After building a successful car auction platform, E Inc founder Ryan O’Connor has set his sights on bringing online auctions to Canada’s booming residential real estate market through Unreserved.
The Ottawa-based proptech startup aims to address what the Unreserved founder and CEO views as the “broken,” traditional model of buying and selling houses by bringing more transparency to the process for buyers and sellers alike.
Armed with $33.85 million CAD in initial funding and the support of E Inc investors and real estate professionals, O’Connor told BetaKit in an interview that he hopes to apply what he learned scaling E Inc to the housing sector.
The financing appears to be the largest seed round in Canadian history.
The CEO has certainly put his money where his mouth is, leading Unreserved’s all-equity December seed round with a $10 million investment. The round also saw participation from Toronto merchant bank Intercap, former Brookfield Real Estate Services President Simon Dean, and a group of other undisclosed real estate professionals and E Inc backers.
Based on existing data, Unreserved claims the financing is the largest seed round in Canadian history. Vancouver-based startup Fraction Technologies did announce a $289 million round in February 2021, that included an equity seed round of an undisclosed amount as well as debt financing to fund peoples’ mortgages. Fraction refused to disclose how much of the round was the equity seed capital versus debt.
Founded in spring 2021, Unreserved offers a platform that allows buyers to bid on homes in a real-time online auction environment. Through this approach, the startup claims it is able to remove blind-bidding and bully offers from the equation. Unreserved supplements its digital auction offering by providing staging, marketing, and promotion services to sellers.
Prior to launching Unreserved, O’Connor founded E Inc, the Toronto-based auto retail company behind E-Dealer and car auction platform EBlock, which went public on the Toronto Stock Exchange in November at a valuation of over $1 billion.
O’Connor left E Inc in March 2021 and sold some of his position in the company as part of its initial public offering, but retains a stake in the auto retail firm.
“The whole time we were auctioning off these cars – we’ve sold billions and billions of dollars worth of cars, all online — we were like, how can this crossover for houses?” said O’Connor.
After learning more about what the traditional home buying and selling process looks like, O’Connor said he saw room for improvement. Unreserved’s auction platform circumvents the practice of blind bidding, where buyers bid on houses without knowing the size of competing offers.
The startup allows prospective homebuyers to bid on properties, permitting them to see all other bids and compete “on equal footing,” while guaranteeing sellers using its platform a minimum price.
Dean is a long-serving Canadian real estate executive who previously served as president and CEO of Brookfield Real Estate Services, where he oversaw Royal LePage’s turnaround “from a perennial money losing brokerage to a profitable public company.” He joined Unreserved’s board last year as its chairman, bringing some industry expertise to the young startup.
“In terms of the potential for Unreserved’s auction model I am very bullish,” said Dean. “As we have seen already in the Ottawa market the consumer has embraced the auction model and its inherent value improvement, transparency, and efficiency that it offers.”
RELATED: Report shows overview of Canadian proptech sector as real estate undergoes digital transformation
Unreserved is part of a growing wave of Canadian startups looking to serve the country’s real estate market, a list that includes Toronto-based tech-enabled real estate brokerage Properly.
Intercap Chairman and CEO Jason Chapnik described the residential real estate sector as “fundamentally flawed,” and Unreserved’s market opportunity as “massive.” Intercap was E Inc’s first outside backer, and continues to be its largest and most active investor.
Chapnik told BetaKit that Intercap was “privileged and excited” to be partnering with O’Connor once again through its investment in Unreserved. “The strength of the round speaks to Ryan’s passion, commitment, and track record,” he added.
O’Connor said that Unreserved raised such a large amount at the seed stage because EBlock was “heavily underfunded in the early stages,” and he wants to ensure that this isn’t the case with Unreserved.
“There’s no such thing as being overfunded, especially at this stage [with] what we’re building,” said O’Connor.
RELATED: US proptech Opendoor plots Canadian hiring expansion, aims to add 100 engineers
According to the CEO, this funding will help Unreserved execute on its product roadmap and grow its team, as the startup looks to build its presence in Ottawa and expand into new markets, starting with Toronto.
Even so, some real estate professionals have expressed concerns about the property auction model’s sustainability and safety. They argue that it could drive already high house prices up even more, and does not carry the same degree of regulatory scrutiny as traditional sales through brokers. Meanwhile, others have criticized practices like blind-bidding, which a recent CBC poll found most respondents support eliminating, and is something that Unreserved claims it avoids.
To date, Unreserved has focused on the Ottawa market, where it has seen growth since its launch last July. November 2021 was the startup’s biggest month to date, as Unreserved’s auction platform facilitated over 20 house sales. According to Unreserved President Matthew Hoar, the startup has sold over $50 million worth of Ottawa real estate in the last 100 days.
“We’re gonna have weeks in the new year where we’re doing 15 to 20 houses a week,” said O’Connor. “It’s crazy growth and lots of demand.”
Unreserved has already grown its team to 95 employees, and aims to reach a headcount of 160 by the end of 2022.
Feature image courtesy of Unreserved