Flat.mx receives $20 million from VCs and proptech unicorn founders set to fix Mexico’s “broken” real property market.
Flat.mx The company, Flat.mx, which intends to develop a “super application” specifically for Latin America, has closed on the 20 million series a round of capital.
Anthemis, along with 500 Startups, co-led the investment that included involvement from ALLVP and Expa. Prior to this, Flat.mx had raised a total of $10 million in equity and the equivalent of $25 million from debt. Other investors include Opendoor’s co-founder and CEO Eric Wu, Flyhomes’ co-founder and CEO Tushar Garg, and Divvy Homes’ co-founder Brian Ma.
Established in July, Mexico City-based Flat.mx began using a similar model to Opendoor that involved buying homes that were renovated and selling the properties. In September, the proptech company had taken part in one of Mexico’s biggest pre-seed rounds to bring the Opendoor real market model of real estate over the Rio Grande.
“The real property marketplace in Mexico is broken,” claimed the co-founder of the company, Bernardo Cordero. “One of the most significant issues is that sellers take anywhere between six months and two years before they can sell. We therefore came up with the most revolutionary solution we could find for this issue by launching an instant offer. This product lets homeowners sell in days rather than months, providing a speedy and easy experience that they won’t find elsewhere.”
The process of creating an instant buyer (iBuyer) for Mexico, as well as Latin America in general, is an arduous task. Contrary to the U.S., Mexico doesn’t have a Multiple Listing Service (MLS). Therefore, information on pricing isn’t readily available. In addition, agents aren’t required to be certified, meaning that the entire process of purchasing and selling a property is not formal.
The mortgage market in Mexico is also very low; it is difficult for buyers to access financing options that are reasonable.
“To create an iBuyer we had to solve the entire deal,” said co-founder Victor Noguera. “We required to establish the MLS as an independent marketplace, and also an open marketplace for contractors.” “We also required brokers using technology and financial products, as well as maintenance service as well as additional services.” “We are developing an app that acts as an agent for real estate in Latin America.”
Flat.mx affirms that its renovated properties have been inspected and passed 200plus points, as well as “a thorough legal audit.”
Flat.mx is increasing sales by 70% quarter-over-quarter , and has added inventory 10 times over during the past year as per its founders. The company has also increased its staff from a minimum of 30 at the mid of the year, to 85 today. At present, Flat.mx has conducted thousands of valuations for homes and more than 100 transactions.
The pandemic was the catalyst for the interest.
“Our technology that is low on touch was the secret to sustaining a company during the epidemic. “We could provide quick liquidity to sellers during the period in Mexico which made it extremely difficult for vendors to sell their merchandise,” said Cordero. “Our technique allows sellers to sell their goods in only one visit, rather than needing to visit with around 40 prospective buyers when they wish to sell their items, while also avoiding the hassle of contacting a lot of customers,” The company claims.
The company’s founders think that rather than trying to focus only on certain aspects of home-buying approach, it is more sensible in the current market to tackle all aspects of the buying process.
“We believe that our products can make others more effective, and creating the ecosystem will give us an advantage in the market,” said Noguera. The startup plans to make use of the funds raised of the round to expand its product’s presence across Mexico for iBuying and also to invest in data and financial products.
It’s not unusual for it to be that Flat.mx’s customers are satisfied.
Archie Cochrane, principal investor at Anthemis Group, said his company holds Flat.mx as an integral part of its comprehensive finance concept within the Mexican real estate market.
“The iBuyer model itself is well-known and is widely used across the globe. However, it’s a complicated model which includes a variety of variables and demands an experienced and well-trained team to carry out the strategy,” Cochrane wrote via email. “When we got to know Victor and Bernardo it was apparent that their vision and a thorough knowledge of the bigger opportunities they could create could allow their business to succeed over the long term.”
Tim Chae, managing partner at 500 Startups, said he believes that Flat.mx is likely to become “the most sought-after choice” for buyers, sellers agents, lenders and others involved who are interested in Mexican real estate.
“There are particular peculiarities and issues specific for Mexico that Flat.mx does an excellent job of identifying and solving,” he said.
ALLVP Associate Fernando Lelo de Larrea said that, in essence, following several seasons of “unkept promises,” software is finally changing the market for real estate in Mexico.
“Most designs are built on models that have proven successful from the established U.S. proptech space,” he said. “Since we first began to explore the proptech industry, we haven’t had a more innovative approach to capitalize on an opportunity worth trillions of dollars.”
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