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Proptech Advances in Latin America As Loft Raises $175 Million in New Investment

The $175 million in Series C funding raised by Latin American digital real estate platform Loft this week offers an insight into how proptech is providing new investment opportunities within the emerging markets of countries like Brazil and Mexico.

“We’re aiming to reinvent the way people move homes by building the most consumer-focused real estate marketplace,” Loft founder and co-CEO Mate Pencz said. Loft’s digital platform leverages transaction data and machine learning to price apartments at the unit level. This brings both liquidity and transparency to a market the company says suffers from a lack of data transparency, excessively-high selling prices, and long transaction times.

The company plans to also use the funding to fuel its continued growth in Brazil and throughout Latin America. Expansion to Rio de Janeiro is anticipated for early 2020, with Mexico City to follow soon afterward. Loft also plans to grow its product portfolio in the new year to include mortgages and insurance.

“Loft is creating a consolidated source of truth on inventory and transaction prices that has, until now, been fundamentally missing from the Latin American real estate market,” Vulcan Capital general partner Rafael Costa explained. “This, together with Loft’s highly accurate and intelligent pricing tools, is transforming real estate transactions and providing a truly unmatched customer experience for sellers, agents, and buyers,” Costa said. Vulcan’s investment in Loft is the first and only Latin American investment in the company’s portfolio.

TechCrunch’s Anna Escher compared Loft to U.S.-based home-selling marketplace platform Opendoor in her reporting on the funding announcement. And while the San Francisco-based property management technology company has quite the head start, including a $3.8 billion valuation, Loft has made strong strides in its initial year of operation. The company announced more than $150 million in annualized revenues last year and transacted more than 1,000 properties. Beginning with 100 employees, Loft finished 2019 with more than 450 on its team, with plans to add more talent early this year.

Loft competes with firms like QuintoAndar, a SoftBank-funded unicorn based in Brazil, and Mexico’s Flat, which includes investors such as ALLVP and Next Billion Ventures. Proptech represents a modest amount of the overall capital VCs have invested in Latin America, rising to 4% of all VC funding in 2018. Nevertheless, this constituted a sizable increase in both the amount invested (503x) and number of deals (5x) over the previous year, as reported by the LAVCA in its Annual Review of Tech Investment in Latin America. The figure also rivaled investment in other areas such as security & infrastructure, digital security, and e-commerce. Overall, the report indicated that fintech represented 25% of all VC spending in Latin America in 2018.

The investment in proptech Loft also reflects the breadth of funding Latin American fintechs are receiving. Last week, Latin American SME lenders Cora and Rebel made headlines with million dollar fundraisings that will help bring credit to underserved businesses. Challenger banks in Mexico have attracted VC interest, as well, with neobanks Albo and Flink both announcing year-end funding last week.