Founded in 2022 with the mission of democratizing the real estate industry, El Salvador-based Proptech startup Propi recently embarked on an oversubscribed pre-seed funding round that raised an impressive $2.5m.
Not content with an outside perspective, we reached out to Propi to find out more.
We were delighted to get not one but two co-founders involved with an interview covering topics including Propi's spending plans, untapped potential in Central America, and educating consumers on digital technology. Here are ten questions with CEO José Mario Ávila and COO Eduardo Francés, co-founders at Propi. Enjoy!
José Mario Ávila: Propi is a one-stop solution for everything homeowners, renters, buyers, developers, and real estate agents need to speed up transactions through two verticals: Rents (and Rental Management), and Pre Sales.
Starting from the initial search and property visits, offer negotiations, and contract signing, the tools created by Propi make it possible to complete a transaction digitally.
Our objective is to be the leading digital brokerage company in the underserved markets of LatAm, one that provides people with an affordable option to rent, buy and manage their properties through an agile and fully digital process.
Eduardo Francés: There are more than one.
Propi's technology allows anyone interested in renting a property to understand the property's market price (through big data) to achieve a transparent, easy, and efficient negotiation.
We also provide owners and real estate agents with a prospect's real-time credit profile that outlines the customers' quality and purchasing power.
Meanwhile, the pre-sale vertical allows Real Estate investors—as well as those who want the platform to lease and manage the asset they bought in pre-sale—to search for real estate projects still under development, pay property reservation fees and negotiate terms all in the platform.
Additionally, as a market first, Propi enables tenants and buyers to pay for their rent or fees with credit and debit cards.
EF: We actually have two business lines: Rents and Pre Sales.
In the Rents vertical, we act as an end-to-end digital brokerage for home seekers and take a one-month brokerage fee. We also charge Landlords 5.5% of the monthly rent for the rental management service.
In the Pre Sales vertical, we sell primary real estate and take a 3-5% commission.
JMA: Our biggest challenge is to educate a consumer that is not naturally used to buying or renting a property through digital means. We are experiencing an incredible adoption in the use of our platform features, but there is still a lot more to do.
JMA: The round included the participation of leading business groups from the Central American real estate sector and other investment funds such as Panorama Capital.
We also raised from angel investors and venture capital funds from the US and Latin America, including the founders of Hugo App and various senior executives from the largest Proptech companies in Latin America.
We plan to continue expanding our product portfolio and start operations in other Central American countries with the money.
EF: Home seekers in Latin America, and especially in Central America, have had antiquated and cumbersome processes for decades. In my personal experience, I rented a house with a 3-year contract and I had to physically sign 36 promissory notes. This is one of the many problems that Central Americans face in their day-to-day real estate transactions.
JMA: Many industries in LatAm haven't been digitized, and Proptech is no exception.
Something we experience in Central America and in LatAm (where many markets lack this type of solution) is that the TAM of many of the underserved markets isn’t big enough if you see each country separately. But if you collate those markets, you have a very interesting value proposition with a larger consolidated TAM.
Many Proptechs have seen that the digitalization wave in the Real Estate market in LatAm is just in its beginnings, and therefore there is an opportunity to become a market leader by expanding their product offering quickly and operating across more than one vertical.
In LatAm, if you offer a solution in an industry that impacts the majority of the population (like residential real estate), you can solve deep problems pretty fast with technology, and drive transformation in the industry via the increased affordability that technology brings to the table.
EF: We are developing products that will enhance our value proposition in the Salvadoran and Central American markets.
For example, we are about to become the first company in the country to offer renters insurance that will protect property owners from any missed payments. Additionally, we are continuing to work on making the sales and rental processes more efficient and transparent.
We have already achieved the milestone of being the first platform in the region to offer a 100% digital end-to-end rental and sales process, which was a completely new concept in the region.
Meanwhile, we are expanding to two additional markets and are currently using our proprietary technology to develop an algorithm that provides better guidance to our clients on per-square-meter pricing, while additionally democratizing that information to help address the serious issue of the information asymmetry that is rife across the industry,
JMA: We receive many requests to expand to new verticals such as secondary home buying.
Customers also want us to introduce a pricing engine that can automatically estimate an accurate property’s market price.
EF: The real estate market in Central America has significant untapped potential due to the region's economic stability and growth potential, as well as increasing demand for both residential and commercial properties. The rise of the middle class in many Central American countries is also expected to contribute to this growth. Digital platforms and tools have become increasingly important in the buying, selling, and renting of properties in the region, with virtual and augmented reality likely to become more prevalent.
The COVID-19 pandemic has accelerated the adoption of digital tools in the real estate industry, with landlords, investors, and real estate agents all eager to embrace new technologies. However, there is still a significant housing deficit in the region, with an estimated 10 million households lacking adequate housing. This presents an opportunity for companies like Propi to democratize access to property by making the process more transparent and efficient through our digital tools.
We have witnessed an irreversible shift towards the use of digital tools since the COVID-19 pandemic, with an unprecedented willingness among landlords, investors, and real estate agents to adopt these tools. Nonetheless, the biggest challenge we face is tackling the educational process by which we will need to focus and invest resources into strengthening the acceptance of a more digital approach—including confidence in digital contracts.