Doubts have been raised about the valuation of Yopa and the future of online estate agency in a piece in the Sunday Times.
Run under the headline “It doesn’t pay to be a digital estate agent – just ask Yopa and Purplebricks”, the piece by Peter Evans says that many “struggle to find a business model that works”.
The article says that Yopa’s recent £16m fund-raise took the loss-making start-up’s total fund raising to above £90m “and looked like a vote of confidence”.
However, the article claims: “According to several sources, Yopa’s latest fund-raising was a ‘down round’ – meaning the company raised funds at a lower valuation than before.
“Based on research from the researcher Beauhurst, Yopa was valued at £116m before it raised £20m in July last year.
“The current valuation has not been disclosed.”
Grenville Turner, the newly appointed chairman of Yopa, declined to comment on the valuation.
Yopa’s backers include Savills and LSL – but the latter did not contribute to the latest fund-raise and has down-valued its original £20m stake to £7.8m.
The article says that Purplebricks has faced scepticism about the transparency of its business model and its shares have dropped by over 70% in the last two years.
The current market slump and the high cost of customer acquisition are both cited as the main problems for online agents.
Purplebricks spent £42.1m on sales and marketing last year, and had a total revenue of £93.7m, says the article which quotes Russell Quirk as saying: “It’s an impossible sector to thrive in.”
“He should know,” says the article. “He founded Emoov which collapsed last year.”
There were 856,420 transactions in England and Wales last year, with online agents thought to be behind less than 7% of them, says Evans.
He also quotes Tom Scarborough, founder of new business Movewise, which lists a property with successive agents until it is sold, and which was called BestBid when it raised £500,000 earlier this year. (See link below to EYE story in April.)
Scarborough said: “People who are listed with online agents are our best customers.
“They’ve had no viewings for months. We get hold of them, send them to the best local agents and they get 20 viewings.”
Movewise, backed by Lovefilm co-founder William Reeve, takes a 0.25% commission when the property sells.
Scarborough is targeting unhappy customers of online agents: “We want to steal all their customers.”
As the article went out yesterday, Quirk tweeted: “Yopa . . . like the online agency sector as a whole now. Once the exciting fling, now the discarded one night stand.”
The full article is here although you may find that it is behind a paywall.