Loft's co-founders (from right to left) João Vianna, Florian Hagenbuch and Mate Pencz.
Loft's co-founders (from right to left) João Vianna, Florian Hagenbuch and Mate Pencz. Photo: Loft/Courtesy
Technology

Loft wants to simplify one of the greatest passions of Latin Americans: having a home of their own

One of the company's cofounders, Mate Pencz said that the startup will operates in five news cities by the end of 2020, in addition to its first international market, Mexico City

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Only a few days ago, Latin American ecosystem won its 12th unicorn (a tech company with a valuation of over $1 billion). The Brazilian startup Loft reached this market value, according to Brazilian media outlets such as O Estado de S.Paulo and Exame, after receiving a $175 million investment round led by Vulcan Capital and Andreessen Horowitz (the company not officially confirms this new market value).

The business model of this startup? Buying, renovating and selling real estate in a current 4-month timeframe–yes, this is quick for a sector that has been hampered by legal and financial bureaucracy like the Brazilian real estate market. But the company wants to further simplify the whole process involved in one of the greatest passions of Latin Americans: having a home of their own.

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“We see the real estate market of the big Brazilian and Latin American cities as a great business opportunity, since today the buying, refurbishing and selling process, in general, has several points of improvement regarding the quality of the user experience, ” explained Mate Pencz, one of the startup’s co-founders and co-CEOs, alongside Florian Hagenbuch, in an interview with LABS.

In practical terms, this means making the actual purchase and sale data (ie the value actually paid for the property, and the financed one, for example) visible and working on it as transparently as possible, as well as making more renovations simultaneously (for this, Loft has acquired more than half of the shares of the startup specialized in renovations Decorati).

“In terms of Brazil, we live a favorable economic context, with interest rates at the lowest level in history, which is a great reason for people to leave the rent (market) and buy their own property,” said the executive.

Loft’s headquarters. By the end of the first half of 2020, Loft is expected to have a staff of 550. In early 2019 the company had 100 employees. Photo: Loft/Courtesy.

Loft wants to reach more cities, and soon

Since its founding in August 2018, Loft has raised $275 million in investments. Something really impressive, and perhaps explained by the company’s rapid growth: in 2019, Loft generated $150 million in revenues and bought, refurbished and sold over 1,000 apartments in the city of Sao Paulo.

Mate Pencz at Loft’s headquarters. Photo: Loft/Courtesy.

The global real estate market is six times the size of the world’s GDP. Facilitating the purchase, renovation and sale of real estate properties through the application of technology is just beginning around the world

Mate Pencz, co-founder and co-Ceo at Loft.

The Brazilian megalopolis was the starting point for the startup, which began operating in the city selling luxury apartments in the Itaim, Jardim Paulistano and Jardins neighborhoods. Now, Loft operates in 18 different regions of the city.

With the new investment round, Loft arrives in Rio de Janeiro and Mexico City, its first international market, in the early months of 2020 – Juan Pablo Ramos, former director of regional expansion of Uber Eats in Latin America, was hired by Loft for this first operation outside Brazil.

Pencz did not detail the company’s strategy for its arrival in Mexico, but it is expected that Loft will begin exploring the Mexican capital slowly, in specific neighborhoods, just as it did in Sao Paulo.

Until the second quarter, will be Belo Horizonte’s turn to receive the startup’s operation, followed, till the end of this year, by three other Brazilian state capitals (Curitiba, Porto Alegre and Brasilia are among the list of next Loft’s cities).

Real estate portfolio diversification is also in the plans of the startup, which informs that apartments under 100 square meters (1076 square feet) already account for a quarter of the company’s transactions in Sao Paulo. According to Pencz, this proportion is expected to increase rapidly in the coming months, as the company reaches new cities.

Loft is not afraid of competition

Recently, another Brazilian startup, which also became a unicorn, QuintoAndar, began testing real estate refurbishing before placing them for lease, in addition to buying and selling real estate in some regions of the city of Sao Paulo.

ALSO READ: 2017 to 2019 – A chronology of Latin American Unicorns

Both startups have similar business models, but with different focuses and operations strategies. QuintoAndar started out with a focus on rent, with one eye on the landlord who doesn’t want to keep his extra income at a standstill, and the other one on the young tenant, who sees no reason to own a property of his own.

Younger generations, even in Latin America, tend to look more detached at the idea of home ownership. Asked about this, Pencz replied that it is likely that Loft will launch, “in the future”, a service also for the rental market, as a way to complement its portfolio.

And Loft is not afraid of competition. “The recent entry of competitors is great news for everyone because it validates the model. We’re on the right track,” said Pencz.