The typical 6% commission fee that is equally divided between the buyer’s broker and seller’s broker has been a traditional part of any residential real estate transaction. Prevu, the full-service technology-powered brokerage, challenges this model in an area where homebuyers have access to information on available homes at their fingertips thanks to the internet. The startup’s Smart Buyer™ platform streamlines the entire home buying process and by leveraging technology, Prevu is able to save two-thirds of the buying broker’s fees, translating to 2% cashback, straight to the home buyer. Buyers have already received upwards of $60K in rebates on the platform.
AlleyWatch sat down with Founder Thomas Kutzman to discuss how Prevu is changing the residential real estate buying process, the company’s future growth plans, and recent round of funding.
Who were your investors and how much did you raise?
Prevu’s $2M seed round was led by Corigin Ventures, which brings strong domain expertise in both real estate technology and consumer industries. Kairos and AVG Basecamp Fund were also institutional investors in the round. We are excited to partner with all of the investors who participated in our first institutional round of venture financing.
Prevu is a real estate technology company on a mission to save homebuyers money. The company’s digital Smart Buyer™ platform offers a home buying experience with unparalleled control, transparency, and savings when purchasing a home. With Prevu, consumers can seamlessly search, offer and save up to 2 percent of the purchase price when they buy a home. This zero-pressure online experience delivers a smarter, more efficient way for homebuyers to transact.
What inspired you to start Prevu?
The mission for Prevu was formed out of our own frustrations with the high fees and antiquated process of buying or selling a home. We believed there had to be a more seamless way to transact and save during a home purchase thanks to technology.
How is Prevu different?
Prevu is focused on transparency and elevating the homebuyer experience – saving homebuyers time and money during the largest financial transaction of most people’s lives.
What market does Prevu target and how big is it?
Residential real estate is one of the largest components of the US economy with over $1.5 trillion in gross merchandise volume (GMV) of transactions per year. Americans spend $80-100 billion per year in real estate commissions. Prevu is focused on unlocking significant savings in brokerage commissions for American homebuyers.
Americans spend $80-100 billion per year in real estate commissions. Prevu is focused on unlocking significant savings in brokerage commissions for American homebuyers.
What’s your business model?
Prevu provides homebuyers with a commission rebate of two-thirds of the real estate commission the company receives for representing the buyer – with the company making up to 1% of each transaction.
Who do you consider to be your main competitors?
We look at competitors in three key categories: 1) traditional brokerages, 2) tech-enabled brokerages, and 3) savings-oriented brokerages.
What was the funding process like?
As first-time founders, the venture capital fundraising process was a learning experience compared to the nuances of public markets fundraising we were accustomed to in our earlier careers in finance. At the end of the day, we were able to connect and share our vision with very thoughtful investors who agreed that real estate is in the early innings of disruption.
What are the biggest challenges that you faced while raising capital?
There are a lot of talented entrepreneurs looking to improve the residential real estate transaction in different ways, so it is easy for investors who look at hundreds or thousands of companies in a year to quickly bucket new models as “another tech-enabled brokerage” and dismiss an idea without thorough consideration.
What factors about your business led your investors to write the check?
We believe there are three key factors that make Prevu stand out from the pack. First and foremost, our technology delivers a seamless online buying experience that is more akin to the platform experiences that consumers enjoy in other areas of their life such as travel, hospitality, and e-commerce. Second, Prevu is focused on the buyer side of the transaction, which is unique relative to countless startups focused on the seller side of the transaction. Third, Prevu is consumer-focused, not agent-focused like many other tech-enabled models, which we believe will allow us to build a more enduring brand.
What are the milestones you plan to achieve in the next six months?
Over the next six months, we will be expanding our engineer team to build more tools that improve Prevu’s consumer experience and agent efficiency, as well as accelerate our brand awareness in NYC and new geographic markets we plan to enter.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
We would encourage other founders to prove out their business concept as far as possible before pursuing venture financing. Staying focused and bootstrapping in the early days will provide an attention to detail on cost control and operational discipline that will make you more efficient in deploying growth capital as you grow.
Where do you see the company going now over the near term?
Over the near term, Prevu is focused on bringing our mission of saving homebuyers money to more folks in more cities outside of NYC.
What’s your favorite restaurant in the city?
My favorite restaurant in the city is Misi. While I live in Manhattan, it is definitely worth the trip to Williamsburg. I love pasta and have been a big fan of chef Missy Robbins since her early days at A Voce and her earlier restaurant Lilia.