Technology is streamlining every aspect of traditional firms and presenting major investment opportunities.
Israeli Prop-Tech Revolutionizes Real Estate
From his vantage point as general partner of international tech investment firm Flashpoint Ventures, Alex Konoplyasty sees the construction and property technology sector rising fast on the Israeli horizon.
This was a contributing factor in London-based Flashpoint’s decision to open a Tel Aviv office in 2019 and to announce in March its plan to invest at least $100 million in Israeli startups over the next three years.
“We have $400 million under our management, and Israel has been a very important market for us. We’ve invested about $30 million of capital into eight [Israeli] companies,” Konoplyasty said.
“Guesty were early riders of the prop-tech wave, founded by twin brothers with personal experience in this space,” said Konoplyasty. “It was an early-stage investment, but we took the risk because we believed in it, and it has been very successful for us.”
He said that property, construction and real estate are big, broad and conservative markets.
“Technology has been slow to penetrate these markets. But several things happened: First, alternative business models have come up like WeWork, Airbnb and booking.com, which enabled a lot of small entrepreneurs to enter this newly digitized market,” he said.
“The wave we see now is driven by Covid as people are self-isolating and there is a need for flexible work solutions and remote construction-site oversight.”
To fill those needs, the Israeli con-tech and prop-tech ecosystem has grown nearly 800 percent in the last four years, encompassing about 200 startups today, according to Israel’s ConTech Construction Innovation Zone.
Konoplyasty said traditional real estate and construction firms outside Israel are investing in Israeli con-tech and prop-tech.
And that includes the world’s largest construction nation, China.
Haier Israel Innovation Center and its HCH Ventures recently led a startup roadshow aimed at Chinese executives and investors.
The presenter was Amalia Paz, co-founder of Bricks Proptech Innovation Center, which matches real-estate owners, developers and operators in Israel, the US, the UK and Asia with relevant Israeli startups.
“There is not one week that we do not receive inquiries from the largest players in the industry to connect them to relevant Israeli technologies for cooperation or investment,” Paz said.
She said that although real estate may bean “old industry,” this market is just as large as that of the newer sector of cybersecurity.
“Therefore, the opportunity is huge for both Israeli entrepreneurs and investors,” she said.
Here’s a look at Israeli prop-tech firms.
Founder Omri Peled started Bllink following an embarrassing episode: As a young student working full time, he had fallen into arrears on his monthly upkeep fee to his apartment house’s building committee. The committee hung a sign at the front door intended to shame him in front of the other tenants.
Peled, who happened to be in high-tech, developed a digital solution that allows tenants and building committees to execute, manage and track all building payments automatically.
Bllink’s product is used in 35 cities across Israel. It has attracted prominent investors such as senior Wix executives Avishai Abrahami, Nir Zohar, Giora Kaplan, Lior Shemesh and Eyal Veitzman, in addition to Flashpoint VC and Altair Capital.
Starting next year, Bllink plans to expand into Europe, where it will focus more on processing rent payments.
Boaz Leviatan had a finance professor at IDC Herzliya who owned family properties in the United States. Seeking to buy additional properties, he applied for a mortgage at his American bank but was turned down because he had no credit score in the U.S. His mortgage application to his Israeli bank also was rejected since they couldn’t evaluate the proposed U.S. property.
Leviatan and three friends — Yair Benyamini, Erez Dricker and Tim Mironov — founded Lendai to enable overseas customers to secure mortgages on U.S. properties.
Its proprietary technology determines the present and future value and cash flow of the property; the likelihood of recouping lost capital via the property if the borrower defaults on the loan; and the creditworthiness of the foreign investor.
“We started with Israelis wanting to purchase in Georgia. By the end of the year we’ll be working in 12 states,” Benyamini said. “Canadians comprise our biggest market, and we also work with Brits and Australians.”
Benyamini is moving to Florida to open Lendai’s U.S. headquarters. The R&D, he said, will always remain in Israel.
For investors, tokenization provides control over when to invest in a project and the ability to trade and liquidate on demand. For property owners, it provides an efficient way to raise capital from a broader pool of potential investors.
Recently, the Jerusalem-based SolidBlock teamed with Blue Horizon Developments to tokenize The Beachfront Hotel in Phuket, becoming the first real-estate project to raise money on the blockchain in Thailand.
Localize.city built a novel engine that extracts helpful insights about any New York City address from thousands of datasets, using artificial intelligence to help potential buyers and renters make more informed decisions about a property’s advantages and drawbacks.
The website searches any address in New York City’s five boroughs. Conclusions are presented instantaneously in the form of up to 30 succinctly worded insights regarding the neighborhood’s prices, transportation, livability, community and potential nuisances.
When artificial intelligence meets architecture, you get Qbiq.
Founded in 2018 by Leeor Solnik, Noam Diamantstein and Elad Kaminer, Qbiq gives real-estate developers, brokers and architects an automated data-driven layout plan optimized for utilization, costs, build time, efficiency and additional factors.
The Qbiq platform includes smart assessment tools, comparisons and 3D visualization to test concepts, close transactions faster and improve engagement and deal conversion rates. It also provides automatic validation of architectural plans against local regulations, compliance, building constraints and company standards.
Via its website and mobile app, Lendlord provides property owners with ongoing metrics on portfolio health, historical growth trends, suggestions on potential savings on mortgage costs, upcoming due dates, and more.
In addition, Lendlord offers custom loans to finance new business or refinance existing loans. The platform currently manages around 12,000 properties worth approximately $4 billion.
Jones founders Michael Rudman and Omri Stern spent years providing services in commercial real estate. They discovered that strict insurance requirements make it difficult for vendors to be compliant across all properties.
So, in 2017 they decided to simplify risk and compliance for commercial property managers using software and artificial intelligence. The process of vendor approval is cut from the usual 12 days to 2.5 days, with reported 99.9 percent accuracy.
The company’s compliance data platform also serves as a trusted vendor marketplace.
Jones won the Real Estate Tech Award for 2020 in the insurance category. Customers include large U.S. real estate firms such as Lincoln Property Co., Prologis, DivcoWest, Rudin Management, Sage Realty and JLL.
A product of the Tel Aviv-based Stoa Fund, FlipOS is targeted at American real-estate investors who buy assets with the intention to renovate them and resell (“flip”) them at a profit.
The service provides online tools to accomplish fix-and-flip deals faster and more securely. This includes upfront cash offers, low-cost loans and inspections. For now, FlipOS is available in select counties in Arizona and Florida.
Or Preiss co-founded an esports gaming site. His older brother, Itai, does fix-and-flips in the U.S. real-estate market. Zorba is what happened when they joined forces with Kobi Mantzur, formerly a developer for MyHeritage and Isracard.
Zorba is a social marketplace that streamlines off-market deals between real estate wholesalers and vetted cash buyers.
“We saw a huge opportunity to use my knowledge from the past decade to standardize this market to make it better for both sides,” Preiss said.
“Buyers get access to under-the-radar deals. They can schedule a walkthrough from the app and make an offer through the app, giving them an advantage over other buyers. Wholesalers can help homeowners sell fast for cash in difficult situations, like probate or divorce. We help them sort out all the issues.”
Founded in 2016, Home365 is a fast-growing hybrid of prop-tech and insur-tech. Its machine-learning underwriting engine predicts maintenance, repairs and various resident-related events, guaranteeing small and medium-sized property owners a fixed monthly return on investment.
“Being focused on delivering passive and predictable financial results, Home365 invented a new asset class that transforms the risky nature of being a real estate investor into an all-accessible ‘savings account’ experience,” said Daniel Shaked, Home365’s founder and CEO.
With its recent acquisition of U.S.-based SlateHouse Property Management and Realty, and its closing of a $16.3 million funding round led by Greensoil PropTech Ventures II, Home365 now manages 7,000 units across six states with a total value of some $1 billion. A new 40-agent realty division facilitates the buying and selling of investment properties across many different regions, using the company’s proprietary evaluation tools.
Edited by Judith Isacoff and Bryan Wilkes