Buying your first home is one of the great milestones in life, but selling your home is often not. In fact, its most likely one of the greatest causes of stress in your life and BestBid Agency wants to mitigate home sellers’ stress through its multi-agent home vendor system. The agency focuses on producing results by increasing the number of buyers that see the property, through the use of multiples agents that are managed entirely by the BestBid platform. Home sellers only deal with one contract, one contact, and one fee that is directly handled with their in-house agent at BestBid.
London TechWatch spoke with Chief Marketing Officer Jonathan Butt about fundraising and building a proptech startup in this competitive market.
Who were your investors and how much did you raise?
BestBid, the UK’s first multi-agent home vendor, has raised a £500K Seed investment round led by venture firm Hambro Perks, as well as notable angel investors Paul Forster (cofounder of Indeed.com), Simon Murdoch (founder of Episode 1 Ventures), Doug Monro (cofounder and CEO of Adzuna) and William Reeve (serial entrepreneur and cofounder of LoveFilm).
Tell us about the product or service BestBid offers.
BestBid lists homes sequentially with the best local agents until they are sold. They support the seller with experienced in-house agents advising each step of the way. BestBid’s multi-agent process is delivered at a sole agency price, with their agents focused purely on providing independent vendor advice.
What inspired the start of BestBid?
Tom Scarborough, the founder, sold his house. It was a nightmare. It took a long time and resulted in a lot of family stress.
Three offers fell through. Four estate agents were commissioned to sell the property. Each recommended he drop his asking price to below market.
He was convinced by market dynamics so believed the alternative was to find more buyers. He did so by initiating a multi-agent process. He discovered each agency bought a fresh crop of buyers. Each time he commissioned an agency a new flurry of viewings followed.
However, managing 4 agents was complex. 4 sets of T&C. 4 points of contact. 4 disconnected entities.
He believed he could create a service that could do better. That’s BestBid.
How is BestBid different?
The alternatives are:
- Online estate agents – Purplebricks etc. But these charge their fee upfront and have smaller pools of local buyers
- Sole agent agreements – but these limit the number of buyers a property will be seen by because the market is so fragmented
- A traditional multi-agent process – but Tom’s complex and expensive process is a typical result of this process, so very few opt for this path
What market is BestBid targeting and how big is it?
We believe BestBid can sell homes more reliably, more quickly and for more than traditional sole agent agreements. Ultimately, we are targeting the entire residential home sales market.
Initially, we are helping those stuck in the sales process. Agents are only selling 43% of their listings at the moment. So there are a lot of people stuck.
Initially, we are helping those stuck in the sales process. Agents are only selling 43% of their listings at the moment. So there are a lot of people stuck.
What’s your business model?
BestBid charges a commission on the completion of the house sale. We take a fraction, paying most of that fee to the agency that provides the buyer. It is similar to a broking model.
Who do you admire in the startup world and why?
We are big fans of companies that manage to create and sustain incredible working atmospheres. Tony Hsieh of Zappos is the kind of reputation we hope to emulate.
What was the funding process like?
Fundraising is incredibly stressful and involves a lot of sleepless nights. Whilst Tom had a good network from his previous work, it is still hard to find great investors for whom it’s the right time and right opportunity, but we are incredibly fortunate, grateful, and humbled to have such fantastic backers.
What are the biggest challenges that you faced while raising capital?
Getting the meeting is the hardest. Angels and Seed funds are reviewing a lot of opportunities. Then finding a lead angel to allow the round to form around. We were extremely fortunate to work with Hambro Perks who initiated the lead position. This allowed the great angels we have to come together and close the round. Creating and maintaining the fundraise momentum is hard. Thank you to those strong hands who backed us from the start and were patient as we pulled it all together.
What factors about your business led your investors to write the check?
The investors say there are three primary reasons they invested:
- First, the idea makes sense. All parts of the story are consistent and are supported by our understanding of estate agents and the property market.
- Secondly, the proof of concept had shown it can work and we had the capability to make it work.
- Third, they trusted in Tom and the team he is building up around him.
What are the milestones you plan to achieve in the next six months?
Our primary focus is on cost and depth of customer acquisition. Over the next 12 months we’ll be investigating how to connect with home sellers and provide them with the best support in selling their properties. We hope this accumulates by gaining good traction in a specific area for a reasonable cost of customer acquisition.
What advice can you offer companies in London that do not have a fresh injection of capital in the bank?
Constantly explore ways of getting more out of the money you do have! For example, at BestBid:
- A typical cost of building a website may be £10K. We got going with 3 pages built for a cost of £700.
- We have a staff of 9 people. But 6 of those are freelancers working for $35/hour.
- We’ve avoided agency quotes of £60K by commissioning crowd-sourced platforms to help with our identity.
- We’ve replaced a £30K piece of market research with a £230 Google Consumer Survey.
These actions allow us to make informed decisions without breaking the bank.
Where do you see the company going now over the near term?
We’re following our business plan. We’re rapidly experimenting to find out how to best connect with prospects and how to engage them. This may be door-to-door sales or writing letters to the individuals. But for the immediate future, we’re focused on proving the business can work in a focused region.
What is your favorite restaurant in London?
Pidgin in Hackney. A real gem.
