Flat.mx has closed a $20 million Series B round of funding.
500 Startups and Anthemis co-led the investment which also included participation by ALLVP and Expa. Flat.mx previously raised $10 million equity and $25 million debt. Opendoor CEO Eric Wu and Flyhomes CEO Tushar Garg, Brian Ma, co-founder of Divvy Homes and Flyhomes CEO Tushar Garg are some other backers.
Flat.mx, a Mexican-based startup, was founded in July 2019. It began with an Opendoor model, where it bought properties and renovated them before reselling them. The proptech startup raised one of Mexico's largest pre-seed rounds in September to expand the Opendoor realty marketplace model across Mexico.
Bernardo Cordero, co-founder of Mexico's real estate market, stated that Mexico's real estate market is in crisis. Selling a property can take anywhere from six months to two decades. We devised the most radical solution to this problem, an instant offer. This product makes it possible for homeowners to sell their property in days, instead of months. It is a quick and easy way for them to get a great deal.
It is difficult to build an instant buyer in Mexico or Latin America. Mexico does not have a Multiple Listing Services (MLS) like the U.S. Pricing data is therefore not easily available. Agents are not required to have certification, so the entire process of selling and buying a home is informal.
Mexico has a low mortgage penetration, so it can be difficult to get affordable financing.
Victor Noguera, co-founder of iBuyer, stated that we needed to resolve the transaction from beginning to end in order to build it. We needed to create the MLS, a third party marketplace, a contractor marketplace and financial products. A broker technology, home maintenance provider, and other services were also required. We have also been developing the LatAm real estate super app.
Flat.mx claims that all certified remodeled properties have been subject to a 200+ point inspection as well as a thorough legal review.
Flat.mx is growing sales by 70% quarter-over-quarter, and has increased its inventory by 10x over the last year, according to its founders. Flat.mx has almost tripled its staff from 30 in the middle of last years to more than 85 today. Flat.mx has completed thousands of home valuations so far and over 100 transactions.
Only the pandemic boosted interest.
The key to sustaining a business during the pandemic was our low-touch digital solution. Cordero said that we were able create liquidity quickly for sellers in Mexico, where it was difficult to sell. The model allows sellers to sell in one visit, rather than receiving over 40 potential buyers at the same time. This is a way for sellers to avoid having to contact many buyers.
The company intends to use the new capital to further develop its concept of a "one-stop shop" where buyers and homeowners can get all the services they require in one location.
It makes more sense to address all aspects of homebuying in emerging markets than to just tackle one.
Noguera stated that we believe each of our products is stronger than the other and that creating an ecosystem of products will give us an advantage in the market. The capital raised by the round will be used by the startup to expand its Mexican presence for iBuying and to invest in financial products and data.
Flat.mxs investors tend to be bullish.
Principal investor at Anthemis Group Archie Cochrane said that Flat.mx is an integral part of his embedded finance thesis within the context of Mexico's property sector.
Cochrane sent an email to say that the iBuyer model is well-known and is being used in many countries. However, it is a complicated model with many variables and requires a skilled team to implement the strategy. Victor and Bernardo were clear to see that they had a deep understanding of the larger opportunity set and a clear vision.
500 Startups managing partner Tim Chae said that Flat.mx is his preferred route for Mexican buyers, sellers, agents, and lenders.
Flat.mx is a unique Mexican website that has solved many of the nuances and problems.
Fernando Lelo de Larrea, an AllVP partner, said that software has finally transformed the Mexican real estate market after years of broken promises.
He said that most models are based on successful models from the mature U.S. proptech industry. We have never seen such an innovative approach to seizing the trillion-dollar opportunity in proptech since we began investing.
