IThe startup, Loft has better market products in Brazil than Opendoor in the United States. Now, the property tech company has raised a new funding round to prove its point.
Andreessen Horowitz is leading the current funding round in the two-year-old real estate startup. The firm also invested in a banking service startup, Mercury, in September last year. The company, Loft, has raised $175 million in Series C co-led by Vulcan Capital.
In the U.S., sites such as Opendoor provide insight into the worth of the house that you are interested in. However, this transparency isn’t present in Latin America. The founder and CEO of the company, Mate Pencz, states that the real estate in Latin America is a $6 trillion opportunity. Currently, the lack of data transparency has caused many problems, such as prolonged selling, high asking ratings, and low-quality listings. It creates a bad experience for sellers, buyers, and brokers. However, Loft believes that it can create transparency with open data for the properties.
Andreessen Horowitz and Vulcan Capital have led the funding round with participation from Fifth Wall Ventures, QED Investors, Valor Capital, Monashees, and Thrive Capital.
Ever since it started back in 2018, Loft has been supported by several big Silicon Valley names. The company got investments from angel investors, like Opendoor founder Eric Wu, Max Lechvin from PayPal, Joe Lonsdale from Palantir, Josh Kushner from Thrive Capital, and David Velez from Nubank. Moreover, Loft wasn’t Pencz’s first entrepreneurial venture. Previously, he founded the web company Printi. However, he sold it to Vistaprint in 2014 for $25 million.
Pencz says that they have negotiated over a thousand properties in Sao Paulo. He plans to expand the company to new cities by replicating their services. Currently, the company is operational in Brazil but plans to expand to Mexico in 2020. Loft has approached the Latin America head of Uber Eats, Juan Pablo, to introduce Loft’s services in Mexico City in the coming months. Loft will be a serious threat to some players in Mexico, like Flat, an Opendoor clone in Mexico.
To market its products, Loft isn’t thinking about SEO performance advertising or Facebook advertising. Pencz wants to reach a bigger audience through community events and festival sponsorships. Pencz states, “Our main expansion strategy is to partner with brokers and get a high NPS score.”
The founders of the company started by making estimates of buildings and houses physically. However, they didn’t stop there. The founders want Loft to be a one-stop-shop for different services, like insurance, property financing, and renovations. They want to dominate the real estate in Latin America.
Andreessen Horowitz partner Rampbell mentioned that the firm has been active in Latin America for several years. Before Loft, a16z invested in the Colombian point of sale lender ADDI, restaurant management platform Meitre and the delivery unicorn Rappi.
Rampbell states that a16z doesn’t have a strategy for investment in Latin America. However, the main reason that a16z invested in Loft was that it was a better fit in Brazil than Opendoor in the U.S. Rampbell states, “There is a huge value in multiple listing services, and the opportunity might be huge in a market like Brazil. However, you need to invest in the right entrepreneurs because it matters a lot.”
Loft’s leading source of revenue is property sales and secondary products. The company has raised $275 million in just two years, which will help it grow. However, Pencz hasn’t disclosed Loft’s current valuation.
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