We’re delighted to bring you the first of our ‘Breakfast with Goldie’ series!
Each breakfast will focus on a player in the PropTech sector and we hope it will bring you a unique insight and outlook on this rapidly changing landscape from those in the know.
Our first expert is Majed Chaaraoui, CEO and Co-Founder at Insurami, a deposit guarantee platform for commercial real estate. Insurami provides landlords and businesses with the opportunity for deposit free leasing who I sat down with before lockdown began.
“I had an investor yesterday tell me that we had a very beautiful boring business”
“it takes time to understand the market, its peculiarities and niches and build your credibility to have long term success”
What does Insurami offer landlords?
Insurami enables deposit free leases for commercial real estate. Our platform enables landlords to look at Tenant’s risk profile upfront before negotiations or viewings commence, for free and then are able to offer their tenants a deposit guarantee instead of the traditional deposit required.
All risk underwritten by us we do via our proprietary models,. Our platform, allows landlords to see how we rate a business, and we then sell our deposit guarantee product to their tenants based on the level of risk that we attribute. They can see we have skin in the game. I’m not giving them a score like a D & B or Equifax; I’m saying here’s how I rate the business for free and here’s how I sell the guarantee off that. We can then build a product around that, where landlords see how we look at risk and implement that into their day to day, whether that’s for new tenants, ongoing tenants or looking at the market as a whole for risk in their portfolio - that’s the huge advantage we can offer landlords.
Where do you see the disruption?
If you look at L&G with Capsule; British Land with Storey; Crown Estate with 1 Heddon Street -all of these processes are meant to speed things up. But when you look at the financial angle that’s where it’s still the same: still asking for financials, still negotiating on deposits that takes weeks to play out. We’re providing that information up front, so before someone walks in your door you know how they’re rated and its’ a simple choice between a deposit or paying for a guarantee with Insurami. That removes the friction from the negotiation.
How do you see the prop tech sector evolving?
We’ve seen quite a few players who have tried to completely change the market with offerings that then disappear. I’ve seen people coming in with a completely radical idea and struggling quite a bit. We’ve found it’s best to work with landlords to slowly create change over time, it’s a gradual process.
What challenges are particular to proptech?
There’s a lot of moving parts especially with our product so you have to be mindful of everything involved. Again, because we’re quite new, learning those steps takes time and you need to build up credibility in the space. Improving your processes and aligning them over time does take a bit of understanding, but it’s short term pain for long term gain.
How is proptech different from straight ‘tech’?
I think what lots of people in tech coming into property don’t realise is that you need to have that patience because real estate isn’t like banking. You’re not going to get that overnight growth of over 1,000 or 100,000 users, but what you will get is a customer base that does become a lot more valuable over time. If your service is impeccable, that’s how you build your company value in the long term.
What useful prop tech have you seen out there?
The ones that we really like are the more analytics focused. Datscha, Coyote and MSCI have all provided landlords with the ability to use and learn from the data from a management or purchase perspective.
Where do you think the sector is going generally? What is the useful proptech that’s removing friction from the process?
I definitely think improving the entire journey for customers is something landlords can offer. I think for a tenant as well it’s no longer about ‘I just need an office’; for a lot of companies it’s how their employees feel when they come in; how’s the building, how’s the setting, the office layout, what can we offer in addition? It’s a holistic approach where it’s not just a place to work, you’ve got break out space, gym discounts it’s the whole package; that’s where the players will win.
Are you seeing much competition for your products?
I had an investor yesterday tell me that we had a very beautiful boring business. And the benefit of that is we’re not a Facebook or WhatsApp. We do deposit guarantees for commercial real estate and that’s about analytics and data which we really like. We have a partner on board like Munich Re which obviously does take time. Working with the land lords that we do does take time, so we haven’t seen competition yet. We know that deposit guarantee is live in the states so we do expect it, but the blessing and curse is if we do do well you’ll see competitors come in but that’s the same with any business.
What’s the size of the market?
In the UK market alone, we think deposits for offices and industrial premises are about £35 billion. That’s £35bn that earns 0-0.1% interest in a year, so if you can give that back to SMEs to invest in their businesses rather than having it tied up in rent deposits, that’s a big boost for the economy that not many people think about.
Is a lot of money going into things it shouldn’t be?
Venture capital is about taking risks, helping small ideas and seeing if they scale. Given the market you’ll see a lot of people raising from sources that aren’t really into property, hoping it works well. But you will see the best ideas backed by the biggest players and they are the ones most likely to succeed based on your reputation and the market. It’s important to have a good understanding of property: you can’t just enter any market and immediately grasp a full understanding of it, no matter what sector you’re in. With property it takes time to understand the market, its peculiarities and niches and build your credibility to have that long term success.