Flow raises the largest proptech seed investment in South Africa ever

Flow, a local proptech startup in South Africa, has recently received the biggest proptech seed investment in the country to date with an impressive R20 million (approximately US$1.4 million). Founded by Gil Sperling, Daniel Levy, and Jonathan Liebmann, the mobile app is looking to change the rental space in South Africa by rewarding good tenant behavior and giving millennial renters (commonly called Generation Rent) a voice.

Kalon Venture Partners is the lead investor of R10 million (approximately US$731,000), with co-investment of an additional R10 million (approximately US$731,000) from an international VC, which is in its final stages. Funding will be used to accelerate the development of South Africa’s #1 app for tenants; to fuel growth and increase the base of tenants already using Flow; as well as to increase the range of rewards available to tenants.

With Flow, tenants get rewarded for registering, adding their property details, paying their rent on time, looking after their homes, and much more. Great tenants can earn thousands of points every month, increasing their Flow score and accessing incredible rewards. For these rewards, Flow has struck partnerships with a number of leading brands in the lifestyle, entertainment, homeware, fashion and travel space, including: Superbalist, Weylandts, SweepSouth, OneCart, plus a selection of airtime and electricity providers (with more to be launched in the coming months).

Tenants that are fully in Flow can get up to 20% of their rent back in rewards every month. That means thousands of rands in value, as well as a more seamless and connected rental experience.

For more information and to see how Flow works, check out this video.

The property industry - ripe for disruption

Gil Sperling, CEO of Flow, notes that the property industry, locally and globally, is one of the few verticals which has not seen much innovation, making it an industry ripe for disruption. “Compared with any other industry, the property industry – and in particular the rental market – is archaic and disconnected. There’s also a massive paradigm shift in how people should rent which is inspired and driven by their lifestyle choices, and is something proptech could and should leverage big time. People are used to being connected all the time and transacting digitally, in real-time; and they want transparency in their dealings with companies (including their landlords). These are some of the key factors that inspired the creation of Flow. Through scaling with technology and economies of scale, we can revolutionise the economics of rent, providing a more seamless experience and more value to tenants,” Sperling adds.

Globally, proptech is one of the fastest growing sectors. In 2017, Venture Capitalist’s put $12.6B into the proptech sector, with WeWork and Compass leading in terms of funds raised. Softbank invested $4.4 billion in WeWork and $450 million in Compass. United States-based real estate tech firms comprised nearly $6.5 billion (or 52%), of the venture capital funding raised in 2017. 

Clive Butkow, CEO of Kalon Venture Partners, notes that the company invests in technologies that are disrupting their respective industries and have large target addressable markets - and that Flow fits this criteria perfectly. “In addition to this, Flow has also passed our most important investment criteria, being: the A-team; the three founders have all built incredibly successful businesses and have the ‘execution intelligence’ to grow a product into a large profitable enterprise,” Butkow adds.

As opposed to other tech companies, Flow has seen a gap in the market and is largely focused on a very specific subset of people: millennial residential property renters.

The demand for rentals among millennials is on the increase, and it’s easy to see why. In Deloitte’s 2018 Millennial Survey of over 10,000 people born between 1983 and 1994, the research found that freedom and flexibility were key workplace priorities for this age group. But this could be extended to the world of property too: because of this desire to have more freedom, millennials tend to settle down later and want a more transient lifestyle, which means they’re renting rather than buying. Property prices have also increased across the board, making home ownership increasingly unaffordable for younger generations.

Millennials have become increasingly familiar with using technology to meet their needs – yet when it comes to renting an apartment or a house, the entire rental process is still very manual; lacks transparency; and lacks clear communication while leasing and during a lease. Flow is setting out to drive the digital innovation that is desperately needed within the rental market.

A track record within property and technology

Sperling, along with co-founders Daniel Levy and Jonathan Liebmann, come from three very different backgrounds, yet they all have serious expertise in their respective fields. Sperling started his career as an engineer, and Levy as a lawyer. Together with a third partner, they founded Popimedia, an ad-tech and performance marketing company that partners with tech giants like Facebook (today, Popimedia is the largest buyer of Facebook media inventory in Africa). After exiting Popimedia to French based global communications group - Publicis - in the largest deal of its kind, they identified opportunities in the proptech space and joined forces with Liebmann, a property disruptor and innovator best known for creating the highly successful Maboneng Precinct in downtown Joburg.  

For these three serial entrepreneurs, Flow is the vehicle that brings their various expertise together into one offering, and looks to be something that will disrupt the proptech market in SA.

The ultimate goal with Flow is to collectively make a huge impact on Generation Rent. By making the rental market in South Africa better for everyone – tenants and landlords – this should, in turn, have a positive knock-on effect on South Africa’s economy at large.

SOURCE Flow
Edited by V. Haviland

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