Funding isn’t the competitive advantage. Relations & information can make or break a business – Sylvia Pavlova MBA CMC, PROPTECH BULGARIA
Sylvia Pavlova MBA CMC is the Founder of PropTech Bulgaria – the one-stop-shop for everything which concerns PropTech in Bulgaria. PropTech Bulgaria is the national PropTech association of Bulgaria and the driver behind uniting the South-East European PropTech.
Sylvia Pavlova is a Board Member of the European PropTech Association – PropTech House.
Sylvia achieved her MBA degree with OUBS, the UK in 2013. The MBA ranks in top 1 % of MBA degrees in the world. She also holds degrees in Commerce & Management and Law. Since 2016 Sylvia Pavlova has had an internationally certified management consultant (CMC) status in Strategy and Business Development.
- “Fortune favors the prepared mind” guided Sylvia Pavlova when starting working with PropTech
- Eastern European PropTech ecosystem has to unite in order to prove its untapped potential.
- Too many entrepreneurs put funding first, but this is like putting the cart before the horse
- Key relations steer a startup’s movement into a higher gear
- Post-pandemic, human interactions and whole processes will be reshaped or remodelled
- National PropTech associations are on a mission to bring down the market entry barriers between European countries for PropTechs.
PropTech Bulgaria & the Bulgarian Proptech ecosystem
When asked why they started working with and in the Proptech industry long before knowing if it will pay off, Sylvia Pavlova says that it’s her blessing to recognize waves 2-3 years before they raise:
PropTech Bulgaria was established in 2018, and we began preparing to enter that business line even in 2017, well before the PropTech wave with national associations worldwide.
For 2-3 years’ time, my team and I had to work tirelessly and invest huge efforts and money in order to prepare for the wave to rise.
On the other hand, one is always surrounded by short-sighted people who cannot see what will happen tomorrow, not to talk about next year. But this was the reason why, when the wave raised in 2019, we were on the top. Just as Louis Pasteur said, ‘Fortune favors the prepared mind’.
When looking at the Bulgarian PropTech ecosystem, it is a complex one that can be better understood by reading the annual mapping report the association is issuing:
PropTech Bulgaria is the first national association which issues annual PropTech mapping reports for the country, and on 24 June we will present its 3rd edition. I’d urge anyone who’s interested to find out more, to check BULGARIA: PropTech Mapping Report 2021.
Does it matter where a startup is based?
We wanted to know Sylvia’s take on the development of the East-European PropTech startup ecosystem and even more, on the differences between startups here and those in areas considered more favoured. Sylvia thinks that we face a bias that will hopefully disappear in the following years:
Eastern European PropTech ecosystem has to unite in order to prove its scale and showcase its high-level tech solutions, and untapped potential.
PropTech Bulgaria has already started this process by organizing the first and only international PropTech conference in Central & South-East Europe. We had the 1st edition of the event in 2020, and the second edition is coming in November 2021.
I believe that in the coming years it will not be a disadvantage for a tech company to say that it is established in Eastern Europe.
To my great regret, at an international HealthTech competition in 2020, a Bulgarian tech company (established and operating in Bulgaria, with a completely Bulgarian team) was presented as a Dutch company in order to be regarded more favorably by the jury.
I believe that in the coming years we will not see any more such cases.
On international scaling
When deciding to scale their PropTech companies beyond their national borders, entrepreneurs should focus on two aspects, Sylvia says: Information and contacts. What about funding?
If they want to gain more speed, also funding. But they can also expand with their customers, and thus remain bootstrapped.
Too many entrepreneurs put funding first, but this is like putting the cart before the horse. Funding is no longer a competitive advantage due to its availability. But the access to scarce information which implies information disparity/imbalance, plus the access to break-through contacts can either make you or break you.
Common mistakes in PropTech startups
Sylvia emphasizes the importance of relevant relations especially in early stages, when time and speed are “critical survival factors”.
Most tech entrepreneurs are madly fond of their tech solutions, and they invest their resources (effort, time, money) into the product, rather than into relations. What steers your movement into a higher gear is key relations.
Entrepreneurs are somewhat prone to build relations with and prioritize their relations with people/organizations which fund them. However, these are not their customers, nor the industry or market partners to help them breakthrough into a market. At least not, in the majority of cases. I see a kind of short-sightedness in entrepreneurs.
Essentially, it all comes down to mindset:
This is what differentiates the critical few that gain faster speed: they have a different mindset than mass entrepreneurs, and create advantages in relations before others see that this is the way, that is, such entrepreneurs are first movers and reap the advantages of being such.
Solutions for collaboration
Can we do something to foster collaboration between investors, entrepreneurs and clients of PropTech companies? It depends, Sylvia says.
Some tech investors take care of the business development of their portfolio companies, others don’t. CVC funds, or organizations contracted by CVCs to recruit tech companies for them, also make the liaison between target tech solutions and the respective corporate.
But in the latter case, tech companies are the ‘product’ sold to the corporate that is the ‘client’. It doesn’t mean that tech companies should not consider such opportunities, having in mind that CVC funding is triple the size of available VC funding. It means that you should be aware of your power level in each case.
Can PropTech associations help?
The value chain with PropTech associations differs as we regard both tech companies, corporates, tech investors as clients, and make the most mutually beneficial links between them all.
I firmly believe that national PropTech associations in the majority of cases are powerful deal engines for tech solutions, both in terms of finding funding, and lead generation.
Commercial property technologies that will ‘steal the show’ in the following years
Any technology which makes human interactions digitally possible under whatever circumstances, plus technologies which make deals possible under whatever circumstances.
We get more and more used to virtual tours on our own or in the company of virtual guides.
We anticipate finding all necessary information on the web, inclusive of all documents, functionality for an online chat immediately, etc.
The future of virtual showcasing solutions
Virtual showcasing has entered the real estate industry, but not as a stand-alone solution. The time for isolated technologies that only solve certain issues is gone, says Sylvia:
Virtual showcasing is usually part of the sales/transaction process within all asset classes. In 2020 due to the pandemic, numerous new tech solutions occurred and those who were alive and well before, strengthened their position. As a natural next step, I believe that such tech solutions will add up more technologies, hence functionalities, in order to cover more processes that comprise the sales/transaction process.
And following that, most possibly, we will observe the consolidation of the sector, i.e. larger tech providers in the area will acquire smaller ones. In any case, all tech solutions that rely only on the virtual showcasing alone will be forced to differentiate, or doomed to become void.
Is the real estate industry ready to accelerate its digitization process?
Although the pandemic has emphasized the vitality of digitization and ”property developers are aware that digitization is the near-future.” according to Sylvia Pavlova, some players still try to delay adopting more technologies:
It demands a shift in investment priorities and inadvertent behavioral change, hence this implies an inherent increase of risk and obscurity in predictability. We, humans, are always risk-averse, so this is no surprise. Therefore, to our pity, we change mainly under the extreme pressure of severe circumstances.
But what will definitely change after the pandemic, she continues, is the way we interact as humans:
Post-pandemic, human interactions and whole processes will be reshaped, or better, remodeled. Next, the manual part of processes, if repetitive, might be digitized. What’s important and curious is how the former will be reshaped. The latter is just a simple consequence, which can be easily predicted once we know how human interactions and major processes will get altered.
Why do we need PropTech associations?
While PropTech associations have only recently entered most markets, Sylvia thinks their role is crucial:
Firstly, it is useful to note that national PropTech associations have different business models. However, in the course of time most of them offer one, two or more of the following services. Any of these services is a business model on its own, and this is why it is very difficult to have them all, as it is a matter of capital intensiveness.
Speaking in terms of International Marketing and Porter 5 Forces, you know that the more market entry barriers there are, the more laborious and perplexing it is for a company to enter a new market.
She continues by listing some of PropTech associations’ roles, which although might sound easy, take a huge investment of time, efforts and money:
National PropTech associations are on a mission to bring down the market entry barriers between European countries for PropTechs. These might imply legislative barriers, information imbalance on customer types and preferences, contacts with key people in the traditional industry in the country, business specifics.
National associations are not recruiting techs to present them as a ‘product’ to corporations, but facilitate the interaction between them as equals. It does not mean that associations do not undertake think tanks for corporations, but the power balance is different.
Many associations also organize large-scale international or local PropTech events in order to make this networking and matchmaking possible.
National PropTech associations are also a source of expertise on the overlap of both tech and traditional industrial know-how. Hence, for instance, we issue the annual BULGARIA: PropTech Mapping Reports with elaborate analyses both on PropTech, the traditional construction industry, and real estate sector in the country. Germany, Italy, Denmark also started issuing such annual reviews.
Furthermore, national PropTech associations work in fostering the whole validation and growth of PropTech companies through academies, pre-accelerators, and accelerators.
Here is how things happen in different countries when it comes to types of growth opportunities developed by associations:
In Denmark the PropTech association carries out an academy (est. in 2020); in Belgium PropTech Lab (Belgium) has an acceleration program together with PwC (est. in 2019); we in Bulgaria have PrEXCELerator Bulgaria (est. in 2017); PropTech Romania also has started a PropTech accelerator in 2021. The advantage of such validation & growth media, or better ecosystem, for startups is that these are tailored specifically to PropTech, and not just to startups in general. Moreover, all resources of associations are driven together to make PropTechs under validation successful.
To conclude, Sylvia comes back to the business model each role implies and ads that this is actually the reason they pay results:
As you can see, any of these roles suggests a separate business model, requires huge expertise, large numbers of key contacts, incessant efforts, and a different paradigm in business thinking. This is why it delivers different results and proves to be highly efficient in these turbulent times.