage.
“People want to know what you’re doing works and if you spread yourself to thin with over-ambitious growth plans this can be hard to prove.
“For us it was important that we nailed down our service and proposition in London and once we were confident that we had refined our model, we then rolled it out to other parts of the UK.
“Finally, success in the proptech space hangs on user feedback. The people using your product should be the ones helping to shape it for the better and failing to listen to user feedback is a big mistake.
“But it isn’t just about listening, you have to be very agile operationally, take this feedback onboard, rebuild and adapt your product quickly to ensure it evolves and continues to work well for the user.”
CreditLadder is a platform that enables tenants to report their rent to Experian and have their regular rental payments recognised and, ultimately, help improve their credit score.
“Every month more and more businesses launch in the resi space hoping to make an impact and be the next big thing. I don’t think there is a simple formula to follow that leads you to success simply because sometimes you have to be in the right place, at the right time with an offering that hits the right notes,” says Sheraz.
“First, the basics. It’s best to avoid ideas or a product that tries to force-fit into a space that doesn’t need it – you’ll hear this a lot, but there’s a good reason for that.
“That’s not to say don’t be a visionary, but sometimes it pays to be simple – identify a problem and go out to solve it. Sounds simple, but I’ve seen so many ideas that are trying to solve an issue that just isn’t there, or want to be the 50th business who are trying to tackle the same problem.”
“Relationships. Hugely important in all walks of life. In the workplace, don’t try and be the hero. It can be tough, but build those relationships – internal and external and get yourself early advocates, either consumers or other businesses that will sing your praises because you focus on doing a great job. You can’t beat great traction.
“And finally, financing. We all need it, and it can come in various shapes and sizes. I’ve seen some people raise big within proptech with no product and a great idea and I’ve seen those who have traction but struggle to raise.
“In a way, this brings you back full circle – sometimes it is just about the right time, the right place and the relationships you’ve built all coming together. You end up in a place where someone believes in you, and that can make all the difference.”
It’s a digital tenancy process platform that enables letting agents manage landlords, tenants and properties more effectively online.
“Understanding the market and building a product which addresses a genuine pain point is the cornerstone of any viable proptech business,” says Tom.
“In the current climate, with the housing market in flux and the upcoming tenant fee ban seeing letting agents assessing their business models, proptech businesses who are offering services for which there isn’t a genuine, commercially-driven market-need may find themselves in trouble.
“Having an easy-to-use product which can integrate with existing processes is also essential. You can be offering the most innovative proptech service in the world, but if the on-boarding process is painful or if the user needs unrealistic amounts of upskilling to make the most of it, you simply won’t retain enough customers to create a successful model.
“Letting agents, for example, are hugely busy and often away from their desks, so any training you provide needs to take that into account.
“A well-designed product that addresses a clear market need and, crucially, makes a difference to the bottom line, are the key ingredients any successful proptech company needs in order to thrive.”
It’s a deposit-free renting product that’s not insurance-based like many of its competitors and claims to be growing 50% month-on-month with monthly revenues of £100,000.
“The key ingredients that drive success in the market, and which are the ones that we used, are to have a high margin product, to leverage technology well, ensure the product or service is customer-focussed and to get into bed with the most suitable investors,” says Franz.
“It’s also about how you structure your product so that it can be scaled quickly both in your home market and beyond.
“We found that distribution is also important – at the end of the day it’s helpful if you work with larger, existing industry players.
“After all, you’re a small company and you’re resource-restrained, so you need to strike partnerships. I prefer this on a revenue basis not an equity one; keeping independence is important for success because strategic investors may have different aims in mind than you or your company. We raised from financial investors, not strategic ones.”