Vietnamese proptech startup Propzy seeks $25m in Series B

Vietnamese proptech startup Propzy is planning to raise $25 million in a Series B funding round later this year to expand its financial relationship management and property management products.

Propzy has secured a total of $12 million in funding since 2016. Its latest round was a $6 million financing led by Korean VC firm Stonebridge Capital earlier this year, said its founder and CEO John Le.

Investors backing the business include Insignia Ventures, GS Shop, Frontier Digital Ventures, TNB Aura and Next Billion Ventures, among others.

Propzy is Stonebridge’s first investment in Vietnam.

“We saw many positive similarities between one of our early investments, Korean real estate portal JikBang, and Propzy when it came to understanding the uniqueness of the market and providing Vietnamese consumers with a compelling value proposition that goes beyond just traditional classified site offerings,” commented Fortune Sohn, managing director of Stonebridge.

Le claims Propzy is the only proptech company in Vietnam to follow the hybrid online to offline (O2O) model that offers a full-stack real estate platform.

“In Vietnam, a lot of brokerage firms operate in the resale segment. So, the market is lacking a technology platform to allow salespeople to service the needs of the real buyers and sellers,” said Le.

“We want to make sure the quality control process is secured, so by the time a property becomes a listing on our marketplace, we can address the real buyers’ needs, which means what they see is what they can actually get,” he added.

The platform allows a customer to book an on-site visit after a due diligence process matching the demand and supply is conducted. Since Propzy works directly with property owners and gets all information about assets while simultaneously conducting customer KYC and assessment, it claims it can enable interactions between buyers and sellers within several tens of minutes.

Currently offering mortgage brokerage service, Propzy will use the next round of funding to develop financial relationship management that will include mortgage banking, besides leveraging its data.

“The banking market is where you can originate the mortgage directly on your own balance sheet and take the interest spread, and over time sell this asset to a bank, a conduit or an investment manager that looks for interest rate yield,” Le said.

Through the property listing curation process, Propzy captures the market value of properties, which make it more efficient and scalable when the company enters new markets.

“By having an automated valuation model, it will lead to the introduction of much more innovative mortgage financing products. The next thing you do is create a layer of automation around the mortgage underwriting and risk-based pricing,” the CEO asserted.

He added that the $25-million fundraising target was mainly for building up the Ho Chi Minh City-based company’s banking capabilities, and its Tenant Access Platform (TAP), which is a property management software for buildings and properties operators.

Le said that he expects Propzy to become profitable and start entering other markets by the second quarter of 2020. It will start with Hanoi and then foray into other regional markets.

The TAP platform can be the premise for Propzy to penetrate into other Southeast Asian markets, upon which the company will be able to build up and replicate its marketplace.

The Vietnam market alone represents $70 billion in GMV of IPO, resale, new construction, and remodeling, among other transactions, Le said. He claimed that Propzy’s real estate transactions and mortgage brokering proceeds in the first half of 2019 have already exceeded the total value of 2018.

Since 2018, the proptech sector has evinced significant investor interest. PropertyGuru acquired Batdongsan.com.vn paving the exit of Japanese VC firm Cyberagent Ventures. Similarly, Homedy, a Hanoi-based company, raised a second funding round from Genesia Ventures, Access Ventures and Mynavi Corporation in July 2018. Most recently, Rever bagged $4 million from VinaCapital Ventures.