The chief executive of online easyProperty says the company’s investors “have full confidence” in the firm despite it announcing an operating loss of around £11m.
Rob Ellice told Estate Agent Today over the weekend that he has spoken with the board of the firm and the investors in the agency and they are “completely behind and totally supportive” of the direction the company is taking. “They’re totally on board” he says.
Ellice says each online agency establishes itself in its own way and that there is no ‘norm’ when it comes to the size of initial losses a firm may make because of the high level of technology and marketing spend involved in the early stages of an online player.
On Friday we reported that easyProperty’s trading statement for the year to the end of September 2016 showed it had a turnover of just under £875,000 and a gross profit of just above £492,200 but with a pre-tax operating loss of over £11.3m.
The figures show its total comprehensive loss for the year was £10.94m; a year earlier, between September 9 2014 and September 30 2015, its total comprehensive loss was some £6.7m.
Ellice says the year to the end of September 2016 was “a period of further development for the business” but at “a lower rate of growth than anticipated.”
There have been several rounds of fund-raising for easyProperty, with the largest thought to be the sourcing of £25m from a hedge fund and so-called angel investors - these are wealthy individuals who invest in start-ups in return for ownership equity. At the time of that fund-raising round, about 15 months ago, Ellice told the press that the funding was exchanged for "just under 15 per cent" equity in the business.
There has been a shocked reaction to the figures from some influential observers.
PropTech commentator James Dearsley commented in his weekly newsletter to the property industry that: “I have always said I love online and hybrid business models but they have to look at their long term plans and pricing. Neither they nor their high street counterparts have it right yet.”
Eddie Holmes, chair of the new UK PropTech Association tweeted: “Will easyProperty.com be the first big #PropTech failure?”