Proptech company Virtual Walkthrough was sold to Matterport in July. The journey to a successful disposal was challenging, but rewarding, writes c0-founder James Morris-Manuel
Back in 2009, well before the term proptech had been coined, I co-founded Virtual Walkthrough. We initially conducted research and development in stealth mode, before launching during MIPIM in 2014.
Two years on, proptech is now a thriving and familiar sector, and our company has been acquired by US firm Matterport, the leader in immersive media technology, in the first significant acquisition of a UK proptech company to date.
Overseas acquisition of UK businesses is not new. Many companies have been through the process, but not in this sector. I firmly believe that this deal signals a clear endorsement of the UK’s fast-growing proptech scene.
I will confess it is daunting to know that the US is watching us. With the recent round of US proptech entrants in the UK, such as Compstak and Hightower, we can see how enticing the UK property market is, and how strong its proptech offer has become.
Proptech is really starting to make its mark, as is wider innovation in UK property market practices. We may not have produced any unicorns yet, and we don’t always focus on disruption, but we are fulfilling the needs of the sector, which initially resisted young start-up companies trying to change the ways things worked. The property market is now starting to sit up and take notice.
With the transaction marking the first significant UK proptech acquisition, there wasn’t exactly a precedent or a roadmap to guide us, and we found the process to be a journey of discovery.
We navigated a multitude of legal, communications and business strategy meetings to bring together two companies that focus on selling to the same market: a challenging task, yet a rewarding accomplishment. This has provided us with some fascinating insights into the transaction process, and pointed the way towards how the proptech sector may evolve in future.
For example, when approaching acquisitions you need to be prepared to put in the hours, and sleep can become a luxury. Transactions are by nature stressful, complex and time-consuming – and, in this case, managing an eight-hour time difference between London and California eventually led to 18-hour working days, especially towards the end of the deal. Also, be prepared to be absent for long periods, with your day-to-day workload handled by colleagues to avoid interruption to daily business.
Familiarity with your purchaser is also critical to success. You know your own business inside out, but it is extremely helpful to immerse yourself in the business of your future colleagues, too, and preparation is essential. Get to know the key stakeholders, and the way they run their business. What is their vision, their strategy and their working culture? Knowing the other party inside out enables you to pre-empt any stumbling blocks and speed up the process.
Clear communication with your purchaser can also save time and money, especially in relation to legal fees, as much will have already been discussed informally. Also, as the transaction approaches, pre-arranging detailed meetings with your lawyers to iron out the final terms can also help control costs. However, that is not to diminish the role of the lawyer: finding the right one is essential, and they will be a rock through the whole process.
We also learnt that with a big change to the business comes a critical focus on business processes and protecting the brand image. You can also begin to live in a world of terms and conditions, focused on the next meeting and ticking the next item off the agenda.
In addition, you must not overlook your most important assets: your stakeholders and customers, those who make your business what it is and those who have allowed your business to enter its next phase.
Communication is therefore key, as is planning for the future. Providing stakeholders and customers with a clear understanding of what is happening is critical. Our policy was always transparency, sharing concrete information – which, particularly for staff, avoided the risk of misunderstanding or speculation about what was happening. Then, once the deal is done – as far as the confidentiality agreement allows – make sure your clients and colleagues know about it before it makes the headlines.
Finally, once you begin to look beyond running the physical transaction process, you start to see and appreciate a bigger picture. You are reminded why you took this step in the first place – for the betterment of your company and its stakeholders. In addition, instead of talking about the next step, you realise you are actually taking it.
Perhaps Virtual Walkthrough’s acquisition is a one-off. Perhaps we were lucky, and in the right place at the right time. Or perhaps we are beginning to see a second phase in proptech emerge beyond the initial rounds of funding: the evolution of proptech.
It is all to play for, but proptech is here to stay, and has certainly not become yesterday’s faddish buzzword. It is a dynamic part of the tech sector, and is making a global mark on the property industry.
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