Mate Pencz is co-founder and co-CEO of Brazil's first unicorn in 2020, thriving real estate startup, Loft. In this interview, Mr. Pencz discusses Loft's revolutionary business model, the key factors behind the company's incredible 16-month journey from foundation to unicorn status as well as the wider potential of Brazil’s and Latin America's real estate markets.
Leaders League. What is Loft and what does it do?
Mate Pencz. Loft was launched in 2018 to debureaucratize and bring predictability, dynamism, transparency and liquidity to the real estate sector. The company buys, renovates and sells apartments. Additionally, we offer an exchange model which allows owners to put up their existing property as a down payment. Today, we operate in 37 of São Paulo’s neighborhoods and our model can easily be replicated in other of the world’s cities.
By combining real transactional data with a proprietary machine learning model, our platform can price apartments according to their particularities, increasing both liquidity and transparency for buyers and sellers.
One of the major headaches for consumers is looking for an ideal apartment which meets their needs. Often, properties will require renovation and modernization but, once ready, no longer correspond to what consumers were originally looking for. This leads to a great deal of frustration and additional expenses as, often, the resulting delay in selling existing property will generate new expenses. Loft was born to soothe these pains. Our goal is to reinvent the way in which people move by building a marketplace of real estate assets increasingly focused on consumers.
What have been the key factors behind Loft’s success story?
Loft was launched to reinvent the real estate market and from the beginning we believed in our potential for growth. Our business model itself represents an enormous opportunity in emerging markets and thus, combined with other factors such as a highly qualified and motivated team, ensured our growth was very fast paced. We began 2019 with 100 employees and have grown to over 500, as of March this year.
We are the pioneers in this segment and have established a relatively consolidated lead in this market in the region. We have commercialized over a thousand apartments in São Paulo since launching operations, in August, 2018. At first, we only operated in a few São Paulo neighborhoods but expansion came swiftly, increasing our capillarity and potential. This January, we received an investment which is further boosting our growth. Besides São Paulo, we are now also operating in Rio and will reach Mexico City later this year.
Halfway through our trajectory, we acquired Decorati, a startup specialized in apartment renovation and Spry, a market research company, and began working with a new modality: the marketplace.
In early January, Loft reached unicorn status a mere 16 months after its foundation, a record in the Brazilian startup ecosystem. What made this possible?
The residential real estate market in Latin America is a $6 trillion opportunity. However the lack of transparency in data and consolidation in the market contributes to low quality and redundant listings, inflated prices and delays in closing transactions, creating a painful experience for buyers, sellers and agents.
This opportunity as well as market demand incremented Loft’s growth. We generate liquidity for the market and this stimulates the economy. We began to deliver, in an unprecedented manner, verified data and liquidity in what is a traditionally sluggish and bureaucratic sector.
Our rapid growth caught the attention of investors which have been following our progress and, believing in the sector’s potential, we raised, via a Series C round, a $175 million investment.
In a six-month period, Brazil’s real estate market has seen the emergence of its first two unicorns, Loft and QuintoAndar. Should we expect more growth from this sector in the future?
Investments indicate that the market is confident in the long-term viability and scalability of the sector to promote real estate transactions in an efficient manner. As I said, the residential real estate market in Latin America is a $6 trillion opportunity. There is still much room for companies within this segment to grow and bring innovation and transparency to the sector.