Category: Europe

StepLadder Affordability
EuropeInterviewsResidential

PropTech Affordability Startup: StepLadder

In a number of cities around the world, housing affordability is getting out of control. Hong Kong, Sydney, Vancouver and Auckland are regularly cited by the IMF as examples where the price-to-income ratio has reached dangerous heights. In my home town, Sydney, the average price is over 12 times earnings (A$84,600 v A$1,032,000) which is causing so much concern it has become a social crisis.

Governments are increasingly being forced to act, enforcing lending restrictions, removing investor tax breaks and looking at ways to increase supply. Now tech entrepreneurs are spotting the opportunity, with a handful of PropTech platforms launching to help first home buyers get into the market. Stepladder is a UK-based one, inspired by the South American system called ROSCAs where people pool their money so they can buy sooner. It’s a simple concept – 10 people each contribute 10% of their overall saving target each month. Each month the group generates 100% of a deposit for one of the people, allowing them to buy immediately. In this way, 9/10 people will get their deposit faster than they would had they been saving alone.

Founder Matthew Addison tells us his story:

While ROSCAs provided the inspiration, what was the moment you decided to create a business?

You’re right to point out that the seed for StepLadder was planted during my Master’s work at the University of Pennsylvania. If you spend time reading my thesis, you can see I was fascinated by ROSCAs, and in particular, the commercial scale opportunity in markets where these are absent.

The rains that helped the seed sprout were a near-continuous flood of press focused on the Generation Rent crisis. In the UK in 1981, 62% of 24-35 year olds owned their own home. Twenty years later, that figure was still 60%. But, by 2014, home ownership in the traditional first time buyer demographic cratered to only 36%.

I thought a disruptive private sector solution – importing a solution to this local problem – could make a difference. We know ROSCAs work – 70 countries worldwide have their own local names for them. I understand economically why they are an equilibrium solution to a particular market dynamic, which is present in the UK first time buyer market. Finally, I have the career-long financial sector expertise, product knowledge, and entrepreneurial sense of mission to bring ROSCAs across the chasm to the UK, and beyond.

What was the process of launching the platform – funding, programming, business planning, etc?

StepLadder’s history to March 2017 can be broken down into three phases: (1) due diligence and formulation; (2) structuring and funding; (3) launch and proof of concept.

First, the formulation of a ‘first time buyer solution’ business model around the core ROSCA intellectual property required understanding the market and testing that the market would be able to understand the StepLadder proposition. Focus groups and due diligence of the first time buyer marketplace were crucial at this stage.

Second, the detailed design of the StepLadder circle was both an iterative exercise based on market feedback and one where expert advice proved invaluable. We closely examined multiple dimensions for assembling the business plan: e.g. regulatory, legal, branding, and underwriting. We also secured the financial support of our ‘Proof of Concept’ investors.

Third, we entered the Proof of Concept stage when the “shop window” that is our site: joinStepLadder.com went live in November 2016. From this point, our focus has been marketing awareness and information exchange with prospective members.

How do you calculate the 45% savings? Presumably some people will get the money sooner, but some might get it later?

Mathematically, the expected draw from a uniform distribution is 50% of the draws remaining. That roughly represents the odds of an individual member being drawn for the property deposit in any given month. It is imperative to appreciate that even being drawn in the final period of the circle is no different to the alternative outcome of saving alone (except for minimal interest in a regulated, principal-guaranteed, high-street savings offering). Where a member in a 30-month StepLadder circle has a 1/30 chance of having to wait the full 2.5years, saving alone that probability is 100% — the lone saver will definitely have to wait that long!

Do you put the money in savings and does the system require the money to earn interest?

The fixed monthly contributions of members become the principal for the peer-to-peer lending underway. In other words, float is minimal. This is not a collective investment scheme, nor does it involve ‘investment returns’. Just the opposite – the power of the ROSCA is in the acceleration of capital formation for actual member use in making an asset purchase.

What is your business model?

We generate revenue from membership fees, mortgage facilitation, and transaction services. We intend for the membership fee to recoup administrative costs of operating the circle – and not as a source of profit for StepLadder.

Please note that the fixed monthly contributions that form the property deposit awards are always treated as client funds and are ring-fenced from StepLadder’s own operating resources.

Do people need to use the agents/advisors that pay you fees?

No, members are not tied to our transaction services partners. However, we believe our service partners will make attractive offers to our members. This is based on two, reinforcing factors: 1) group buying discounts and 2) quality referrals from our membership. We have evidence of this already in the promotions offered to Founder’s Circle members by our initial panel of services partners.

What are your plans for growth / can you take this abroad?

Thanks for the optimism! At the same time, our key focus is executing on delivery of our roll-out: first in Greater London and then throughout London and the UK is an unmatched global opportunity in scale, innovation, and urgency.

Medium-term, we also think there is a significant opportunity throughout the Anglo sphere (Ireland, Canada, Australia, and the US) and beyond. We are open to partnerships in order to accelerate this process.

Are there any other platforms in the UK or globally helping with this affordability issue?

There are a number of well-intentioned government programs aimed at this issue: shared ownership and Help-to-Buy ISAs in the UK, for example. Generally, these come with a number of conditions or restrictions. They are also subject to the vagaries of political priority.

There are also a number of deposit-finance schemes on offer from new and specialist lenders. I note that these can introduce tax, estate, and financing complexity to home ownership, which is not the case with StepLadder.

Ultimately, the real alternative is the Bank of Mom and Dad – but that’s not an option available to every qualified first time buyer. StepLadder is.

What is the technology behind the platform?

The platform has two main pieces (i) the public facing website and matching engine; and (ii) the private member environment with circle management.

The public facing site serves to facilitate the information exchange process and accelerate the match of a prospective member to a circle that fits their circumstances and goals. We have natural network effects as our pool of prospective members grows – this means matches occur faster while simultaneously our circle affinity scores rise. This is always done without sacrificing underwriting standards and why the first criteria remain credit and affordability tests.

In the private member environment, the functionality is focused on managing the circles’ progress, reporting and user-circle interaction. The whole circle management process is automated, including all cash flows and allocation. The UX is a simplified version of a marketplace lender interface, where we prioritise security, transparency, and community among the members of each circle.

Have you needed to jump any regulatory hurdles?

Absolutely. I have engaged with the Financial Conduct Authority since before incorporating StepLadder in March 2016. The first port of call in January 2016 was the FCA’s Innovation Hub. They have been great. Our ongoing dialogue with them culminated in a preliminary perimeter assessment that StepLadder’s business model conformed to Article 36H of the Regulated Activities Order – operating an electronic peer-to-peer platform.

I considered regulatory review so important from the outset that I retained both corporate counsel and regulatory consultancy before raising seed finance or bringing on any team members.

What do you think is the biggest concern someone might have in using the system?

That’s as easy to answer as it is important: trust. We are a new company offering an unfamiliar financial product. Moreover, our proposition is large ticket with a long(-ish) duration. We see ourselves as a path across a generational rift; however, that may sound too good to be true to a casual observer.

So, it’s StepLadder’s responsibility to earn trust. We started by thinking like a prospective member. Focus groups were among the first business activity we undertook, and we clocked-in nearly a dozen before putting up our first landing website. I consider 1:1 direct personal contact with prospective members essential to members deciding StepLadder is a suitable solution. I personally feel compelled to evangelize our message – so, I’m happy to engage with press, partners, and thought leaders about what StepLadder can do.

Realla
CommercialEurope

Realla Interview: Commercial Property Search Engine

Residential property portals such as Zoopla, realestate.com.au and Zillow have pioneered the global shift towards the consumption of residential property online. Features we now take for granted, such as map search, professional photos and floor plans, and automated agent contacts are now being supplemented with more sophisticated options like virtual reality tours and automated valuations. This has made buying and renting property online as easy as lying on the sofa with one eye on the TV and another on the tablet.

Commercial real estate, traditionally dominated by the large brokerages, has lagged behind – characterised by individual project marketing (brochures) and an overall lack of transparency. This is starting to change with platforms such as Realla in the UK, taking the best features from residential sites and applying them to commercial real estate. Co-founder, Ian Parry, discusses Europe’s leading commercial property search engine.

What made you focus on commercial property given the background in residential search?

During 2008-2012, I was the CTO and co-founder of Globrix, which was a property search engine 100% focused on the residential sector (it was sold into Zoopla in 2012). During this time it became clear that commercial property was an under served market and there was a great opportunity there. I then met my future business partner Andrew Miles through a UK venture capitalist and we decided to start Realla. Andrew previously worked with British Land on the investment team and had become frustrated with receiving endless, huge marketing brochures for deals. The focus at this time was to create both the search engine portal and marketing tools for agents (since then we have added more powerful features for agents, landlords and investors).

How has your Globrix experienced shaped your approach to Realla?

The approach with Realla has been similar in a sense to the approach with Globrix – both have focused on crawling to create and build a stock of properties in the index. Realla now has over 96,000 commercial properties to search in the UK which is pretty much the entire market. Taking that into account, the technology approach has moved on however the concept is very similar – our most sophisticated tech is using machine learning to extract properties from PDF brochures. We see the opportunity in generating traffic and up-selling paid for placements.

How do you obtain your data?

  • Crawling from public websites
  • Publishing direct through our marketing tools
  • Machine learning for extraction of key meta details such as price, address, building types on both HTML and PDFs

Realla is a great site in terms of managing a lot of data / fields while keeping the UX clean and easy – how as the design process been in order to achieve this?

We have a small product and design team – our head of design previously worked for major brands like Burberry and Nike. We also have a lot of experience with the search components within the site having built a number of “guided search” experiences and learned various lessons via:

  • regular user feedback sessions
  • specific customer sponsors for part of the tools
  • data monitoring to track KPIs and engagement and feed them back into the design

Does the nature of UK commercial property support the need for this type of platform? Ie. so many types of commercial spaces, such a deep and diverse market.

Yes, but it takes investment in the verticals. We think our industrial and office offering will diverge significantly over time. Essentially the base need exists in the market where tenants and investors want to discover deals online and to date this isn’t particularly well served with a single resource to view the entire stock.

Was it an easy process to bring on the commercial agents?

There is no friction in agents using the portal, however it is a slower process for getting agents to use the marketing and CRM tools. We compete against incumbent in-house IT systems and a few other CRM businesses who focus on commercial property. PropTech is forcing agents and landlords to adapt a more digital approach to everything they do now and we are also aware progress takes time, but we have secured flagship clients in the last year.

Clients include Colliers, JLL, Richard Susskind and The Office Group.

What is the most similar platform in the US?

Real Massive is the most similar in the US to Realla, they also provide a powerful and yet easy way to help commercial real estate agents collaborate and streamline their marketing efforts.

How were you funded before this raise in June 2016?

Our first Angel raise was in March 2015.  A list of some of our investors can be found here. Realla is invested in and advised by leading real estate agents, investors and technology angels.

What is the long term vision? Say 5-10 years from now?

We aim to become the industry standard marketing medium for commercial property, and with it, the major specialised portal providing traffic.

Do you have international plans?

Yes, we do have international plans, once we see real growth in the UK we will start to implement them. We already have a foothold in Dubai.

realla

Commercial property online agent
CommercialEuropeInterviews

Virtual Commercial: the world’s first online commercial property broker

The digital disruption facing the real estate industry has taken another step forward with the launch of what could be the world’s first commercial property online agent. Following in the footsteps of UK startups such as Purplebricks and eMoov, Virtual Commercial provides commercial property vendors with all the tools they need to sell online for as little as £300. Co-Founder and CEO, Andrew Vertes, tells us more:

Are you the world’s first online commercial agent? 

Yes, we believe Virtual Commercial is definitely the UK’s first, if not the world’s first, dedicated online commercial estate agent. We provide the tools and support of a traditional agent to allow anyone to sell or let their commercial property throughout England & Wales. All for a low, fixed cost with no commission fee charged.

Was this inspired by residential online agents?

Absolutely. Having worked in commercial property agency for many years, I had witnessed the way the internet was changing how commercial property was being marketed and searched for. At the same time, the rapid success of online residential agencies (eg. Yopa) proved that sellers are happy to take control of the process.

What type of properties do you target? Is it everything from the local grocery store to a large office building?

As this has been built from the ground up for commercial property, we are able to handle any type of commercial property or business disposal. Whether a sale or a letting and from your local high street shop through to a large multi-let office building, we can deal with every use and every type of disposal.

What do the traditional agents think of this?

As we are the first movers in this market, we believe we will be closely watched. Having met some senior individuals within the established traditional firms, the consensus is that they have been waiting for someone to make the move into this market and are surprised it has taken so long.

What is the background of you and the team?

I have worked in commercial property my whole life. I ran the commercial agency department and was a director of a successful central London property company. I then left and set up my own management and agency consultancy, then came up with this idea and realised I had to make it happen.

Andrew Vertes

Andrew Vertes, CEO and Co-Founder, Virtual Commercial

I spoke with a good friend Laurence Herzberg who had recently helped launch a property portal in the Balearic Islands to see what would be required to make this happen. He introduced me to our third co-founder Aron Maus, who also had experience with launching his own start up trading in precious metals.

What are the biggest challenges in growing the business?

We launched at the beginning of June, about the same time as Brexit. Without a doubt this has affected market confidence. We initially launched with a single sales model based on a 12 month term but we found prospective clients now have the concern of negativity surrounding commercial and the future. Understandably clients had concerns about paying for a fixed marketing term if the economy is about to plunge into a recession (although that has largely been seen to be unfounded). We have dealt with this by changing and improving our pricing options to include the following:

1. Unlimited marketing term
2. On-completion pack
3. 3 month marketing term

Do you have outside investment or are you planning to raise capital?

Yes, we were fortunate enough to raise investment for the business. I think our successful raise was really down to our team of co-founders, having a detailed business plan, financial forecasting and a working product. Because we believed in the concept we decided to self-fund the development of the platform prior to raising capital. This meant that investors could use our platform and see for themselves what we were building. We ended up getting investment from multiple investors at our target valuation. However, it was by no means easy.

What has the market response been like generally? Any surprises or as expected?

As mentioned, launching in the Brexit aftermath has been an unforeseen and surprising challenge. We initially launched with a flurry of enquiries from interested users, however, post Brexit, many previously interested parties are now questioning whether it is the right time to sell. Those users who have completed a purchase have been really positive about our website, support and the lead management process.

Do you think this is different in any way to the residential concept? (eg. vendors may see agents are more valuable for commercial assets?)

There are obviously similarities between the two but there are also significant differences and far more complications and challenges with commercial property, whether using a traditional estate agent or an on-line agent. However this is why we offer Agent Support for all our clients, should they have a question or need advice, we are here to help.

Can you give a case study of a property sold via the platform?

We have only been active a short while but one of our first clients is a critically acclaimed and award winning restaurant in a beautiful medieval town in Dunster, Somerset. The restaurant is Reeves Restaurant, the freehold sale of which includes a 40 cover restaurant, outside space and accommodation. The current owner had previously used a traditional estate agent to market the property but he found that the agent actually had very little involvement in the sale beyond listing the property on-line and interested parties preferred dealing directly with him rather than the agent. However, the agent still insisted on a traditionally large commission fee based on the sale value! As a result, he engaged Virtual Commercial to assist in the sale of his asset.

Workplace Engagement Platform
CommercialEuropeInterviews

Office App: Workplace Engagement Platform co-founder Interview

As a successful graduate of Pilabs 3rd cohort (2016), UK startup Office App represents a new wave of workplace engagement platforms. Businesses large and small are exploring opportunities to engage employees, improve productivity and maximise staff satisfaction. Book a meeting room, receive local lunch specials or check if there are parking spots for your clients all via a single, flexible mobile app. Office App co-founder Thijs van der Burgt tells us more:

Tell me a bit about the team and why you decided to start Office App?

Office App is built from the belief that an office building can and should be more exciting, efficient and above all more fun. That is why we’ve created the only fully integrated office assistant for your mobile. The team includes:

  • Thijs: 7 years experience in Product Development with a focus on User Excellence
  • Teun: 5 years Strategy Consultancy at McKinsey  with a focus on Operational Excellence

Did you know much about workplaces / office buildings beforehand?

Although I have worked in office spaces, I didn’t actually know much about the spaces themselves. I’m a product developer, my partner has over 14 years of experience in real estate, and together we developed a product that is both helpful for facility managers and occupants.

What are you hoping to get out of the PiLabs experience?

When we started the business in Amsterdam, we knew we could build a successful business in our home market, but that it is not where the big opportunities lie. The European pinnacle of office life is the City in London, so in our process of researching that market and looking for ways in, we more or less stumbled upon PiLabs. At that point we had already realised we were going to need to step up our game if we were successfully going to penetrate the UK market. PiLabs is very well positioned to do so by helping us to get in front of the right people, sharpen our product offering and secure funding.

How much traction have you got with clients?

We are very excited to announce that we have on-boarded major clients like Dell, EY and the World Trade Center. All our clients are very happy with our added value and have either applied Office App in more offices since then or recommended us to other clients.

How do you on-board local deals? (ie. from local restaurants etc)? Is that a manual process?

Yes, it is a manual process. We are able to add a mobile shop for your local dry cleaner, car wash or florist. We offer these local retailers a shop in our marketplace within 1 hour, direct payment included.

Could you expand overseas? Eg. Singapore?

Yes, definitely. We have optimised our platform to scale easily and reliably – we don’t even have to be physically present to install Office App at any office around the world!

You’ve mentioned being sensor/IoT agnostic – can you tell us about any sensors you are already working with?

With our partners we are using PIR, vibration, temperature and magnetic sensors in different buildings. Mostly for parking, desk, meeting room availability and their occupancy rates. And with other partners we use wifi or beacon sensors. It depends on the clients wishes what technology we implement and how we offer this to the employee. For example, for one client we have sensors in table tennis and foosball tables to indicate if they are available.

What are your plans for raising capital?

We are looking for £500k investment for operations, sales and product development. Our growth is limited by the bandwidth of the company, not the interest from potential clients.

Are you planning to grow the team?

Yes we are hiring new sales people and looking for an additional iOS developer to strengthen our development team.

What has been the best part of the experience overall?

A big part of my job at Office App is that I’m in charge of product. In development, we focus on user experience and iterate on results in user engagement surveys. Seeing people more engaged and happy using Office App makes me proud of what I do.

IndustryHub
EuropeInterviews

IndustryHub: Connecting Real Estate Projects and Creative Teams

Interview with IndustryHub founder Savannah de Savary:

What was the inspiration (lightbulb moment) behind IndustryHub?

There was definitely a “lightbulb moment”. I was working for a big real estate development firm in New York, sitting in a meeting about a large development site they had in Brooklyn. The CEO wanted to transform the site into an office complex that would attract the hot tech companies and grew frustrated when his development team couldn’t easily identify the architectural firms and interior designers who had a rapport with such tech companies. We needed a team who knew their design preferences and had the necessary reputation within the tech community to attract them to our site.

However, finding out who those firms were remained as time consuming as it was 30 years ago. We had to leave the meeting with his questions unanswered and call round our word-of-mouth networks until eventually we found someone who could identify a suitable candidate. It was time consuming and frustrating to say the least and was mirrored on a frequent basis when we wanted to know who was behind a specific project we admired or was regarded as up-and-coming for a specific service. I began to think how useful it would be to have a search tool that enabled us to know the answers right off the bat.

Is this full time or are you and the team still working elsewhere?

Full time and still struggling to find enough hours in the day for the pace at which we are growing – IndustryHub is a 7-day a week job!

Describe the process / challenges of putting it together.

We spent an enormous amount of time on the UI/UX design. I think in a way it helped that I approached the user interface without a tech background. The priority was simplicity of use: ensuring that the product was intuitive for people with real estate backgrounds. A key part of the process was getting feedback from our future user base as often as we could. We’re not looking to be a “disrupter” – changing both the means and methods by which developers source consultants, just the “means” by taking word-of-mouth insight online – so it was important to hear from our user-base how best we could do this for them.

A key challenge of putting it together has been making sure we create a two-sided marketplace that adds value to both sides. We simultaneously need to provide unparalleled marketing exposure for consultants, search tools for developers and collaboration tools for both. Our discovery tool enables developers to find consultants by their experience with a particular project type, client, specialism or even by their involvement with a specific project the developer admires. However, it is the data from the consultants’ profile pages that powers the developers’ discovery engine. We therefore have to ensure that the majority of top consultants are on board and showcasing their projects before we invite our waitlist of developers to begin using the platform. Deciding when we’ve reached this tipping point of enough consultants is our primary challenge.

This is both a platform for developers and consultants – which target market has responded best to the concept?

We’ve been pleasantly surprised to find that consultants across the board have responded with enthusiasm. Even the largest firms like CBRE want to have their projects visually mapped out and showcased to a wider audience of potential clients. We are in an earlier stage with the developer side because, as mentioned earlier, we have not yet invited our waitlist of developers to use the search functionality except to provide feedback. That said, we’ve noticed a lot of developers are already signing up organically and using the beta platform.

From reaching out to them, we’ve found there isn’t uniformity in what has attracted them to the platform. Some are using the platform to discover innovative new consultants such as up-and-coming interior designers and to be kept abreast of the new projects being unveiled by leading consultants. Others say they have had the same go-to consultants for decades. What they’re frustrated by is how much time they waste researching precedent and inspiration for their projects.

For these developers, the exciting part isn’t the consultant discovery tool as much as the project search tool which enables them to discover relevant inspiration for their projects. We have a wide variety of search filters that enables them to browse the most applicable images with more added every time a consultant uploads a new project. Such developers have been the driving force behind us creating the Pinterest style notebook feature which will enable them to save project ideas, browse those curated by their colleagues and create project-specific notebooks where they can collaborate with their consulting team during schematic design. We’ve found it is well worth taking the time to find out which aspects of your offering users are responding best to. For example, by doing so, we’ve discovered a lot of fund managers and developers see IndustryHub as an opportunity to showcase their own projects. Sourcing consultants, attracting investors and joint venture partners remains largely reliant on word-of-mouth referrals. Different developers therefore have different needs that can be met by IndustryHub without us expanding our focus.

Is there anything like it in the market already?

Surprisingly, there is relatively little competition currently, although if there was none it would be a worry itself! There are great sites connecting designers with furnishing and products and directories focused on specific verticals, such as listing architects or engineers. However, if you want to discover the professionals behind a specific project you admire, you still have to rely on your personal network or a laborious google search.

Having already built out this search functionality and integrated with google maps, we are pretty far ahead of any competitors that may emerge. By having professionals themselves power the content in exchange for free marketing exposure, our data is multiplying on a scale that is difficult to maintain on a platform that is manually researching or scrapping data.

What is your business development / sales approach? (are you marketing, word of mouth etc)

We extend invitations to a wide variety of consultants, from the leading structural engineers and sustainability consultants to lighting designers and landscape architects. We have a great business development team who’ve recently been reaching out to top architectural firms and interior designers in the UK and inviting them to join the platform. As we offer free marketing exposure on a scale unprecedented in the industry, the response has been unanimously positive.

In light of the firms we are working with having each completed hundreds of projects in the past few years, when they create an account, our data entry team can temporarily join to add their past projects for them. This makes creating an account a painless task for consultants, although firms with large marketing teams often enjoy creating the profiles themselves. Word-of-mouth also plays a large part. Many consultants that join don’t just add the images of a project but also who collaborated on the project with them. If these companies are already on IndustryHub, the project links through to their profile page. If not, they can automatically be invited to join. For the company being invited, the proposition isn’t just to have a profile – it is to have one that is visible to any potential client browsing the page of the consultant they’ve collaborated with. This makes for a pretty effective business development strategy.

What are you the stats?

So far we have just over 12,000 projects listed, 49,000 project images and 4,500 profile pages. Some of these were created during our beta by IndustryHub and an invitation then sent to the company in question to take ownership. However, increasingly we’ve seen companies join organically from around the globe. During the past month alone, nearly a third of the AJ 100 architects have joined.

What are your long term plans (5-10 years)?

Our initial launch city is London; however, our road map goes global. Especially in fast-growing emerging markets, developers find it extremely difficult to identify the players with local connections, experience and credibility. IndustryHub will change this.

Is the site complete or are you still rolling out new features?

We are still rolling out new features. It is similar to LinkedIn in the sense that everything you see is and will remain free with premium features available for an annual subscription cost. We will be rolling these premium features out in Q1 2017 and are pretty excited about unveiling them.

Is this also for individuals – ie. linkedin for real estate?

At the moment our focus is on B2B with the personal profiles simply having an “About Me” section and profile picture. For company profiles, there is significant peer-to-peer connectivity: you can follow company profile pages and send inter-company instant messages, reminiscent in format of Bloomberg Chat.

In time, I think we will look to develop personal profiles to enable blogging, Ted Talk style videos and the ability to follow and message individuals on the platform. The objective will be to provide a platform where members can establish themselves as thought leaders in a specific field. We are in the early stage of developing these personal profiles, so any feedback as to what you’d like to see them include is most welcome!