Success story: Local property venture raises $9m in funding

Zameen is arguably the Pakistani start-up ecosystem success story of the year. The online property portal announced earlier this week that it raised $9 million in series B funding – easily the highest amount of cash secured by any home-grown start-up this year.

Sure, there’s Rocket Internet-backed Daraz in the mix too with a blockbuster $55 million, but Zameen is a purely local company, with local founders who have retained majority stake in the venture. The same cannot be said about the ecommerce marketplace.

Conceptualised by brothers Imran and Zeeshan Ali Khan, Zameen was founded in 2006 after they moved back to Pakistan from the UK. Both are highly educated, with degrees from Imperial College and Oxford, and ran a successful online B2B classifieds portal before deciding to explore opportunities in their country of birth.

However, while their classifieds business in the UK was doing “really well,” the entrepreneurs decided to use their returns and invest in other businesses as well.

“We were managing over a hundred websites, including directories, referrals, affiliate marketing, even traditional businesses like running a gym. In the end it got too much, we were doing too many things and made a lot of mistakes,” says Zeeshan. “We realised this was not going to work out and we needed to focus on a specific vertical.”

That vertical was property. The brothers were convinced there was huge potential for disruption in this space. Back in 2006, the state of internet infrastructure in Pakistan was extremely poor but the offline property market was exploding.

Facilitated by large investments from the Pakistani diaspora, people found that investing in real estate would earn them significant returns. Some looked at it as a speculative bubble, but there’s no denying the fact that if an investor bought a piece of land and sold it merely six months later, they could very easily have earned a return of around 30-40%, maybe even more.

Another factor influencing the brothers’ decision was their prior experience and exposure to western markets. “There’s a lot of mobility in the property market. People are constantly buying and renting properties and the value of each transaction is high,” explains Imran. “We saw a lot of people [in the UK] searching for property online and knew the model could be replicated in Pakistan.”

Starting off lean

Zameen’s basic operations began in a small apartment in Lahore. The biggest obstacle the founders faced in convincing property agents to come online was that the agents were completely clueless on how to operate computers or even access the web.

Unperturbed, the brothers would write down details of listings on pieces of paper, take photographs, and go back to their office to do data entry. Nevertheless, there was scepticism on the agents’ part on whether the portal would actually drum up more business. They strongly resisted to changing the traditional ways of doing business.

To facilitate and scale listings on Zameen, the brothers made it completely free for agents to advertise their properties on the site. Only much later did it start monetising, by introducing sponsored listings, as well as display products, branding, and advertising.

The crucial factor that helped it gain early traction was interest in the property market from expatriate Pakistanis. They were used to searching for property online and keen on making investments back home.

Zeeshan indicates that in the first few years, approximately half of all traffic was generated from outside Pakistan. As a result, agents started getting calls and converting leads sourced through Zameen.

“In terms of growth, it was all organic for the first two to three years. Word of mouth definitely helped – property agents are a tightly-knit community and they were quick to inform others when they closed a deal. As a result, we were approached by more agents requesting to put their listings online.”

The business was chugging along nicely, when, in 2011, the brothers were approached by French investor Gilles Blanchard. Gilles was the co-founder of French real estate portal Seloger, and had sold his business to Axel Springer in 2010 for $960 million. He had money to invest and time to pick the right business.

Imran says that Gilles was alerted to Zameen by his Pakistani friends. He was impressed by the founders’ drive and commitment, and decided to participate in an angel investment round, also joining the start-up as its chairman.

“Gilles’ experience was invaluable. It was great. We’d been in the classifieds industry since 2003 and I thought okay, I know a lot now. I would have given myself 80 out of 100. However, when he came on-board, after a year, I probably would have given myself 30,” laughs Imran.

Competition lurks

But the entrepreneurs would have been foolish to assume their journey would go on undisturbed without competitors eyeing the space. In 2013, Rocket Internet entered the fray through its own property listings portal, Lamudi.

By now Pakistan was perfectly poised for tech start-ups to disrupt traditional business sectors. Internet penetration was growing rapidly and consumers had started to feel more comfortable transacting online.

Both Imran and Zeeshan indicate that their resolve to build a successful business only strengthened with extra competition. “We got more focused and stayed true to our path. There’s always going to be competition, no matter what business you’re in. So we got into sixth gear and outpaced them with lightning-quick execution,” Zeeshan says.

Imran elaborates: “When you get a competitor, you can either stop and fight or keep moving forward. We chose the latter.”

Zameen received a shot in the arm in 2014 when it raised its series A round from Catcha group and Malaysian VC Frontier Digital Ventures. One of the reasons for its continued growth, the founders claim, is the strong work ethic and team culture they’ve strived to instil in their employees from the beginning.

"The culture we’ve tried to promote, from day one, is for employees to take ownership of the company. We stress upon that. We have a team of 300 people. There’s constant evolution as we have to be at the top of our game. We’re very approachable [as founders] and have a very, very open culture. We’re just there for everyone as much as we can, we talk to everyone. That’s essential."

A focus on getting the basics right is a recurring theme the entrepreneurs stress upon. They credit their investor and chairman, Gilles, with instilling this mantra in them. “Building team structures, focusing on content, and having a clear vision comes across as very simple. But it’s not so easy.

Gilles was putting sense in us, explaining how to do this properly. We built proper systems for sales, customer service, and business development and also experimented with different strategies, some of which were not so successful. But you learn, you adapt, and you move fast.”

The hard work, persistence, and perseverance certainly seems to be paying off. Zeeshan says they’ve grown by a hundred per cent since last year in terms of listings on the site. In August alone, they added 100,000 new properties.

Traffic has grown to two million monthly visits, with almost 70% generated from internet users in Pakistan. In terms of scale, they’re significantly outperforming their closest competitor, Lamudi.

Nine million dollars is no small change by any stretch of the imagination. The funding round means they’re in prime position to consolidate and keep growing, which the founders seem eager to do.

Part of the funds will be earmarked for their Middle East venture, Bayut, as well as expansion into other markets, but Imran and Zeeshan make it clear that capturing the domestic market in its entirety is high on their list of priorities.

At the same time they offer a word of advice for each budding entrepreneur out there. “When you’re young, you think you can conquer the world. But it’s better to conquer your niche,” smiles Zeeshan.

This article was originally published at Tech in Asia here.