From Pre-Seed to Series A: PropHero's Impressive Growth Journey
In these investment notes interspersed with founder insights, we share PropHero's skilful path to their recent A$25M Series A funding round
Disclaimer* Past performance is not indicative of future performance. Specific risks may impact on the possibility of such a return in future.
In 2021, we had the pleasure of meeting Mickael Roger, and Pablo Gil Brusola to hear about PropHero - a tech-forward platform that makes buying investment properties simple, painless and profitable. We jumped at the chance to invest in their pre-seed round and have since joined them on the path to Series A.
In just over 3 years, the team has created a product that inspires true customer love, drummed up momentum with tenacity and resourcefulness, expanded globally and proved the stickiness of a marketplace hypothesis (by demonstrating the value of connecting customers to anyone needed to successfully complete a property purchase — think surveyors, mortgage brokers, agents and more).
PropHero represents everything that AfterWork strives for: backing ambitious founders early on in their journey, and supporting them as they de-risk their unique hypothesis and build momentum, fast. We’re proud to continue our multi-year relationship with the team - and to have been given the opportunity to partner many times over through both the AfterWork fund (PropHero now represents one of the largest positions in our portfolio) as well as with many of our LPs who have joined the journey via direct investment.
These investment notes interweave interview responses from Mickael Roger, one of the PropHero founders.
The PropHero Product
Buying property is time consuming, stressful and devoid of data. Often buyers just go with suburbs they know, and let their emotions drive decision making. Prophero starts by understanding their customers and their goals; factoring things like rental yields, timelines and deposit available - culminating in a data-driven approach to identifying properties that fit with an investors profile. With the right property identified, PropHero then gets to work making the process seamless by plugging their customers into an ecosystem of partners needed to seal the deal - from surveyors, to mortgage brokers, renovation and furnishing options and insurance providers. The upshot? PropHero customers can build a high return, global property portfolio through a simple, transparent and time efficient process.
Immense Customer Love
Since launch, PropHero has helped 8,000 customers across 40 countries build wealth through property. The team have found a foothold with those building a diversified property portfolio and ‘rentvestors’ alike - both eager to embrace digital solutions that simplify decision making while keeping them in control.
Most importantly, the proof is in the pudding with customers returning to PropHero’s trusted service time and again. In fact, 2 years after the first investment, 48% of users are buying a second property, sometimes more. Beyond delivering a simple experience, this is no doubt due to PropHero’s ability to deliver strong returns for their customers. PropHero’s property prediction model has consistently outperformed market averages year after year. Since 2021, the 1,800 properties sold through the platform have outperformed the market and generated $65,000 in average capital gains.
Tell us about the early days of interacting with customers… how did you ensure you were building a product they would love?
Learning from past mistakes, we tested product market fit with over 100 potential users before building anything. Our question to them was simple: “If there was an app that allowed you to invest in real-estate removing most of the pain points, and where you would outperform the market since it’s using AI to select the best deals, would you pay for it, and how much would you pay?”
Around 80% of respondents told us “This is exactly what I need, tell me when you go live”.
This made us confident we could launch PropHero.
Following this decision, we built a 1-month MVP, then went to market with our first users.
The experience with the first users was extremely manual, talking to them a lot to get constant feedback on the Product features and asking them which features they would like us to build next.
I can say, smiling today, that I’ve been ashamed of our Product for nearly a year (with the exception of the Data model which was working from the beginning). This MVP mindset allowed us to 1) Get constant user feedback and 2) Get revenue to pay the bills.
Committed Team, Masters at Execution
Over the years, we have been consistently impressed by the team’s ability to deliver. PropHero has a demonstrated history of setting and achieving ambitious growth targets, as well as systematically derisking the business. For example, the team set an aggressive goal to reach profitability in 2024 and achieved it with an entire quarter to spare. Since launching in July 2021, PropHero has built a multi-offering marketplace delivering annualised revenues exceeding US$24M.
How do you ensure your goals have the right amount of stretch and how do you celebrate wins as a team?
We follow an Agile methodology to set quarterly objectives and key results (OKRs) with each team. Targets are defined based on bottom up analysis of our funnel. Each quarter, we ensure that these targets are “ambitious yet realistic” and we make sure leaders only commit to targets they believe in.
A key mindset we constantly push with the team is the “Florentino mentality”, which is an homage to Florentino Perez, a very successful Spanish entrepreneur and the owner of Real Madrid. The “Florentino mentality” consists of having the absolute belief that whatever limit you see is only in your head, and that the absolute certainty that we will succeed makes the impossible happen.
Each time we face challenges (and we face many!), we remind the team of it, and we’ve seen it work incredibly well.
Global Expansion
The team launched in Australia and within a year of launch expanded to Spain. They have since opened operations in Ireland and Indonesia and have their eyes set on further global expansion. With every market, PropHero cements their position as a global wealth partner to their customers - allowing them to invest across borders with ease and benefit from market dynamics absent in their home markets.
What dynamics do you look at before determining a market’s suitability for the PropHero proposition?
We believe PropHero will one day be present in all countries, so the real question is “Which ones should we prioritise?”.
There is both science and art in defining which country to open next. Science consists of analysing macro-economics, competition, investment returns, ease of doing business and synergies with existing markets and customer base. Art consists of travelling to the target country, and then finding the ideal, initial, trustworthy partners.
We’ve observed that hiring the right country manager and selecting the right partners to launch a country are the 2 key success factors when opening a country.
Taking big bets with a hypothesis-led mindset
The team have their eyes set squarely on the future - unafraid to make big bets in order to fuel new waves of growth. Yet doing so with a customer-centric mindset and through an incremental ‘test and learn’ approach has ensured risk is appropriately mitigated and the business continues to grow from the core.
Case-in-point, the past 3 years has seen PropHero evolve beyond simply property investment transactions into a wider marketplace of vetted partners across conveyancing, mortgage broking, renovations, property management, and insurance. Today, approximately 90% of users cross-sell at least one marketplace vertical, with many customers choosing to bundle multiple offerings into a single, easy subscription.
More recently, we’ve seen the team launch some promising experiments with AI that acts as a wealth advisory concierge by identifying a user’s next best action. This feature has already seen positive reception from an existing pilot, and we have faith in the team’s ability to amplify greenshoots.
How do you create a culture of appropriate risk taking and what is the approach you take to experimentation?
All these initiatives have been launched as they contribute to our vision to become the world’s first AI-driven Real Estate Wealth Management Platform.
There are many elements that come into play to create this culture of entrepreneurship:
Hiring, developing, exciting and retaining amazing talent. We have an entire team dedicated to this.
Constantly reminding everyone on our entrepreneurial culture (“Entrepreneurship” is one of our core values)
“Test fast, fail, learn, grow” mindset: Team members are encouraged to test things, with a “start small and fast” mindset. We make mistakes, sometimes it costs some money, but this is the price to pay to discover new opportunities.
Finally, and this may sound counter-intuitive, our role as founders involves more often asking people to slow down and focus, instead of testing too many things. It is actually easy to “do many things”, but much harder to define what will truly move the needle, and do it well. This is where the OKR process is critical. Each Key Result is reviewed and validated by the founders to ensure that it is aligned with the vision and focuses the organisation on the most important opportunities.