Vietnamese property technology (proptech) startup Houze is in talks with potential investors from Asia to raise around USD 10m-USD 15m to build up its platform and expand its network next year, founder Pham Lam said.
The company aims to close this round before the end of this year, with the proceeds set to be used to add more features to Houze’s platform. The new capital will also be used to scale up its network in Ho Chi Minh City and extend to major cities nationwide like Hanoi and Da Nang, among others, he said.
The investors for Houze could be strategic and financial investors, Pham added. Strategics and long-term investors with expertise in similar business in other Asian countries are preferred since they could bring their experience and add more value to Houze.
Houze last month announced it has raised an additional USD 2m of funding from DKRA Group, whose chairman and CEO is also Pham.
With 17 years of experience in real estate brokerage, Houze’s founder sees a lot of issues that need to be addressed in the three phases of real estate development, which are land acquisition and development; sales and marketing; and then property handover to buyers. The majority of real estate businesses in the country, including proptech startups, often focus on the second stage, Pham said.
Houze aims to build up an integrated online-to-offline (O2O) platform to cover all three segments: sales and marketing activities (Houze Agent); after-sale services for home buyers (Houze Commerce); and supporting property developers (Houze Invest). This segmented approach will help the company build an ecosystem that will improve the acquisition experience of both brokers and property buyers, Pham said.
Brokerage service platform Houze Agent reflects the sharing economy model, which gathers real estate brokers to share business opportunities. Houze Commerce, on the other hand, is a multi-usage platform for residential communities, which incorporates Houze Building, a property management technology platform for real estate service providers, and Houze Service, a provider of home appliance and equipment maintenance services for residents.
Through these segments, which help build customer trust, Pham said the firm could build a customer database that would be useful later on when Houze could offer users with a modest amount of capital and some real estate investment options through Houze Invest.
The company derives revenue mainly from brokerage fees from primary property sales, and from platform users such as property management service providers and residents, as well as from individual investors, Pham added.
Houze Building platform has already received applications for around 25,000 apartments and 40 condos in Ho Chi Minh City and the company will deploy Houze Service to them soon. Houze is still focusing on the primary real estate segment, after which it will expand to the secondary housing market because the latter is relatively fragmented and complicated, Pham noted.
Proptech firms in Vietnam normally originate from property brokerage companies that have undergone digital transformation or technology startups that have seen huge opportunities in the local real estate market, according to the founder. However, many of them have been struggling because they are too aggressive in pursuing the secondary real estate market. A successful business should be a mixture of the two business models, he said.
Pham also named some challenges for local proptech startups like complicated high-value property products and a business environment associated with a substandard legal framework for real estate.
Vietnam-based proptech startup Propzy last month announced it had dissolved Vietnam’s legal entity related to direct sales staff, two years after bagging a USD-25m Series A round led by real estate private equity firm Gaw Capital and Softbank Ventures Asia, according to local media reports. The dissolution was explained as a result of business model restructuring.