Aussie real estate startup ActivePipe has raised $6 million in pre-Series B convertible note funding, as it gears up to accelerate growth in the US.
The funding comes from insurer IAG’s Firemark Ventures, and Second Century Ventures, the venture capital arm of the National Association of Realtors.
Founded in Melbourne by Ashley Farrugia, ActivePipe is an automated real estate marketing platform designed to make life easier for real estate agents, using predictive data to identify and manage their high-value contacts.
The following May, it entered into the US National Association of Realtors (NAR) Second Century Ventures 2018 REach® accelerator program, with the NAR taking a minor stake in the business.
Since then, the platform has taken off in the states, Farrugia tells StartupSmart.
“Our product-market fit couldn’t have been better,” he says.
“We got a huge reception from our product over there.”
While the founder doesn’t disclose exact revenue figures, he says in June 2019 ActivePipe saw compound growth of 80%, company wide.
He also notes the startup has just signed its biggest enterprise agreement of all time.
This year, the startup is expecting to see about 350% growth in its US business alone, where it has a rapidly growing customer base of more than 10,000, adds Farrugia.
This convertible note raise is a bridging round, Farrugia says, as ActivePipe gears up to closing its Series B towards the end of this year.
The combined funding will be used to further accelerate the startup’s growth in the US market.
In particular, having the NAR as a repeat investor is going to be “a huge advantage for us”, says Farrugia.
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Typically, the NAR only invests in technology it believes can “radically transform the industry”, he explains, noting that it was an early investor in electronic signature company DocuSign.
“It’s pretty exciting that they view us in the same light as they did DocuSign back in the day.”
Part of the reason ActivePipe has gone down the convertible note route is to minimise disruption to the day-to-day running of the business — allowing it to continue on its current growth trajectory.
“Fundraising is incredibly disruptive to the business,” Farrugia explains.
“While we’re getting the business ramped up we didn’t want to run a full-blown disruptive big raise in the middle part of this year, when we had a heap happening in the US.”
But, next year, the business will be making big moves in terms of the product, Farrugia says.
It will be moving more from being a marketing automation platform to one that “drives action off the data we harvest and really help agents list and sell homes”, he explains.
“We’re going to really invest in the product.”
These efforts will continue to drive growth in the US and Australia, he adds. He has no designs on expanding that footprint globally. At least, not just yet.
“We won’t enter another market unless we can do it right,” says Farrugia.
“It’s a really bad decision to go into a market and half-arse it.”
While Farrugia would consider moving into new geographies if he has the funding and resources to do it properly, there’s plenty of opportunity in the US.
There’s a $6.4 billion spend on property lead generation in the US every year, he says, and about 50% of those leads don’t even get a call back.
“We’re very honed in on solving that problem,” Farrugia says.
“We can be the best in the world at solving that problem.”
ActivePipe is an example of an Aussie startup that is seeing success in the US market. But, having made that move, Farrugia has some words of wisdom to share.
“It’s bloody hard,” he says.
“Definitely don’t go too early,” he advises.
As a mentor to several startups, he often hears founders talking about moving into the US market before they have proven their product locally.
“If you can’t prove out your product in your local market, your chances of it working in another market … is highly unlikely,” he explains.
“You don’t get many chances to enter a market, so do it once and try to do it right.”
He also advises startups to make sure they’re financially prepared to make an international move.
“It’s not a cheap exercise.”
It’s about having the right resources in place, and the right people to spearhead the business in the new market. Those personnel will be “critical”, he adds.
“If you’re a startup you can’t afford someone who’s done it before, because they’re off running big businesses, but you also need to find someone that’s capable of having the hustle,” says Farrugia.
“It’s tough, but finding that balance is mission critical.”