Month: June 2016

Proptech in India
Asia PacificCommercialInterviews

Interview: Propstack co-founder Raja Seetharaman

With a massive market, easily understood product, strong team and upcoming favourable regulatory change, Propstack looks ready to seize the commercial PropTech opportunity in India. We asked co-founder Raja Seetharaman to bring us up to speed.

Tell me about your founders and how you started?

We are three co-founders with backgrounds in Commercial real estate (CRE) (Insignia, JLL, Colliers), Banking (Deutsche Bank, Kotak), Analytics (Fractal) and residential group buying (Groffr). My personal background has been 15 plus years with Insignia (acquired by CBRE), Colliers, Ascendas (Singapore government company) and JLL as their National Director of Corporate Solutions.

We realized in early 2013 that there was no transparency in the Indian CRE market place and clients always referred to how decision making was inefficient, subjective and difficult. At the same time, we were also aware of data information sites in the US and how they could be a great enabler in some ways and disruptor in others. CRE is the largest asset class in the world and also the top two cost center for most corporates depending on the office location.

We saw this as a huge opportunity and decided to start Propstack.

What stage of growth are you at and how has the journey been?

Our journey has been very exciting. We started Propstack in June 2013, raised angel funding and covered data in Mumbai. We raised our Series A of USD$3.10m in June 2015 from Daily Mail Group (DMGI) with minority participation by Real Capital Analytics (RCA). We are now present in the top seven cities in India and cover 100% of all investible commercial buildings in the country. Our clients are funds, corporates, Developers, brokers and high-net wealths.

Did you have any previous startup experience?

Yes, two of the co-founders ran a boutique real estate advisory business while the third co-founder ran an online residential group buying firm for couple of years prior to starting Propstack.

What have been the biggest learnings in terms of starting your own business?

Personally my fear of failure was easily outweighed by my hope and expectation for success. Professionally, commercial real estate has been a slow adopter of technology. That said, it’s been an exciting journey thus far and I am loving it. We’re at a nascent stage of intersection of CRE and technology in India and it has its own unpredictability. When we find a solution to a specific problem, we are adding value to our business as well as the industry.

How have you found the challenge of hiring staff as you grow?

We’ve had hiring challenges especially for specific functions like sales and senior tech talent who can quickly grasp the CRE tech industry. As a young company, it’s important for us to not only find talent with the right skill sets but also find them at the right cost.

What is the business model?

We are a SAAS platform and our business model is subscription based.

Can you give more details on how your clients use the data – is it mainly for acquisition due diligence? Rental benchmarking?

Propstack conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information in India. Our suite of online services enables clients to analyse, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities.

Propstack covers the commercial real estate hubs of Mumbai, Pune, Bangalore, Chennai, NCR, Hyderabad and Kolkata. Propstack’s online service provides subscribers access to a diverse range of commercial real estate information: detailed building information, analytics, client stacking, availability/vacancy, transaction details and trends – catering to all Commercial real estate research requirements.

We are proud to serve a wide variety of professionals working in corporates, funds, rating agencies, brokers, owners, developers and vendors. Propstack is relevant to anyone who has a professional interest in commercial real estate.

Who are your competitors in India or globally?

Our platform is globally scalable and some of our products are customized to India centric requirements. In the current form, we are not aware of any other company in the world that offers a similar tech platform. That said, there are a few companies that currently offer products similar to ours. Exceligent, Costar and Compstak are some of them. We offer real time data and analytics covering supply, demand and vacancies at a macro and micro level. Propsense, which is our analytical engine is one of its kind globally. Our COMPS data are abstracted sale and lease information from registered agreements with the Government of India. It’s important to note that these are registered/verified data and not crowd sourced or based on ‘hearsay’.

How similar are you to Compstak in the US?

Propstack and Compstak are neither competitors, nor similar. As mentioned on www.propstack.com, we provide all kinds of data on Indian commercial real estate which includes verified rent and sale transaction data. Some points to highlight:

  1. Propstack’s philosophy is to provide transactions based on verified sources
  2. Propstack solely focuses on office assets
  3. Propstack additionally provides real estate intelligence in terms of research and analytics to paid subscribers
  4. Access to data at Propstack is paid because of the premium nature of the data

Your data is from government registered leases – does that mean all commercial leases are registered with the government? Is that the only source of verified information?

Yes all commercial leases need to be registered with the government to make it ‘legal and valid’ and that is the only source of verified information. We are the largest repository of this information after the Government of India.

Do you have expansion plans beyond India?

Yes, we are currently beta testing data for 2 other countries in Asia Pacific. While our tech platform is scalable globally, we would like to stabilize our India operations prior to expanding overseas.

Does your data verification approach mean you can only expand to certain countries? Eg. In Singapore leases are confidential.

No, it does not limit our expansion plans. We are well aware of potential country specific challenges and have concluded that our platform and technology is scalable. I’d prefer to not get into specifics at this stage.

Do you plan to raise more capital?

Yes we are planning a Series B round in the next 6-9 months.

How would you describe the evolution of proptech in India?

India may be a notch below the US but a notch above Europe. Also, I believe that residential tech is more evolved in India than CRE Tech. While we have seen significant funding into a few residential tech companies, CRE tech has been slow to get off the ground. That said, with the imminent introduction of REITS and few other policies by the government, we expect CRE tech to catch up soon.

Propstack video overview link.

 

 

 

 

 

Property Startup
Investment

How to Invest in Proptech Startups

As its own vertical, real estate tech startups are still flying below the radar. There are a handful of incubators, 2-3 conferences and some media coverage but it hasn’t got anywhere near the same mainstream profile of fintech (financial technology). Even the property industry is not completely aware of the breadth and depth of the startups bubbling to life in this space.

One of the exciting opportunities for people in the real estate industry is the ability to become involved in this world. This could be anything from launching a startup, working for one or advising one. There is also the possibility of investing in one.

Your investment options reflect the amount of capital you have to spend. For normal people, this could be anything from $5,000 to a few hundred thousand. In most cases, the key is getting access to startups at a very early stage when they are still open to small investors and are willing to give away equity. This is called an angel or seed round. The founder will have a clear business plan and may have an early version of their product but they aren’t ready to approach professional investors that need more than a good idea. This provides an opportunity for investors to get in early, providing capital to build out the IT and demonstrate a minimum viable product (MVP).

Obviously a high percentage of these startups fail, so it’s important to focus on businesses you understand and can genuinely add value to (via contacts or expertise etc). So where do you go to look?

Angel List

Angel List is the world’s largest database of startups. It allows you to invest directly via their website and lets you sort by industry type. More than 4,000 real estate startups are currently on the platform.

You need to join a syndicate which is just like a mini-VC fund led by an individual (or a few) who you follow into the deal. Most syndicates have some kind of investment mandate (type of companies they look for) so that you can keep an eye on who has backed proptech.

One syndicate called Bricks & Mortar Ventures is specifically targeting proptech businesses and has already made 15 investments. Their portfolio includes some well-known names like PlanGrid, Rhumbix, Asset Avenue and Rad Pad. The minimum investment is USD$50,000 and the benefit is that you are putting your money with people who know this space and have a track record of picking winners.

If you are interested a good starting point is to read this interview with Angel List proptech investor Brendan Wallace: https://blog.angel.co/inside-the-deal-brendan-wallaces-investment-in-clutter/

Angel Investment Network

While Angel List is the most established platform and as the broadest collection of startups, there are a growing number of other options.

Angel Investment NetworkAIN has been around for a number of years and provides country based platforms. That means I login via a Singapore website when then allows me to bring up local or global deals. They have a real estate specific category which returned 124 results globally. The only limitation is that they include actual real estate deals rather than just real estate tech projects, but that’s just a matter of sorting through each listing

The site provides an overview of the business including the team, amount they want to raise and the minimum investment size. If you click on interested, the team will get in touch directly with documents such as a pitch deck and legal agreements. I have both invested and looked at a number of deals via this platform and it works well as a simple introduction service.

Incubators

While real estate incubators don’t let you invest directly as they are pre-funded, you can watch them to see startups that graduate through their programs. By applying successfully, they get both funding and industry support which usually strengthens them but by no means guarantees success. This can leave the door open for investors, again, particularly those who have something more to offer than just money.

The following incubators worth watching:

This is a low percentage option simply because with a bigger profile comes bigger expectations. If nothing else, it tells you what other people believe is worth backing.

Local startup events and conferences

These can be the best hunting ground if you have the time and energy.  Startups that have managed to get on some of the above platforms may be pretty savvy and be more picky about who to take money from. The founders that are beating the pavement at a local startup night or manning a booth at a conference are likely to be open to discussions.

These events often help each other or feature similar people in the scene so go to 2-3 events and you will discover a whole lot more. Many Business Schools have startup pitch nights and there are more and more events being held at co-working spaces and even corporate innovation labs. Googling ‘startup event [insert your city]’ will turn up plenty of options.

Finding the right investment won’t be easy and it’s helpful to decide a few things before you start:

  1. Maximum investment amount and number of investments you would like to make – my approach is to treat this like a night at the casino (eg. ‘how much are you willing to lose’)
  2. Business type (eg. anything property related or specific topics within the vertical: residential sales? crowdfunding? Virtual Reality?)
  3. Team / experience (what are you looking for? Direct property experience or ok with more tech focused experience? Previous startup experience?)
  4. Your role – active or passive (how much can you help and do you want to help)
  5. Investment horizon – it’s no good demanding returns in 2 years when it takes 10 years to build the business

All of these will vary from individual to individual, but it helps to set these out before you start looking so that you can vet the opportunities. The investments you pass on are just as important as the ones you make.