Security type: Common stock
Round size: Up to $2 million
Price per share: $5.65
Valuation: $17 million
Minimum investment: $5.65
Investment portal: Netcapital
Note: The amount raised under the two exemptions must total at least $10,000 by April 16, 2018, at 4:00 p.m. ET. If the total doesn’t reach its target, then your money will be refunded. Home61 may issue additional securities to raise up to $1.9 million, the offering’s maximum.
Dear First Stage Investor,
Home61 wants to bring the real estate industry out of the 1970s.
Or is it the 1950s?
This is a huge but sleepy corner of the economy sorely in need of updating, if not a wholesale revamp.
Make no mistake, the U.S. real estate market is huge!
In terms of transactions, we’re talking $2 trillion a year. In terms of commissions, $60 billion.
How this hidebound market managed to slip by from decade to decade untouched by innovation is beyond me.
I think you know what I mean…
Most of us have bought homes. We know that the paperwork involved is mind-boggling.
You feel trapped in a snail-like and maddeningly frustrating process.
Amazingly, real estate agents pretty much feel the same way.
In addition to generating dozens of documents to make an offer, they also spend countless hours getting and checking out leads. It’s a big reason why they close just 1.7 deals a year on average – not nearly enough to make a decent living.
It’s also why companies have difficulty growing bigger, leading to a highly fragmented real estate market. More than two-thirds of it is made up of small brokers.
This is an industry begging for a technology makeover…
Today’s recommended company, Home61, believes it can replace the old-school legacy companies like Re/Max and Century 21.
Re/Max has a cap of $1.4 billion. Century 21 is comprised of 7,450 franchises operating in 79 countries. But make no mistake. These are NOT tech-savvy, well-oiled machines… just the opposite.
Home61 is reinventing almost EVERYTHING they do, creating a faster, more efficient and user-friendly version where buyers, sellers and agents have access to real-time data to make informed decisions.
It’s incorporating a nimble online marketplace… best practices training (borrowed from the startup world!)… sophisticated algorithms that match customers to agents… and a hybrid lead generation program that uses Google, email and, increasingly, customer references.
It’s game changing because it’s so ambitious. It’s so ambitious because so much had to be discarded and reinvented.
That so much could be overhauled is a result of major technological advances in combination with the bold business plan put forward by Home61 co-founder Olivier Grinda.
So let’s briefly touch on five of the more critical innovations Home61 has made…
- A Match.com for Real Estate – A proprietary algorithm matches clients with real estate agents based on language, social, financial and other factors. And once clients sign on, they get a call from their matched agent in literally less than a minute.
- Paperwork – What used to take several hours now takes just seconds. Home61 creates all the documentation going into a contract in about five seconds (give or take a second). Agents can make an offer on a home in just three clicks. And agents use the saved time to close more deals. By the way, homebuyers also walk away much happier with the homebuying experience.
- Home Seller Benefits – The seller pays $6,000 instead of a 3% fee. Any home sold for more than $200,000 benefits. They’re also provided with a dedicated presentation of their property, including flyers and online ads. They can access a “Seller Dashboard” that lets them track online visits and total impressions of their listing in real time, as well as see actual physical home viewings. Another neat service is the company’s “41 day” law. If a property hasn’t sold in 41 days, the company will help the seller revamp the offering.
- Data Sharing – There’s tons of information at a customer’s fingertips. Price comparisons and price per square foot. Days on the market. Guidance on how low they can go on the offer… and much more.
- Efficiencies for Agents – To name a few, agents get a dozen quality leads per month from Home61, as well as intense onboarding and training to kick-start their first year. Agents average 17 deals. In the second year – 40.
This Business Model Works
In a short time, the company has made impressive progress.
Sales have nearly doubled in each of the past two years…
With just three years of operation under its belt and a dozen full-time employees, Home61 already ranks as a top-50 Miami real estate company with more than $1 million in revenues – and climbing. It will soon be expanding to two other major urban markets. In five years, it plans to be operating in 10 major markets, with $1 billion of revenue a year.
Capturing roughly 10% to 15% of every deal it closes, the company is taking aim at revenue of $195 million in 2018.
It sports a 20% conversion rate, closing 654 deals out of 3,200 leads – unheard of in the real estate industry.
Home61’s 65 agents make three to four times more than their peers in their first year. And they convert at least 17% of their leads. If they can’t, they’re let go. (Legacy companies don’t fire their unproductive agents, CEO Grinda notes.)
This is different…
Certainly not how Century 21 or Re/Max operate. Goals are set high… backed by tech tools that promote efficiency… and enforced.
That’s why I believe Home61 has a great chance of achieving its ambitious growth targets and eventually displacing these legacy companies.
The Team
Grinda is leading the charge. He has loads of entrepreneurial experience, co-founding multiple startups. A notable one is internet company Brandsclub. Founded in post dot-com Brazil, it was the first tech startup to raise more than $15 million from foreign investors. It grew into one of the top 25 e-commerce sites in Brazil before being sold to Naspers in 2012.
Home61 Chief Technology Officer Cyrille Carbonnier (the “best CTO” I’ve ever had, says Grinda) has equally impressive credentials. In addition to previous CTO roles at Previsite and ListGlobally, he also founded EON.AI, which provides machine learning solutions and web development for real estate companies.
By the way, Home61’s co-founders have invested $300,000 of their own money into Home61. We view “skin in the game” as a very positive factor.
The team’s capabilities and credentials helped it raise $5 million out of the gate from such well-known investors as Kima Ventures, FJ Labs and Founders Fund.
How to Invest
First, you’ll need to register for an account on Netcapital.com. Go to the home page and click on the “Sign Up” button in the upper-right-hand corner of your screen.
Click “Sign Up” on Netcapital.com.
You’ll need to confirm your account via an email from Netcapital titled “Confirm your email address.” Now follow the steps and fill out the required information. This shouldn’t take more than a few minutes.
Once you’re registered, go to Home61’s investment page. Then click on the orange box that says “Invest” (pictured below).
Now choose the payment method that works best for you and transfer the funds. Your money will be held by an escrow agent until the deal closes, when it will be transferred to Home61, and you will officially own a piece of this exciting, innovative real estate company.
Risks
Home61 is an early-stage tech investment, and like all such investments, it’s risky. Do not invest money you can’t afford to lose.
Also, remember that these types of investments are not liquid, meaning you can’t buy or sell your stake easily. If and when an exit opportunity arises, you’ll be informed immediately.
Invest early and well,
Andy Gordon
Co-Founder, First Stage Investor