Breathe a sigh of relief at McMakler: The crisis-ridden proptech can secure a new cash injection. Company boss Felix Jahn pays a high price for this.
Can breathe easy for the time being: McMakler boss Felix Jahn. McMakler
Nerve-wracking weeks lie behind Felix Jahn. For almost three months, the boss of the ailing Berlin real estate startup McMakler negotiated with investors about a new capital injection, a month longer than initially planned. There was a great need for clarification on the details of the contract. In the end, the 41-year-old was able to come to an agreement with the shareholders, and the signature followed on Wednesday.
Around 20 million euros will now flow into the eight-year-old proptech. The Scottish investor Baillie Gifford is leading the financing round, the old shareholders Warburg Pincus, Frog Capital and IGP Capital are also participating again. “In view of the difficult market environment, trust is a strong signal,” says Jahn to the Gründerszene, who is also contributing a seven-figure sum of money from his own pocket.
McMakler cuts its rating in half
When it comes to company valuations, on the other hand, the 41-year-old has to accept significant losses: According to information from Gründerszene, McMakler is valued by investors at “only” 400 million euros. A discount of around 50 percent compared to the last round of financing in January 2022. At that time, the start-up, on whose platform real estate is traded based on data, is said to have been valued at a good 800 million euros – and was therefore on the verge of unicorn status.
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Jahn: “A comparable valuation would only have been possible with the help of strict liquidation preferences, which we wanted to avoid at all costs.” With such special rights, financiers protect themselves against losses in the event of an exit, while founders and employees, in the worst case, get nothing. This makes corresponding financing rounds significantly less attractive for startups.
“Real estate business at historic low”
In view of the crisis on the real estate market, a valuation loss for McMakler boss Jahn was hardly avoidable anyway. Due to rising interest rates, large parts of the population can no longer afford real estate. Owners, on the other hand, shy away from selling so as not to make a loss. “The real estate business is at an all-time low,” says an industry expert on the start-up scene. “The few transactions that are still taking place are buyers who have a lot of equity and don’t need bank financing.” Only when real estate prices fall more sharply can the market start moving again. However, this is not to be expected in the foreseeable future. Accordingly, McMakler’s business remains burdened.
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According to Jahn, the number of apartments brokered via the platform fell by 23 to 25 percent in the first quarter of 2023 compared to the previous year. The company was able to grow sales by almost 20 percent to almost 111 million euros last year. “This year, however, we will be well below that,” says Jahn.
Against this background, industry insiders consider the new cash injection at McMakler to be all the more remarkable. “Raising a round of financing with a relevant amount in this market is definitely an achievement,” commented one.
Three rounds of layoffs in one year
On the cost side, however, company boss Felix Jahn also made a lot of advance payments. The company laid off several hundred employees in a total of three rounds of layoffs, two more than originally planned. Jahn hopes to be able to break even soon – a requirement that investors are now making of their companies if they want to continue receiving money.
Jahn is confident that he will be profitable on a monthly basis by the end of the year. “Hopes rest on the second half of the year,” says the CEO. If that succeeds, there could even be money from investors again. We’re talking about 10 to 15 million euros.
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