Bloomberg Línea — The startup sphere in Latin America is going through a moment of redefinition of priorities amid belt-tightening brought by the reduction of capital available for growth. QuintoAndar however, one of the most valuable startups in the region, is betting on a regional expansion, and is launching in Mexico with the brand Benvi, which will be its second market after Brazil.
“It is a representative step in our trajectory because of the characteristics of the real estate market, such as the fact that they are physical assets that require local presence, and because there are important regulatory differences,” Gabriel Braga, CEO and cofounder of QuintoAndar, said in an interview with Bloomberg Línea.
“For these reasons, there are not as many proptechs [startups dedicated to the property sector] that operate in various countries,” he said.
The launch of the rental platform operation comes two months after it cut around 160 workers in Brazil, equivalent to 4% of its total staff, a move it attributed to a restructuring and a prioritization of areas, one of which is precisely the expansion into new markets.
“There is a search for efficiency in the operation and prioritization of what we want to do in the future. These are adjustments [the job cuts] that we make from time to time,” Braga said, adding that, despite the slowdown in the Brazilian economy and in the real estate segment, the startup has managed to gain market share in the country, such as rentals, purchases and sales, rental guarantees, and real estate financing, and to exceed its goals both in revenue and bottom line.
The entry into Mexico - Latin America’s second largest market - will initially take place in the capital, Mexico City. The plan had originally been announced in August, on the occasion of the extension of the Series E round that raised the startup’s valuation to $5.1 billion.
The Benvi brand will also be used in other foreign markets, Braga said.
“It’s a big market [Mexico], but it still presents a lot of difficulties for people who want to rent a property. Information about properties is fragmented, there are losses with defaults that are not covered, and the stage of digitization of processes is just starting to grow,” QuintoAndar’s CEO said, citing studies conducted over the past year before the decision was taken to enter Mexico.
Benvi will face competition from local startups dedicated to the same aim of reducing the difficulties in the rental experience, such as Homie, which has received funding from US billionaire Sam Zell.
According to Braga, the Mexican market has about 35 million residential properties, of which six million are rented, close to 20% of the total.
In Brazil, QuintoAndar leads the rental market with more than 175,000 contracts in place, and more than 90 billion reais ($17.3 billion) in assets under management in 75 cities.
QuintoAndar will offer its main solutions available in Brazil in the Mexican market, such as the exemption of guarantor for those renting a property, access to credit and a digitized journey through the app or website; and for landlords, a guarantee of payment in the event of late payment by a tenant.
The operation in Mexico, where the company’s investment and initial local team size were not disclosed, will be led by entrepreneur Nicolás Tejerina, cofounder and CEO of Grupo Navent, one of the largest classified ads portals in Latin America, which was acquired by QuintoAndar at the end of last year.
Navent owns the Inmuebles24 portal in Mexico, which will continue to operate independently, but will have the rental properties of the QuintoAndar platform on its portal.
The move by QuintoAndar is similar to other startups in a more advanced stage of development, such as Mexico’s used car sales startup Kavak, the most valuable in Latin America, worth more than $8 billion.
Kavak made its debut in the Brazilian market last year and began operating in Rio de Janeiro earlier this year. Earlier this month, however, it laid off around 50 people in the country, according to statements made to Bloomberg Línea.
The search for efficiency has also been a common denominator among large startups in the region. Loft, another of the large startups dedicated to the real estate market, recently announced a restructuring and the appointment of an executive, Marcel Regis, who will aim to do more with less -- reducing expenses and developing talent internally -- to lead its operations.
Translated from the Portuguese by Adam Critchley