The commercial real estate brokerage market in South Korea is fragmented, which makes finding a new office for tenants a challenge due to inaccurate listing information, high brokerage fees and complex paperwork. A Seoul-based proptech startup called Rsquare built a data-driven platform to digitize the process, enabling tenants to compare multiple properties and find an office.
The startup has raised a $72 million (85 billion won) Series C round from single backer STIC Investments, JohnWoo Lee, CEO of Rsquare, said in an interview with TechCrunch. The latest funding brings its total raised to approximately $95 million.
Rsquare will spend the proceeds on advancing its AI-based proptech platform, accelerating its commercial building transaction and fulfillment centers brokerage service and increasing headcount to 400 employees by next year, Lee said. It has 354 employees as of October.
The Seoul-headquartered company also plans to make further investments in the proptech sector in South Korea and Southeast Asia, including Singapore, Vietnam and Indonesia, Lee said. Rsquare has invested in a Vietnamese proptech startup Propzy in 2020 and an Indonesian proptech company Mamikos in 2019.
Rsquare, which opened an office in Vietnam in June, is set to enter Singapore this month and Indonesia in 2022, Lee added.
Founded in 2009, Rsquare launched its office brokerage service in 2015 to help startups find office space and has since expanded its platform to serve small and medium enterprises (SMEs) and larger corporations. In 2016, the company set up a wholly owned subsidiary, Rsquare Design, to provide office interior design services in the wake of $3.8 million Series B funding from Yahoo Japan Capital and SoftBank Ventures Asia.
Lee pointed out that Rsquare’s key differentiator is its commercial building data, including the office landlords’ and tenants’ information, the startup has gathered since its launch. Rsquare claims it has amassed more than 120,000 commercial building data across 50 locations in South Korea and around 10,000 commercial properties data in Vietnam. Its real-time database provides detailed information and reduces more than 50% of time and costs compared to the traditional commercial brokers, according to the company. Rsquare has handled more than 10,000 office brokerage transactions with over 21,000 clients in South Korea.
The pandemic has been hard on the commercial real estate market globally. Rsquare, which also grappled with the pandemic, is being recovered quickly as many Korean companies started to reopen their offices from the second half of last year, Lee said. The company posted revenue of $55.2 million in 2020 and $85 million for the previous eight months. Rsquare expects its revenue to double by the end of 2021, compared to last year, as COVID-19 lockdowns ease, according to the company.
As for its exit plan, Rsquare is not planning to go public soon; Lee said it would not happen in two years. The company was approached by global strategic investors for M&A, including WeWork, about two years ago, but couldn’t find any synergy with them at the time, Lee said when asked regarding its M&A possibility. Rsquare will focus on expanding its business and penetrating further into overseas markets for the next two years, Lee added.