Real Estate, Real Challenges: The Struggles of Building a Start-Up in the Real Estate Segment
Use of technology to address the gaps in the property discovery and search experience, and to eliminate brokers from the supply chain
The words ‘property’ and ‘real estate’ carry a certain sense of immutability and permanence. This inherent rigidity is reflective of the larger real estate ecosystem as well. Change, especially the kind of dynamic, constant change that start-ups thrive on, does not happen very frequently within the sector.
Somewhat ironically, this very resistance to change is also what makes the real estate space ripe for disruption. Until recently, most real estate players had largely been following the same processes and business models that have existed for several decades, with little to no modifications. Starting a tech-led real estate venture can, therefore, be a rewarding endeavour – but, it is not without its fair share of challenges.
Finding that Unique Value Proposition
While refining existing business ideas works for a lot of businesspeople, finding an idea that does not have an existing model can be both rewarding and challenging. Rewarding because you get to have the first movers’ advantage and challenging because you might need the capability to convince the end user that it's worth it and the investors that it is scalable. Real estate is a huge sector and quite deeply entrenched in traditional methods of doing business. Therefore, a disruption could only be welcome if it made a huge difference. We started from the very basic problem that the service provided is not commensurate to the money charged. And that was an instant hit with the consumers as they hate paying brokerage. Indians pay upwards of 50000 crores for renting a house every month and another 24000 crores for buying houses.
Convincing Investors to Support Your Vision
Your business might be able to survive as a bootstrapped start-up but achieving rapid growth and scale in the real estate industry, while remaining competitive, requires some funding even if you make a profitable model. This is why, once you’ve finalised your business model and launched your venture, finding access to institutional investment becomes the next most important task.
It is critical to clearly outline your long-term business vision and how you aim to achieve it. You also need to conduct in-depth research about your customer, prospective competition, as well as the current and future challenges in the market, and come up with a realistic blueprint of how you aim to achieve it. Doing so can help your potential investors understand your vision, path to growth and use of growth capital your venture needs.
Entrenching Your USP in Consumers’ Minds and Keeping up With Their Evolving Expectations
Unless your USP is firmly embedded within the minds of the end-consumers, your USP – no matter how differentiated or innovative – will not drive the kind of value that is expected of it.
Differentiation that solves a customer problem faster, better or cheaper is the whole point of entrepreneurship. Targeted communication that speaks about the specific challenges that your end-consumers face, and how your start-up is helping address that need-gap, can work wonders for your brand’s market presence and mindshare.
It is also important to be ready to evolve constantly, and rapidly, in order to further your brand proposition in the consumer market. Some requirements of today’s digital-first customers are prone to change at a fast pace however basic needs remain the same. Your value proposition need to account with their changing sensibilities and demands while remaining true to your core.
Navigating a Large, Unorganised, and Broker-Dominated Market
This point is more business-centric. Valued at $120 billion sales + $50 bn in rental in 2017, the real estate sector in India is expected to reach a market cap of an astounding $1 trillion by 2030. This is a massive opportunity for any entrepreneur. However, given its sheer size, it is but natural that the real estate segment is also highly unorganised. The profusion of property brokers who add little to no value to the real estate ecosystem further adds to the market fragmentation. And in spite of that there is a milieu out there who may not find value in their services but use them either due to want of options or because of habit.
A C2C business must be for the customer and that too on both sides of the transaction. And it will fly only if both the customer appreciates your value proposition. The idea has to be strong, of course, but the communication of the idea has to complement the idea for it to work out. Rest of it is about fixing glitches and most businesses manage to do that.