Still counting the cost: The millions poured into online agents

Still counting the cost: The millions poured into online agents

In February last year (2018), EYE reported that almost £250m (£249.5m) had been raised between ten online agents alone. Of that money, nearly 40% had been raised by Purplebricks.

We have attempted to provide updates, where possible, since February 2018.

In summary, since February last year, Emoov has gone into administration, but was bought in January. Tepilo has vanished. Hatched has been closed down. House Network is in administration. Yesterday, Purplebricks parted company with its CEO and pulled out of Australia.

February 2018 – Purplebricks: £97m
Purplebricks raised £22m ahead of its IPO in 2015, £25m at its IPO, and a further £50m through an issue of new shares in 2017.

Update: In March 2018, German publishing group Axel Springer put £125m into Purplebricks, in exchange for an 11.5% stake, paying an 8.6% premium, at £3.60 a share. In July last year, it upped its stake to 12.5%, buying 3m more shares at £3.07 each. Axel Springer will be counting the cost, given that Purplebricks share price has more than halved since.

To enable Axel Springer’s stake in March last year, co-founders Michael and Kenny Bruce, together with a non-executive director William Whitehorn, sold some £25m worth of shares to the publisher. The bulk, £24.12m, was sold by the Bruce brothers, of which most (almost £16m) were sold by Michael.

The biggest shareholder remains Neil Woodford, whose funds own some 27% of Purplebricks (according to The Motley Fool earlier this year).

In May last year, the Bruce brothers entered the Sunday Times Rich List for the first time, with an estimated wealth of £190m, ranking them as the 630th richest people in the UK.

In February this year, Purplebricks issued a profits warning and announced the departures of both its UK and US chief executives. In April, Berenberg Bank reduced its price target for Purplebricks by over 80%, saying it had “flown too close to the sun”.

Yesterday, Purplebricks announced that co-founder and CEO Michael Bruce stepped down, that it is pulling out of Australia and is reviewing its US operations. Yesterday, its share price closed some 12% down at 119p.

2) Yopa: £58.6m
Yopa won the backing of Grosvenor Hill Ventures, the investment arm of Savills, when it was just six months old, with £16m in funding. It raised £15m from investors including Daily Mail and General Trust (DMGT) and Grosvenor Hill Ventures in May 2017. That was followed by another £27.6m in September 2017, of which £20m was from LSL Property Services and a further £7.6m was from DMGT (the Daily Mail).

Update: Yopa filed accounts in January this year, covering the period to the end of December 2017, showing mounting losses of £32.35m. In March this year, LSL wrote down its investment in Yopa by 60%, taking the value of its stake down from £20m to £7.8m. In April 2018, CEO and co-founder Daniel Attia became chairman and Ben Poynter took over as chief executive.

3) Housesimple: £33m
Housesimple, launched in 2007 by Alex and Sophie Gosling, raised £13m in a funding round led by Carphone Warehouse founder Sir Charles Dunstone and his business partner Roger Taylor via Toscafund Asset Management and Freston Ventures. That was followed in December 2017 by another £20m investment.

Update: In January this year, accounts filed at Companies House show that in the year to the end of March 2017, Housesimple’s losses rose to £13.5m. At the same time the company revealed receiving £2.5m by way of loans, plus further investment of £1.5m. The company is currently offering its services free to sellers in the north of England. As with Yopa, there were changes at the top: Housesimple is now led by CEO Sam Mitchell who took over in January 2018. Founder Alex Gosling was moved to the role of president.

4) easyProperty: £27m
EasyProperty started with a £1.4m round of crowdfunding in 2014, followed by a £9.75m share placement in September 2014. A third round of funding in 2015 saw it raise another £16m from Toscafund prior to its merger with GPEA.

Update: In January this year, E-Prop Limited reported losses of £9m with liabilities of almost £23m for the period covering October 1, 2016, to the end of December 2017. The company is in the same stable as the Guild, Fine & Country and easyProperty. Last August easyProperty confirmed that some franchisees on standard 12-month rolling contracts had given in notice. In June last year, easyProperty appointed Russell Humphrey as managing director; he joined from Yopa.

5) Emoov: £16m
Emoov has raised £16m over four rounds of funding, including £1.95m in 2014, £1.5m in January 2015, £2.6m in October 2015, £50,000 in December 2016 and £9m in August 2017 from venture capitalists.

Update: Emoov went on to raise a sum of almost £2m last summer in a new crowdfunding campaign on Crowdcube, after merging with Tepilo and an online lettings firm, Urban. It said that the merger had attracted an additional £6m from additional shareholders. It had ambitions to float on the stock market early this year. However, in December last year, Emoov went into administration saying it had run out of money because funds promised during the merger did not materialise.

6) EweMove: £9m
EweMove was self-funded by its founders until The Property Franchise Group bought it for £15m of which £8m was upfront and £7m deferred subsequently re-negotiated to a total of £9m, which has now been fully paid up.

Update: Founders David Laycock and Glenn Ackroyd sold the shares they received. TPFG insists that EweMove is a success story, with its 125th franchisee just recruited.

7) House Network: £5m
House Network, founded in 2004 by current CEO Mark Readings, grew organically and received only low levels of funding until a 2017 cash injection of £5m from private investors. It aims to break even within two years.

Update: House Network went into administration in March this year. It was immediately sold out of administration to Universal Acquisitions Limited, which ceased trading in April. The administrator has revealed that House Network took out a loan of £1.5m in 2017, and that in 2018, received a further £5.7m from investors.

8) Settled: £2.4m
Settled has raised £2.4m, including around £150,000 in seed funding in November 2014, followed by £1m in July 2016 and then another £1.2m in June 2017 from venture capitalists Connect Ventures and Piton Capital.

Update: Settled very rarely courts publicity – the most recent press quoted in its ‘recent press’ section on its website appears to be September 2017. It is currently offering vendors packages from £499. Its founders are brother and sister Paul and Gemma Young. Its last accounts for the year ended September 30, 2017, show total equity of £631,635, and cash of £583,287.

9) Sellmyhome: £1m
Director Will Clark said: “To date we have received around £1m investment and the business has yet to receive external funding.”

Update: In January this year, SellMyHome revealed that five people lost their jobs before Christmas.

10) Doorsteps.co.uk: £507,000
Akshay Ruparelia, who founded Doorsteps last year while still at school, initially raised £7,000 from family followed by £500,000 on crowdfunding platform Crowdcube last summer. The largest private investor in that round was Julian Mylchreest, a senior managing director of Bank of America Merrill Lynch.

Update: Doorsteps returned to crowdfunding last October, aiming to raise £400,000 with the pitch on Crowdcube, “the high street is dying”. EYE estimates that Doorsteps has now raised £1.3m.

Outside these ten, EYE contacted some other online agents, including Hatched, owned by Connells. The firm declined to comment when contacted by EYE last February.

Update: Hatched was closed by Connells last September. Connells said the hybrid/online business model was fundamentally flawed.