(Aug 7): When Ted Poh did a short stint as a property officer in a condominium, he was suspected of receiving under-the-table money. Poh had awarded several contracts to the same vendor on the basis of its service quality, but a council member questioned whether he had a personal interest instead. The experience taught him the importance of transparency.
Poh, who used to be a corporate lawyer, is the founder of a property management platform called Pegaxis. His online B2B platform helps property managers procure quotations for maintenance services such as roadworks and building repairs. And it has a marked emphasis on transparency. For instance, property managers cannot view the values of bids submitted by vendors during the tender process. This prevents managers from arranging for a favoured company to undercut other bidders. The digital interface also allows council members to keep track of quotations coming in, rather than getting second-hand information from the manager.
Council members are not trained in procuring maintenance works, Poh points out. They therefore have to rely on managers to carry out tenders with integrity. “This unequal balance of power is what results in kickbacks and corruption. Most council members know that power is very one-sided and are always suspicious,” Poh says. Pegaxis aims to not only ease the administrative burden of property managers but also improve accountability. “Instead of going around trying to catch the culprits, Pegaxis serves as a preventive measure.”
Poh’s platform has already attracted the attention of London-listed real-estate services provider Savills, which late last year took a 15% stake in Pegaxis, valuing the start-up at $2.2 million. “They gave us cash to hire people to accelerate growth in terms of engineering and product development,” Poh says. The deal also helped boost Pegaxis’ standing. “Imagine having a player that manages close to 20% of the market saying that it is going to use Pegaxis in its day-to-day operations. It lent a lot of credibility to a young company with an untested CEO,” says Poh.
Christopher Marriott, CEO of Savills South East Asia, says Savills saw a lot of potential in Pegaxis. “Savills is one of the largest privately owned managers of residential [properties] in Singapore, so there is a great deal of synergy working with Pegaxis to make this element of our service more efficient,” he tells The Edge Singapore.
Poh aims to take his business regional. He will launch his platform in Indonesia by November, and in Hong Kong and Vietnam by 1Q2018. Pegaxis is targeting to raise $3 million in Series A funding in October to fund its expansion plans. Poh hopes to attract investors who are also players in the property market, although he says the company is also open to financial investors who “understand the industry”. “If they don’t understand it, how can they add value beyond the money they cough up? Nowadays, start-ups can also be a little pickier,” he says. “Start-ups are looking for value-add on top of the cash injection.”
Solving procurement problems
Poh, 29, founded Pegaxis in June last year. His parents have been in the property management business for more than 15 years, and he used to work for them during his school holidays. He had noticed that property managers still relied on “backward” methods such as phone calls and emails to source for quotations. “If you wanted three quotations for something simple, such as cleaning services, it would take three weeks, which is quite insane,” he says. “It’s not like the manager is slacking... but he just can’t do it faster, because it’s so manual in nature.”
Even in this digital age, the property tech space remains relatively uncontested. Pegaxis’ current competitors include SESAMi, a B2B e-commerce platform that can be used for procuring services, as well as the government’s e-procurement portal GeBIZ. Another local start-up, hiLife, has an app that allows condo residents to book facilities.
Poh thinks one reason the opportunity in the industry is still untapped is that not many young entrepreneurs would choose to venture into this space. “Proptech is definitely not as shiny or sexy as fintech or e-commerce. But I think this industry is primed for disruption because it’s been neglected,” he says. According to a list compiled by 99.co, there are more than 3,900 active Management Corporation Strata Titles here. MCSTs are the managing bodies of condos.
Pegaxis currently lists about 2,000 vendors across 56 service areas, including accounting, appliance repair and cleaning. The company has had about 1,000 project requests completed successfully through its platform, 200 of which were in the past month.
Expanding overseas
Pegaxis may have figured out how to ensure transparency in Singapore, but as it expands abroad, will the same model work in other countries? In Indonesia, for instance, the residential property market is booming, but its property management system is different from Singapore’s in some ways. Poh says he will have to adapt Pegaxis’ operations to the local climate. He is assembling a team of Indonesians who will be able to better navigate these complexities.
Vietnam is another emerging market that Poh has his eye on. He cites the country’s engineering talent and the presence of Singaporean developers as pull factors. In Hong Kong, Poh says, the property market is more tightly regulated and may have more red tape. But he is optimistic about being able to take advantage of Savills’ know-how to come out on top.
Marriott similarly believes that Savills can help Pegaxis break into these new markets, given its portfolio of two billion sq ft under management and 70 offices across Asia-Pacific. “We have a great deal of property, facilities management IP [intellectual property] and local knowledge that can cut down the time it would take Pegaxis to understand the nuances of these markets,” he says.
Beyond overseas expansion, Poh is exploring ways to make Pegaxis smarter using data collected, such as the average prices for certain types of quotations, and how much property managers typically spend on different areas of maintenance. Incorporating this data using some form of artificial intelligence could help managers make better decisions.
However, Poh emphasises that he is also aiming for a sustainable pace of growth. “This is still uncharted territory, so we don’t want to grow for the sake of growing… As it is, a lot of people would say that we are growing very fast. But most importantly, I want to be able to deliver.”
