flat.mx Secures $20M to Revolutionize Mexican Real Estate

Flat.mx Secures $20 Million in Series A Funding to Revolutionize Latin American Real Estate

Flat.mx, a company aiming to establish a comprehensive real estate “super app” throughout Latin America, has successfully completed a $20 million Series A funding round.

Investment Details

The investment was jointly led by Anthemis and 500 Startups, with contributions from ALLVP and Expa. Prior to this, Flat.mx had already secured $10 million in equity and an additional $25 million in debt financing.

Notable investors also include Eric Wu, CEO and co-founder of Opendoor, Tushar Garg, co-founder and CEO of Flyhomes, and Brian Ma, co-founder of Divvy Homes.

Company Origins and Initial Strategy

Established in July 2019 and headquartered in Mexico City, Flat.mx initially adopted a business model akin to Opendoor’s. This involved purchasing properties, undertaking renovations, and subsequently reselling them.

In September of the same year, the proptech startup secured one of Mexico’s largest pre-seed investments, intending to replicate the Opendoor marketplace model within Mexico.

Addressing the Challenges of the Mexican Real Estate Market

“The real estate market in Mexico is fundamentally flawed,” stated co-founder Bernardo Cordero. “A significant issue is the extended timeframe sellers face, often ranging from six months to two years. To address this, we introduced an instant offer solution, enabling homeowners to sell their properties within days rather than months – a swift and convenient experience unavailable elsewhere.”

Developing an instant buyer (iBuyer) model in Mexico, and Latin America more broadly, presents considerable complexities. Unlike the United States, Mexico lacks a Multiple Listing Service (MLS), resulting in limited availability of pricing data.

Navigating a Unique Market Landscape

Furthermore, real estate agent certification isn’t mandatory, leading to a less formalized buying and selling process. Low mortgage penetration in Mexico also restricts access to affordable financing for potential buyers.

“To successfully implement an iBuyer system, we were compelled to resolve the entire transaction process,” explained co-founder Victor Noguera. “This necessitated the creation of an MLS, a third-party marketplace, a network of contractors, financial products, broker technology, and a home maintenance service provider – essentially, we are constructing the real estate super app for Latin America.”

Quality Assurance and Growth Metrics

Flat.mx emphasizes that its certified, remodeled properties undergo a rigorous 200+ point inspection and a comprehensive legal review.

The company reports a 70% quarter-over-quarter increase in sales and a tenfold expansion of its inventory over the past year. Its team has also nearly tripled in size, growing from 30 employees to over 85.

To date, Flat.mx has completed thousands of property valuations and over 100 transactions.

The Impact of the Pandemic

The onset of the pandemic proved beneficial, accelerating interest in the company’s services.

“Our digital solution, requiring minimal in-person interaction, was crucial for maintaining a strong business during the pandemic,” Cordero noted. “We were able to provide sellers with rapid liquidity at a time when selling property in Mexico was challenging, and sellers were keen to minimize contact with potential buyers.”

Future Plans and Capital Allocation

The newly acquired capital will be used to further develop a “one-stop shop” for both homeowners and buyers, providing access to all necessary services in a single location.

The founders believe that a holistic approach to the homebuying process is more effective in emerging markets than focusing on individual aspects.

“We are confident that each of our products enhances the others, and this integrated ecosystem will continue to provide us with a significant competitive advantage,” stated Noguera. The funding will also support expansion of iBuying operations within Mexico and investment in data and financial products.

Investor Confidence

Flat.mx’s investors express strong confidence in the company’s potential.

Archie Cochrane, principal investor at Anthemis Group, highlighted Flat.mx’s integral role in his firm’s embedded finance strategy within the Mexican property sector. He emphasized the complexity of the iBuyer model and the importance of a skilled team for successful execution, praising the founders’ vision and understanding of the market.

Tim Chae, managing partner at 500 Startups, anticipates that Flat.mx will become the preferred platform for buyers, sellers, agents, and lenders in Mexican real estate.

Fernando Lelo de Larrea, partner at ALLVP, observed that software is finally driving transformation in the Mexican real estate industry, ending years of unfulfilled promises. He lauded Flat.mx’s innovative approach to a trillion-dollar opportunity.