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Sumutasu, a Tokyo-based proptech startup that offers a direct online real estate purchase service, has secured $8.2 million in equity and $1.6 million in debt. The company has raised a total of $16 million since its 2018 inception.
Takahiro Sumi (CEO) and Tomoya Ito (COO) co-founded Sumutasu four years ago to streamline the buying and selling of residential real estate.
In Japan, where the real estate market is fragmented, homeowners have faced uncertain selling prices riddled with brokerage fees and an average selling period of between four and eight months, Ito said. Those factors have led to a low percentage of existing homes in circulation in Japan -- around 15% compared to the 80% typically seen in countries like the U.S. and the U.K., per the 2020 report of the Ministry of Land, Infrastructure, Transport and Tourism (MLIT). Sumutasu says its platform enables users to access a fair house valuation in an hour.
Sumutasu has adopted an iBuyer model -- meaning it buys houses directly from homeowners, renovates them at scale, then resells them to buyers. While the U.S. and Europe have a more competitive iBuyer market with Opendoor, Zillow, Offerpad and Redfin, Japan has a nascent iBuyer industry, according to the company.
"The business model is similar in the way that it is an arbitrage model where the difference between the purchase price and the sales price is the profit," Ito told TechCrunch. "The difference is that we purchase from the seller at a discount from the market price. The reason we are able to purchase at a discount is that we offer sellers the value of being able to sell at their own time and hassle-free."
Additionally, unlike the iBuyers that charge service fees, Sumutasu does not charge a commission or processing fee because the transaction is conducted directly with the seller -- without an agent in between, Ito said in an interview. When purchasing an existing house in Japan, brokerage fees usually amount to about 3% of the property price, Ito added.
The Japanese real estate tech startup operates its service in Tokyo but plans to take it to more areas like Osaka and Nagoya. With the latest funding, the company plans to continue to buy more houses, and launch its mortgage brokering service next year, aiming to increase sales five-fold compared to 2021. It also intends to expand its headcount.
Sumutasu has purchased approximately 100 properties and currently maintains 30 property listings due to smooth progression of sales, Ito told TechCrunch. The company is partnered with more than 20 banks and remodeling companies.
Existing backer World Innovation Lab (WiL) and new investor Mobile Internet Capital co-led the Series B, with participation from other new investors Mercuria Investment, Carta Ventures and Kiraboshi Capital. Japan Finance Corporation led the debt financing.
“Despite the iBuyer business having a huge potential in terms of the market size, we haven’t seen this business model in Japan for a long time due to it being financially intensive,” said partner of World Innovation Lab Toshimichi Namba. “We are confident that they [Sumutasu] can leverage this less competitive landscape to further fuel their growth.”
The company has a team of 30 people.