Future City newsletter: Struggles at SoftBank’s $10B hospitality startup, the death of CrediFi & more
In this week's edition, we look at Oyo's struggles, Airbnb's big European victory and construction platform's $30M fund raise
Proptech is a $20 billion industry that’s already reshaping and upending traditional real estate as we know it. And this is just the beginning. Each Thursday, The Real Deal’s Future City newsletter breaks down the biggest news in proptech across the globe, from 3-D printer homebuilders in Long Island, to emerging tech brokerages in India, to crowdfunding property startups in San Francisco. Of course, we also cover the intrigue around firms backed by SoftBank. There are lots of them.
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Here’s the Dec. 26 edition.
Masa, you’re breaking up
It looks like SoftBank-run Yahoo Japan and SoftBank-fueled hospitality startup Oyo are splitting up. The internet company canceled a joint venture centered around a platform for apartment rentals in Japan, called Oyo Life. Yahoo Japan sold off its 30% stake last month back to Oyo. The news is just the latest snag for Oyo amid a massive push for growth. Layoffs totaling about 2,000 workers are expected in India by the end of January, and owners of apartments and rooms on the Oyo Life platform have complained about contract issues with the startup. Oyo, valued at $10 billion, allows guests to book hotels through its mobile app and charges the hotel owners a fee on room revenue. It also franchises the brand. The firm, which is on track to become the world’s biggest hotel company by room count in 2020, posted widening losses of $332 million for the financial year ended in March. Despite the turbulence, Oyo is expected to raise $1.5 billion more from SoftBank and Oyo CEO Ritesh Agarwal’s Cayman Islands-registered RA Hospitality.
Je ne suis pas agent immobilier
If you listen closely, you can hear Airbnb breathe a sigh of relief. The Court of Justice of the European Union (the EU’s top court) ruled that the company is just an online short-term rental platform and not a real estate agency. If classified as an agency, Airbnb would need a professional estate agent license and would have to comply with a host of other regulations across Europe. The ruling comes after a French tourism association (with the acronym AHTOP) filed a complaint claiming Airbnb was violating French law by not having an agent license. So those pesky property rules will be avoided for now but the company is still looking a stricter regulation on the continent, especially from France, in the future.
We package hits uncharted waters
The WeWork rescue package is looking a bit shaky these days. Talks between SoftBank and Japan’s three biggest banks to secure over $3 billion have reportedly hit a snag. Sources told Reuters that SoftBank would likely go into 2020 without the financing in place for WeWork’s staggering $9.5 billion package. The banks are reportedly spooked by the risk of throwing the life vest out to WeWork. The baby out with the bathwater and all that.
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Over $2 billion
That’s how much Adam Neumann may gain from his now legendary exit package if WeWork ever manages to go public. The ousted CEO has millions of “profit interests” in the company he founded, which would balloon his golden parachute from $1.7 billion to over $2 billion, per The Financial Times. After being pushed out of his position in September, Neumann reportedly negotiated a lower catch-up price than the $38.36-per-share arrangement associated with the more than 42 million profit interests he previously owned. That Adam! Anyway, that all being said, it’s not likely WeWork will go for the IPO anytime soon.
Construction workers go digital
Construction contractor platform Levelset just nabbed $30 million in a round headed by Horizons Ventures, the investment firm backed by billionaire property developer Li Ka-shing. The company’s goal is to digitize payments and billing for the many contractors involved in a given construction project.
CrediFi bites the dust
CRE data platform CrediFi is closing up shop. Sources told The Real Deal that management informed workers the news in offices Tel Aviv and New York on Tuesday. The company had already laid off many of its employees in June and plans to sell the firm to Moody’s fell through. CrediFi let users track commercial real estate loans but their service ultimately couldn’t keep up with that of competitors in the CRE data field, such as the juggernaut CoStar Group.
Looking for the IPO down under
The largest digital real estate marketplace in Southeast Asia, Singapore-based PropertyGuru runs property listings platforms across the region including Thailand, Malaysia, and Indonesia. It’s the reason why their Australian IPO was hotly anticipated in the city-state earlier this year. But in a time of IPO mishaps, this one didn’t exactly go according to plan.
In October, just two days before shares were set to trade in Australia, the company canceled it. “We decided we don’t want to list unless we’re completely on the front foot and charging,” CEO Hari Krishnan told Bloomberg. “We’re not going to limp out into the world.”
Now the company wants to try going public again as soon as 2020. But they’ll likely run into the same problems from last time, namely public markets not buying the astronomical valuations bandied about. PropertyGuru targeted a valuation of $932 million last time around and Krishnan has defended that valuation. We’ll see if history will repeat itself or if they can make it work.
Sending a new living room
A startup that helps consumers with home renovations, HomeLane just scored $30 million in a Series D funding round. The company from Bangalore, India lets homeowners upload floor plans for furniture suggestions from a team of interior designers and see the pieces in person at 16 locations across India. They claim to have furnished over 6,000 homes.
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