Buyers and Builders
00:25:30 · S0
[00:25:30] S0: You mentioned these retiring owners. So maybe you can explain, like, who is your ideal customer profile in terms of agencies which you target, what is the size and why?
00:25:41 · S2
[00:25:41] S2: We started with targeting certain scale, size of an agency in terms of the size of the business. To have, because this is eventually kind of effectively an on the ground density marketplace type business. And economics works better from the threshold of certain density whenever you have, like, four or 500 kind of managed properties in any given kind of certain location. As we kind of start going on and on, I think that as we already have presence in more locations across The UK, I think we can start considering kind of effectively tucking in some smaller acquisitions into the existing businesses as well because there's already existing infrastructure. So in terms of the size, I think that will start being a bit more kind of flexible and accommodative, where if it's entering the new location, it's still going to be certain threshold usually that we would kind of want to have. But other criteria should be is like all the other things that I think are known for the industry. So, kind of business kind of ideally would be as much kind of letting's revenue focused and not kind of sales revenue focused, because letting's have this annuity style recurring income where sales is one of transactional kind of business. So effectively, kind of it's known that Lighting's businesses are valued a bit more in general, and we're kind of happy to pay up but buy a more meaningful asset. It's important for us there is strong succession in the business because we kind of tend to be buying leading agencies kind of across The UK. And for us, it's super important that we're not coming in there to just then fold it into already existing kind of structure or anything. Rather, we rely significantly on the kind of management teams, the strength, on the brand, on the reputation of the existing business to then work together to try to elevate it up to the next level together. So it was like super important for us that there is like a very strong established kind of team and the brand in the kind of in the business that we'll buy. And then some other secondary criteria is what I would say, kind of, sort of Q1 that we'll look at.
00:27:34 · S0
[00:27:34] S0: Okay. And now I forgot to ask in the beginning, let's say I'm a landlord. What changes for me, what improves for me under a new ownership? It used to be I was part of an agency for, I don't know, five years. I was happy everything was alright. Now I'm part of you. What changes for me?
00:27:52 · S2
[00:27:52] S2: You have more visibility. You have more tech first access to the portals, products, so that you can see everything at your fingertips, should you wish it to be. But in reality, a lot of landlords, I think there are two things. Number one, most of the landlords are kind of a little bit later in their life by the age naturally, because kind of you buy the property, then you buy the second, then you start renting out the first. Usually happens closer whenever you are kind of 40, 50, 60 years old, number one. So hence, these people might potentially be a bit less kind of tech savvy and just need technologies a bit less in general, number one. And number two, the whole premise of a landlord coming to the service of a letting agency is to effectively kind of hand in the keys of the property and kind of forget about the existence of the property and then receive a white glove service where the agency would be doing everything for you, finding you a tenant, property manager, collect rent, everything end to end. So what you as a landlord want to kind of to know is, number one, that your property is safe and secure so that nothing happens to kind of to this as an asset, because this is one of the most precious assets that you own in life, almost like your retirement money, number one. Number two, and as a proxy of that, you're interested about the quality of the tenant. Number two, what you kind of is important for you is effectively that if there is any problems that you know about these problems upfront and kind of in advance and not get to know about them firsthand yourself to then kind of inform your letting agency. And then already all the other money that are things such as like utilisation, avoid periods, etcetera, etcetera. So for you as a landlord, kind of by digitising the kind of the tenant find funnel and everything, we'll be able to provide you much more kind of leads per property on each kind of occasion. So effectively, you'll have a much bigger variety and selection of the prospective tenants to kind of to choose from. And on average, we kind of provide the landlords not kind of one to applications per property, but closer to kind of eight to 10 applications per property, number one, and do it much faster. So whenever kind of on average, usually the property is rented in two, three weeks.
00:29:41 · S2
We usually run the properties in, like, a couple of days by digitizing a significant part of the kind of finding the tenant type process. So effectively, kind of it helps you to kind of have a better quality selected tenant and also kind of to run the property kind of much faster. So it helps you with the utilisation and with your kind of income a little bit. And then when it has to do with visibility, with upfront communication, with all that stuff, is just a lot of things where in the currency ramps and the current processes, either you as an agent need to remember to go and kind of proactively inform the landlord about some things, etc. And you, let's say, as a property manager, have like hundreds of properties that you're working on and like thousands of property management jobs that are concurrently running. You just would be forgetting to do some things, not because you are kind of non diligent or because you're a bad person, just because it's so many admin things that you kind of need to be on top of. This is exactly where kind of the automated communication of the system can be providing some things like, hey, we just received this property management report. We have this problem. We're already exploring that. We already, for example, kind of our contractor has come into the property and assessed it. This is the description of the problem. So all of this, like, proactive communication efforts that in general, quite often in the today's world would be lost, the system would be doing it automatically for the landlords in our view.
00:30:54 · S0, S2
[00:30:54] S0: Okay. Now I looked up and there is a larger player on your industry, Textors, which has 20,000 to 30,000 properties which they manage. So the question for you now, as you raise the capital, you're in better position to grow and expand. What has to be true operationally before you could serve a large player like this? [00:31:14] S2: I think that's kind of is the question of scale, right? I think that to be able to ensure that you know how to run, what is the best way to make sure that you can run a 30,000 managed properties portfolio? Probably the answer is run a 30,000 managed properties portfolio. So probably kind of as close as you'd be getting to, well, building out the operational machine, operational product integrations machine that effectively kind of knows to process this sort of volumes, the more conviction and the more confidence you get that actually kind of shouldn't be, for example, suggesting us to kind of to just offer our platform and technology to these guys or, for example, would it be kind of consider, for example, some buying them up or something? We'll have more confident conviction that we know how to process this volume. [00:31:59] S0: I know you need to go. So usually, at the end of every podcast, I ask what is the best investment advice they've ever received. But for... From you, I would like to ask, as you just went through this long journey of raising capital, can you give some specific advice for people who are on a similar journey of raising capital and maybe struggling at this stage?