Pop goes the proptech

There are rumours circulating around industry that Nurtur.group, which is the industry group that operates Fine & Country and The Guild of Property Professionals, is about to back another tech-based property platform.

The group recently set up an advisory board armed with a large pile of City investor cash and it has been busy building a portfolio of proptech firms. It now has six – Starberry, LeadPro, The Property Jungle, BriefYourMarket, Yomdel and Know Your Market.

But it’s not a new model – i.e. back or buy proptech firms and then scale them up through an existing network of branches, no doubt with the aim of selling them off for a profit once they’re up and running and making a profit.

London estate agency LiFE Residential did just this a few years ago – buying up a handful of proptech firms and then giving them scale by employing their services within their mainly lettings business.

This included putting cash into Goodlord, its most notable investment, but also access management platform KeyNest and licensing compliance service Kamma.

And neither are the first property firm to invest in tech; for example Savills has ploughed millions into YOPA and Countrywide, prior to its acquisition by Connells, was an early backer of several lettings technology platforms.

What about success?

But what many commentators forget to mention when salivating over the latest tech initiative or launch, is whether these services, which by and large are pitched at sales or lettings agents rather than to consumers (renting app Movebubble tried that and eventually ran out of road) are ever likely to succeed as businesses.

If estate agents don’t think your tech is useful, then it’s dead in the water.

Having watched so many of these companies launch and attract millions in funding from angel or later-stage investors, I have come to the conclusion that far too much emphasis is put on the funding and too little on their growth or viability.

Much is made of ‘scale’ in within this community – which is shorthand for ‘market size’. Some do make it and use tech to make a process better, drawing thousands of agents into onto their platform, the most famous example being Fixflo.

It was launched in 2013 by landlord and lawyer Rajeev Nayyar and quickly gained traction among residential property managers and letting agents as a cute way to triage tenant requests for repairs or maintenance work. It was a long slog – Nayyar sold the company to a huge German tech firm in May last year after gaining 1,500 clients and over a million properties.

The point I’m trying to make is that the successful proptechs are the ones that plug away in the background; estate agents as Nayyar himself pointed out once, are a highly entrepreneurial lot and if they don’t think your tech is useful, then it’s dead in the water, as many tech platforms have discovered to their investors’ cost.

I can fix this…

The first mistake many make is that the CEOs all too often have bought or rented a house for the first time, had a bad experience and then assumed tech can make it better. If I had £10 for every time I’ve heard that, I’d have enough to buy everyone a stiff double at the bar of the next Negotiator Awards.

The truth is that only some processes – such as conveyancing or fault reporting – really lend themselves to tech.

That’s because they are either linear and involve a few steps like fault reporting or deposit registration or they bring together existing tech onto one platform like sales progression platforms such as Mio or ViewMyChain. Consequently, after talking to some of the proptech beasts, it’s clear to me that despite the nurture initiative, the first ‘gold rush’ or investor cash has come to an end.

And as Nurtur.group proves (backed by cash from Tosca Fund) the smart money is going into the tech that can become part of a suite of services on a platform offered to agents through membership organisations or digital platforms, including Propertymark’s recent dipping of toes into the water via the US-backed REACH programme.

I think the days when high-rolling young things can grab the industry by the scruff of the neck and ‘disrupt the hell out of it’ (as one once said to me) with blistering new tech never seen before, are now over.