After taking part in the three-month program that concluded in the city last month, “we realized (Toronto) was an extremely fertile environment for tech startups,” said Pablo Garnica, chief operating officer and co-founder of AREX. “There was a lot of inclusion” in Toronto, he says, which “we hadn’t encountered back in Europe.”
The Madrid-based startup is setting up shop in its new downtown Toronto office this month.
The 2019 version of the Colliers Proptech Accelerator program received hundreds of applications from more than 50 countries. The 10 companies chosen hailed from six countries.
The accelerator program is designed to help proptech companies refine business plans and gain global real estate perspectives through access to more than 120 mentors from Colliers International, startup accelerator Techstars and the broader real estate, technology and investment industries.
Create digital transaction process
AREX’s stated mission is “to fully digitalize the transaction process end-to-end, transforming the real estate market into what the financial market is nowadays, a liquid, efficient and transparent market.”
To that end, AREX has developed DOMUS, a real estate software tool that aims to make the commercial real estate experience much more efficient, so “people can actually focus on doing the best deals possible and not worry about the actual execution,” Garnica said.
While technology in most sectors has advanced over the last few decades, “somehow real estate kind of missed that train,” Garnica said. “So we’re trying to bring real estate to the same level as any other industry.”
He said while portions of the real estate transaction process have been digitized, the industry still makes use of faxes and a lot of paper.
There are also many inconsistencies in commercial real estate transactions. If the process could be standardized, “it’ll actually make the real estate world a better world.”
How AREX saves time . . . and money
The software is now in its pilot phase and a full-fledged version is set to launch at the end of February.
DOMUS aims to speed up transaction preparation times and reduce time spent on manual work by using prearranged templates.
Pilot testing has found the software allows for about eight to 12 times less time spent on low value-added tasks – like updating Excel sheets or creating presentations.
Garnica said the value added by the tool has exceeded clients’ expectations.
“We know we’ve done our job when the people that use our tool can’t think of going back to what they were doing before.”
The software is best-suited for complex commercial transactions with multiple participants, Garnica said. It is compatible for both real estate owners and brokers.
Real estate is “people shaking hands and making deals. So, we thought that rather than focus on specific transactions or asset types, let’s focus on empowering the user, the person who actually does real estate.”
Integrated platforms, blockchain protection
The platform integrates services like Excel, Gmail and Outlook: “We’re trying to make it as seamless and as integrated as possible.”
DOMUS also makes use of blockchain to manage, store and protect information and to certify documents.
“It allows us to have a ledger of what’s happened in a transaction, who has done what and the contents of documents,” Garnica said.
Users pay an initial set-up charge for integration and training, and then a monthly fee. Minimal training is required to use the tool.
“People in real estate were already making money. So in order to ask someone to change the way they do things, they have to want to use the tool.”
As a result of its participation in the accelerator program, AREX is working with a Colliers International team in London, as well as a brokerage in Mexico and semi-public bodies in Spain.
Garnica says the accelerator program opened many doors.
Why AREX is moving to Toronto
“In the space of three months, we had over 200 interactions with extremely talented, successful mentors in the real estate and tech communities,” he said.
“It’s really helping us sidestep mines that other people have stepped on. It also helped us challenge the way we think about our business and what our goals are.”
Many of the people he encountered during the program wanted AREX to do well “and that’s something that was very sort of contagious.”
Garnica said setting up shop in Toronto allows AREX to qualify for the federal government’s Start-up Visa Program.
“We’re also much closer to the decision-makers in the real estate world which reside between New York, Toronto and Chicago. So, Toronto was the best combination of both worlds.”
Prior to co-founding AREX in 2018, Garnica worked in investment banking at Goldman Sachs in London. He’s lived in a number of countries aside from the U.K., including Spain, Mexico, U.S., Switzerland and Italy.
The AREX name was chosen because it was thought that starting it with an A would make the company more top of mind with people. The RE stands for “real estate” and the X for “exchange.”
Garnica says AREX has encountered less pushback to its software than was expected.
“I think there’s a general feeling of urgency to bring the real estate sector up to date,” he said. “There’s no question that change is needed.”