Ukrainian startup Propertymate, founded in 2018 by Bohdan Hnatkovsky and Sofia Vyshnevska, has received $ 1 million from Pragmatech Ventures. Bohdan Hnatkowski, CEO and co-founder, MSc in Technology Management LvBS, talks about how the year of the pandemic went for the startup, what new challenges they face and how they plan to scale.
Propertymate is a platform that allows buyers of primary residential real estate to find all the information about new buildings. The startup is based on artificial intelligence, which helps analyze data on buyers and real estate. It predicts which facilities customers will be most interested in.
There were many changes during the pandemic; how much did it affect you, your business model?
The pandemic has definitely had a big impact on us. Everyone knows that it brings uncertainty, fear of a possible recession, which could cause the real estate market to collapse completely. Despite the negative consequences of the pandemic, Propertymate has got even more positive than bad out of it.
Risk free option
“There was one very interesting point at some time: the uncertainty of developers led them to completely reduce their marketing budgets and start looking for alternative sources of attracting customers, such as Propertymate. Our advantage is that, unlike other marketing vendors who charge money for their services in advance and give only a limited number of customers, Propertymate only charges a fee for successfully closed customer transactions. Bohdan Hnatkovsky calls this phenomenon “Risk free option” – a risk-free option that creates a positive relationship with developers.
Due to the market opportunity to increase the number of developers on the platform, in the first three months of the pandemic Propertymate increased 40 times, in fact from 10 to 400 developers.
How real estate has become more profitable to buy than to rent
“The more we worked with developers, the more we heard from them that they want to work directly with the buyers themselves,” says Bogdan. Given that the market has managed to somewhat rehabilitate itself since the beginning of the pandemic and stabilized due to the monetary policy of the US government, the mortgage rate fell to 2.8-2.9%. “It makes a mortgage cheaper than renting,” so now it’s essentially cheaper to buy a home than to rent it.
The Propertymate location has clearly had a positive impact on the company’s success, as Austin has now become a kind of “migration center for people from all states.” Favorable climate, lack of income tax and the title of Democratic Center of Texas encourage even companies such as Oracle, Hewlett Packard, Tesla to move their headquarters here. “Actually, a very large number of people migrated along with these companies; this warmed up the real estate market,” says the CEO, adding: “We realized the best thing we can do in this case is to actually open our platform to real estate buyers themselves.”
This direct contact with buyers allowed Propertymate to increase its average commission from 7 to 20 times.
So, the experiment was successful, motivated by this Propertymate decided to scale its business model, attract more buyers and enter new markets, namely to expand its infrastructure to cities such as Dallas and Houston, which are also actively developing in real estate.
A bit about entering new markets and about the team
Bohdan Hnatkowski says: “we make decisions about the target markets based on several key factors”, here are the factors themselves:
- Number of real estate transactions on the market
- Number of developers
- The number of searches on the topic of buying real estate in the context of one year. (Dallas and Houston are well ahead of Austin in this respect.)
- Competition in the market, its saturation.
As of today, Propertymate team has 17 people. In addition, in the US we have two key positions – “nurturing” and sales. That is, there are our agents and those who communicate with customers. ” These Propertymate employees must be native speakers and must have experience in real estate sales.
What’s interesting, the team engaged in “nurturing” consists entirely of Americans. Propertymate does not pay on a regular basis, the earnings of these employees directly depend on the amount of work performed, same is with agents. Part of the team located in Ukraine is mostly engineers, content managers, marketers.
What will the company focus on as a startup that has raised 1 million investments?
Propertymate’s main goal now is to enter new markets, there are more than two planned. Some we have already mentioned – Dallas and Houston, Bogdan Hnatkovsky says: “there is a third, such a hypothetical market now, it’s Phoenix, it is also very interesting.” It is for such an active expansion that the company has attracted investment.
In total, in the next 6 months Propertymate plans to enter the market in Dallas and Houston, and by the end of the year two more, which will eventually give the company 5 markets. This will allow them, in the context of operations, to grow 10 times, and in the context teams – not yet known, but still “without an overhead”, says Bogdan.
How does the online communication mode affect the team?
From March 11, 2020, Propertymate had completely switched to remote work format and has not returned to the office, for which they later stopped paying, because it was not needed. “Now there are two main places where people work, where we rent premises. These are Lviv and Kyiv. ”
Here, too, the pandemic did not bypass Propertymate and again brought good results, Hnatkovsky says: “In this regard, it somehow had a positive impact, we used to look for people only in Lviv, and now we understand that we are not limited, theoretically, even by the Ukrainian market.”