Habi, a real estate startup that digitizes home buying and selling for Colombia’s middle class, announced Wednesday that it raised $ 100 million in Series B funding, the second largest round raised by a female CEO in Latin America.
In Colombia, a country where there are no online listing services and the most common way to sell your home is to hang a phone number and a sign on the window, real estate transactions are incredibly opaque. Bogotá-based iBuyer is looking to change that.
Xabi buys, refurbishes and sells homes to profit from the margin. Its centralized database, built using data from real estate, banking and government partners, drives its automated pricing model, offering transactional services to home buyers and sellers.
The startup also allows homeowners to estimate the value of their home. According to co-founder and CEO Brynn McNulty Rojas, about 100,000 Colombians received quotes from Habi between housing offers and the company’s free online appraisal. From May 2020 to May of this year, the volume of transactions increased by an average of 40% compared to the previous month.
Wednesday’s funding round, hosted by SoftBank Latin America Fund along with previous investors including Inspired Capital, Tiger Global, Homebrew and 8VC, also represents the second largest Series B set up by the Colombia startup, after the delivery app Rappi made $ 185 million in 2018, according to Pitchbook. Xabi declined to disclose his assessment.
According to an analysis by real estate agency Galería Inmobiliaria, new home sales in Colombia’s five largest cities – Bogota, Medellin, Cali, Barranquilla and Bucaramanga – rose 31% in the first quarter of 2021 over the previous year. Habi currently operates in four of these markets: Bogota, Medellin, Barranquilla and Cali. By raising capital, the company plans to expand its presence in Mexico, starting in Mexico City, Rojas said. Habi also hopes to continue to grow its team, which has grown ninefold to 300 employees over the past year.
However, Habi isn’t the only startup in Latin America to raise big bucks trying to bridge the digital divide: Brazilian Loft has closed $ 425M Series D Financing Round in March, valuing iBuyer at $ 2.2 billion. One place where Habi shines: its proprietary data platform, which contains over 16 million unique data points and synthesizes everything from location to property size, number of parking spaces, and the presence of an elevator in a building. This is a lucrative argument in a country where MLS, which in the US are private databases created, maintained and paid for by real estate professionals to help their clients buy and sell real estate, don’t exist, says President Clelia Warburg Peters. Warburg Realty and venture partner Bain Capital.
“In an environment like Brazil or Colombia, where there is no MLS, [companies like Habi and Loft] have the opportunity to enter the market and create a one-size-fits-all experience in which they can own the buyer’s experience, the seller’s experience and the sourcing experience, becoming the de facto MLS, ”she says.
In the US, the iBuyer market is dominated by San Francisco-based Opendoor, which became public at an enterprise value of $ 4.8 billion in September last year. Proptech companies such as Zillow, Offerpad and Redfin have also entered this space.
Despite its success, iBuying is only 0.5% from the $ 1.6 trillion home buying market, according to The Real Deal. And former Zillow president Greg Schwartz says startups like Habi are facing uneven revenue streams in a relatively stable or declining market, such as in the early days of the pandemic, when many iBuyers paused home purchases. In addition, they typically cost home sellers more in service fees, roughly 13% to 15% of the home’s sales price, while traditional agents only cost 5% to 7%.
“It’s really only available to some people,” says Schwartz. “IBuying is not a solution that is usually available in urban areas.”