Despite the pandemic keeping us in one place most of the time, proptech is still taking off. And not just in the U.S.
Dongnae is looking to digitize the rental and home buying market in South Korea. The startup is announcing the close of a $4.1 million seed round, led by Flybridge and MetaProp, with participation by Goodwater Capital, Maple VC, and a variety of strategic angel investors in both Korea and the U.S. This brings Dongnae’s total funding to $4.8 million.
The company was founded by Matthew Shampine, who was born in Korea but raised in New Jersey. Running WeWork Labs, Shampine was stationed in Asia and then more specifically Korea to build out that arm of the massive coworking firm. Moving a lot, Shampine realized the massive hole in the very fragmented real estate market in Korea.
Dongnae is very similar to Redfin in the U.S., giving buyers and renters a centralized place to find their new home. For now, the startup only represents the buyer/renter side, partnering with the thousands of brokers in Korea to essentially build out the country’s first true MLS (multiple listing system).
Some important context: the real estate market in Korea is very different than here in the states. First, most buildings have their own broker with retail space on the ground floor, meaning that there are thousands of brokers in Korea who only represent a limited number of properties. In fact, Shampine says there are about the same number of brokers in Korea as in the U.S., which has has a much bigger population.
Secondly, due to the fragmentation across brokers, there is no real MLS in Korea that unifies all available properties. Renters and buyers must work across dozens of brokers and usually have to go see the space in person, rather than browse photos online. This system also means that the brokers are often representing both the buyer/renter and seller, which means they aren’t always negotiating in the best interest of the buyer.
Dongnae partners with brokers to centralize all the listings into one place, and gives buyers and renters an interface to browse those homes. In fact, Dongnae offers a Tinder-like experience for buyers, letting them swipe left and right on homes to learn more and more about what they’re looking for and ultimately serve up the best fit.
Not unlike Airbnb, Dongnae goes from complex to complex and builds out the digital inventory for each listing, taking 4K photos and watermarking them and passing them back to the broker, while also listing them on Dongnae.
“It’s not necessarily a franchise but it’s a really close partnership,” said Shampine.
Dongnae makes money by taking a buyer side fee, just like any other broker, which is around 8 percent in Korea. The team is 25 people strong and gender diversity at Dongnae is about 50/50.