How “QV on steroids” went from start-up to cashed-up in half a cricket season.
Just three months after completing the Lightning Lab Christchurch accelerator programme, a web-based property investment company has become the first of the cohort to close its investor funding, raising over $200,000.
PropertyPlot, co-founded by Nicola Valentine and Seth Reid, aims to reduce the risk of taking on investment property by providing property market data and likely returns from residential property across New Zealand – “QV on steroids”, as Valentine puts it. The main part of the product is the portfolio manager, where property investors can track and manage the financial performance of their property portfolio.
Valentine says the financial report produced on the PropertyPlot site – from council and core logic data, with bespoke algorithms – helps prevent property investment traps like buying the wrong house in the right suburb (for instance buying a one-bedroom unit in an area where demand is from large families) or overestimating yield and underestimating costs, leading to disappointing returns.
“If you’re interested in property for a financial gain, then it’s got to make money. New Zealand’s got a debt problem because a lot of people make investments based on bad advice and don’t see the returns they expected.
“Our product is essentially about financial literacy.”
PropertyPlot was originally only a business plan submitted as part of Valentine’s MBA, but the idea was so strong Valentine co-opted Reid and put the start-up in motion.
For Valentine, that meant leaving the security of a digital strategist job with Intergen to pursue the grind of getting PropertyPlot off paper and onto the web.
“It’s a hard road. You need to be a master at every part of the business, compared to working at a big company, is a big step up.”
But the road has now made it past a key milestone, with investors fully signing up to the company’s goal of $200,000 initial investment – enough to keep the business, which has two developers on the payroll along with Valentine and Reid in business for 10 months.
The original target was a lot higher – $450,000 – but the co-founders decided to focus on a smaller number of discerning investors and grow revenue, rather than headcount.
Nicola Valentine’s start-up finance tips
1. Talk to your customers
Make sure there is going to be a market for your product.
2. Get help
There’s so much free help available. In Christchurch there’s CDC, Callaghan Innovation, Ministry of Awesome and EPIC, to name just a few.
3. Refine your pitch
You need to make a good first impression. I rewrote my PropertyPlot pitch 20 times, and learned it by heart, so when I delivered it, it hit investors.
4. Provide the stats
You might only get one chance to get in front of the investor, so have the data on hand, so if you get some interest, you can instantly show you’ve got a market, and you can show the return on investment.
“As a founder, you get a lot of mixed messages on investment. Some people say you should only take as much as you need, some say get as much as you can.
“We originally wanted to get as much as possible, but changed our focus. We could employ more people and grow the business quickly but we prefer to focus on revenue and go from there.”
Regardless, the company reached its goal before the end of summer, so what set PropertyPlot apart when it came to closing investment agreements?
Firstly, Valentine says, investors understand an investment business, so fear of the unknown was not an issue.
The rest was proactivity and polish.
“We did pitches to angel investors in Auckland and Wellington. And we worked on our numbers beforehand, so when interest came through we could provide our terms sheets straight away and not leave a potential investor waiting.
“I also rewrote my pitch 20 times, learned it by heart, so when I delivered it, it hit investors.”
The result is Valentine and Reid can now focus on growing revenue at PropertyPlot, with an eye on future expansion in scope and markets.
That includes potential forays into commercial property data, and expanding across the Tasman, where Valentine has personal experience in residential property investment.
For now, though, the focus is firmly on the newly-secured next ten months.
“Right now it’s about financial literacy. We’re going to do it really, really well before we do anything else.”