Business Matters last interviewed Russell Quirk, CEO and Founder of the online estate agency eMoov.co.uk, back in January 2014 – after the company had just received seed funding from the former TV dragon James Caan. Earlier this year, eMoov raised more than £2m in a fundraising which included investment from Simon Murdoch’s venture capital firm Episode 1, an early stage investor in Zoopla, Betfair, Shutl and Lovefilm. As reported on 1 September, eMoov is looking to raise a further £1m – this time through the crowdfunding platform Crowdcube. We caught up with Russell to ask him about his plans for the future and reasons for the fundraising.
To kick things off, can you tell our readers a little bit about eMoov’s history and how the business started?
The idea started in 2006 when I was running a successful chain of high street estate agencies. I was disillusioned with how antiquated customer service was and thought I could offer our clients a better, more affordable experience. Buyers were enquiring online and the footfall to my office was minimal, so I thought I could save money by not having one.
As a consequence of the downturn in mid-2008/early 2009, I sold the business and saw it as an opportunity to set up eMoov. In the first year, I was working in my lounge by myself with just a PC and telephone. My wife had just had twins and we already had a 15 month old daughter. I was dealing with customers on the phone with the kids crying in the background and my wife coming into the room to ask for help. If I was out shopping at Sainsbury’s, I’d have the phone diverted to my mobile and would have to cover up the fact that I wasn’t in a plush office with lots of staff. I can’t believe I’m telling people this but I once signed a vendor up when I was in Burger King – with all of that commotion in the background.
The first year was tough; there were lots of times when I thought is this actually going to work. But, over the next couple of years, eMoov gained traction and I moved into an office, hiring employee number one, Lauren, in March 2011. She is still with us. By late 2011, we had six members of staff and were listing over 100 properties a month – that was a real milestone for me. And in December 2012, we moved into our current offices and have since expanded into the office next door. We now have a turnover of £2m a year and list 4,500 properties a year. We have just reached £1bn in property sales, which we celebrated with a summer party.
Why did you choose crowdfunding over other sources of funding?
It allows us to gather a large number of individual investors who we would like to think will be advocates for the business. In that respect it is strategic. Whether someone has invested £10 or £50,000, they will help to spread the word about eMoov. The other reason is over the last couple of years I have had no end of friends, family, customers and staff all asking how they can invest in eMoov. This gives them that opportunity.
What will the money be used for?
As all growth businesses do, we have a burn. I was recently asked if we are raising money because we have run out. The answer is no; we have a significant six figure sum in the bank. We need the money for operational cash flow and to allow us to try out more marketing methods. Tariq Dag Khan, ex Chief Marketing Officer at Rated People, is our new marketing guy – and he needs money to accelerate the brand. But it’s also for technology. We have just finished building our tech platform and now have an in-house team of top software engineers, designers and product people – necessary to maintain the best customer experience in the sector – but it isn’t cheap. We have a product guy, Olly Dobson, who we poached from Just Eat, we’ve got Camilla Gasco, who’s a very well-known web designer, and we have Ivan Ramirez, who is our Chief Technology Officer – an investor since 2013 and the former VP of Global Product at Groupon. But we’re not just employing more people; some of the new technology we’re using is designed to produce cost-savings by automatizing labourious back of office functions.
eMoov was profitable in years two and three. Why has this changed?
When we took the investment from James Caan we went into growth mode, whereas previously we were in self-sustaining mode. We made £20,000 in year two and £30,000 in year three. It was a business that was coasting along, but if you really want to win in a space and take market share, you have to do it using technology, people and marketing – which costs a lot of money. As a consequence, we are now spending more than we earn, but we are growing a lot faster. That said, if we follow our business plan as we have been doing, we will be very profitable in 2018 – which is only three years away.
On TV shows such as Dragons’ Den the valuation is always scrutinised. For investors reading this, can you tell them why is eMoov worth £20m?
With disruptive businesses, it’s much more about aspirational value. We are only scratching the surface of an industry worth £5bn a year. If we and others like us crack it, and there are four or five big payers like we think there will be by 2020, you can imagine what our value might be.
To give you an analogy, if you build a house, you have to buy the land, the bricks, the tiles, the bathrooms, and kitchens. Before you can realise the value of that house, you have to lose money. That’s exactly what it’s like building a growth business. It’s about the likelihood of what the potential value is. If a business is worth £200m in 10 years’ time, is it reasonable to think that it’s worth 10 times less today if it has a good chance of getting there? Of course it is. As an example, AirBnB have just raised $1bn of funding and they lose circa $150m a year. But their valuation is now over $20bn and lots of ‘clever’ people have put a lot of money into it.
What are eMoov’s plans for the future?
We plan to launch a lettings proposition in the next few months and we want to push our conveyancing offering and mortgages and financial services resource further.
We also plan to launch eMoov globally. We think our model will do well in the U.S., Europe and Australia. As of when we do that, it could put eMoov’s potential into the billions. We have a rich tapestry of different nationalities and cultures in our senior team – and they all want to ‘take over the world’. With that enthusiasm for global expansion around the boardroom table it is inevitable that it will happen. Plus, we have Andrew Mackay and Will Armitage as non-execs. They invested in us at the start of the year and were responsible for the international roll out of the spread betting company IG Index.
Why is eMoov a good investment?
Estate agency is a draconian industry which is ripe for disruption and that treats its customers badly. We are leading that disruption. We are number one for customer service, we have the best platform, and we have the best team. For me, it’s not a question of if, but when online estate agency becomes mainstream. Online estate agency currently accounts for 5% of the market and we are forecasting it to reach 50% by 2020. This is an opportunity to invest now with a potential return based on many multiples of today’s valuation.
We have had conversations with high street incumbents who are starting to run scared (privately) and are already looking to hedge by buying into an online proposition. Whether it be a high street agent, mortgage business, or trade sale to the industry or outside of it, we know we can realise big value for our shareholders. My board would like us to float. In the next few years, it is likely that we could end up as a publically listed company on the London Stock Exchange.
To invest in eMoov via Crowdcube or to monitor their progress, visit www.crowdcube.co.uk/emoov