As a result of the learnings from the feasibility study, GroupEstate executed a major "pivot" of its business model. The feasibility study revealed the initial assumptions about customers and revenue sources were flawed. But it also discovered another, more viable and lucrative model.
The main learning centred around GroupEstate's customer segments and revenue model. It was found that the original business assumption of GroupEstate - to serve small groups of individuals who wish to buy a single property - was not by itself viable due to multiple factors. However, during the feasibility study it was realized that the most achievable customer segment was found in the market for joint building groups.
Such joint building groups (in German, baugruppen or baugemeinschaften), already exist in many European countries. They provide a cost-effective and community-focused path to construct a multi-residence property between a group of families and individuals, usually under the auspices of a lead architect.
This led to a refocusing of the product, messaging and marketing activities to specifically focused on joint building groups.
The pivot also discovered a new revenue model. From the outset, GroupEstate planned to earn revenue by connecting group buyers to finance partners, which would pay leads or commissions to acquire new customers. The feasibility study revealed new target groups in the community building sector, or Baugemeinschaften. This sector was found to be extant, identifiable, reachable, and lucrative. It also aligned well with GroupEstate’s core mission of creating a scalable solution to affordable home ownership.
These learnings necessitated a complete revision of the company’s revenue model and finance plan. The new finance plan demonstrates that GroupEstate will reach break-even point in 2017, and will achieve a profit of €1.9 million by 2018. To achieve this, GroupEstate requires funding of €1.5 million during 2015/16.
Improvements to the product were created through a process of conceptualization, design, programming, public release, testing, and user feedback. Problems were prioritized, and enhancements were released on a rolling schedule from February 2015 until June 2015.
The internationalization section of the study involved analysing all European countries to identify viable new target markets. Data was analysed from multiple sources to create a comparison table to aid decision making. Countries that presented low home ownership levels, high housing costs, high house prices against rent, high house prices against income, high prices in real terms, and a high price to rent ratio were considered favourable.
The detailed comparison of national statistics identified nine countries (including Germany) that contain conditions suitable for a viable launch of GroupEstate’s product. These were: Belgium, Denmark, France, Netherlands, Austria, Sweden, United Kingdom and Switzerland. Two further countries were selected as exploratory markets, despite not meeting all statistical indicators. These were: Italy and Greece.
GroupEstate then selected the three most viable and reachable markets, and conducted in-depth reviews of their local conditions. These countries were: Austria, United Kingdom and Switzerland. For each of these countries, the following factors were reviewed: market trends; state of shared property trends; legal environment; competitors; partners; market entry strategy.
As a result of the feasibility study, GroupEstate was able to enhance its entire business by discovering new and viable customer segments and revenue models. It has prepared to launch in multiple European countries, armed with detailed market information and an entry strategy.
In terms of social factors, the potential for impact remains high. GroupEstate's product is one focused on improving access to affordable housing options. The model of joint building and buying can mitigate many social issues - including ageing populations, widening inequality, urban gentrification, public housing stock decline, multicultural and multigenerational integration.
GroupEstate is now prepared to launch a rapid growth strategy, including deployment in several European countries. It has professionalized and can present a detailed business plan to investors. The company will continue its operations, growing in line with the findings of the feasibility study, and solving a major social challenge thanks to the support of the European Union Horizon 2020 SME Instrument.
