SimpleShowing is offering a SAFE that will convert into equity in the future subject to a 10% discount to the company’s future value. The valuation is set at $16 million pre-money. While that amount might seem somewhat high, SimpleShowing has had good early traction. Taking revenue into account, this price is slightly lofty but not out of the question. Thus, SimpleShowing’s price score is above average.

Some companies operate in only one market. SimpleShowing appears to operate at the intersection of three market niches within the real estate space. The first of these is the agent commission space. In essence, the bulk of the company’s revenue comes from replacing agents. According to one source, agents in the US generate commissions worth about $75 billion every year. Since the company gives half of this figure back to the buyer, its potential market size is smaller. SimpleShowing’s market potential is further restricted by the fact that the commission figures calculated assume a commission rate of about 4.86%. That figure is down from around 6% seen in the 1990s, but it is higher than the 3% figure charged by SimpleShowing. Altogether, the actual market size for the business is probably closer to $23 billion. 

The other market that SimpleShowing operates in is the title insurance market. One source that pegs this figure at about $15.3 billion for the 2019 fiscal year, up 6.5% from the year prior. Lastly, it looks as though the company is getting into the mortgage origination space. If this is true, then the overall market seems to be about $4 trillion in size just for the US. However, this figure is not all it appears to be, as this is the volume of the mortgages made out each year. It is not what the company would ultimately generate as revenue. Certainly, this piece of the market would be large, but nowhere near what the overall market size suggests. 

While the market sizes that we’re looking at are significant, their growth rates tend to be moderate most of the time. Home buying and selling is cyclical, and the number of properties should not grow much more, if any, than the general population growth. Add to this that the individual niches are not tremendous in size compared to other markets, and it should not be surprising that SimpleShowing’s market score is about average. 

At the head of SimpleShowing are its two co-founders. Fred McGill Jr. also serves as its CEO and managing partner. In the past, McGill has served as an official member and contributor on the Forbes Real Estate Council. Prior to that, he was a Vice President of Marketing and Business Development at Redox. He led and managed sales operations, customer acquisition, and similar activities at that company. Prior to that, he was a Senior Account Executive at Salesforce.com. 

The other key team member is Jeremy Gamble, SimpleShowing’s COO. His professional experience appears rather limited. In fact, the only prior experience listed is his role as Vice President at the Orlando Health Foundation. In all, this founding team illustrates some familiarity with the real estate market. However, the credentials are not stand-out for the industry, and there is little entrepreneurial experience. As such, SimpleShowing’s team score is only slightly above average.

One category that SimpleShowing is a little stronger in is differentiation. The company’s business model it’s fairly unique compared to other players. For the most part, it is competing with traditional mortgage agents and brokerage firms. There are, however, some companies that are more similar in nature. One of these is a player called knock. Like SimpleShowing, knock offers automated, self-guided showings. But it has no lock box integration. And it is unclear if it has any B2B component. Other players include Reali, Homie, and REX. However, they cater to different aspects of the real estate experience. For instance, Reali allows users to buy and sell properties through their app. Homie connects users to real estate agents. And REX is similar to Reali. There are other companies out there that could become competitors. Zillow is one example. However, it appears as though the business model pushed by SimpleShowing is largely unique at this time. Because of this, the company’s differentiators score is strong. 

In most respects, SimpleShowing rates highly for performance. The company already operates in five markets across three states. It has strategic partnerships in place, including an arrangement with Expetitle Exchange. During 2020, the company saw 4,243 new users and signups on its platform, up from 2,513 in 2019 and just 734 in 2018. SimpleShowing is aiming for 5,700 new users this year. While this may not seem like much, consider that it has already seen more than 2,500 property tours booked on its platform. Additionally, 61% of its users end up buying a home through the platform. In 2018, this resulted in revenue of $392,174. That figure grew to $578,479 in 2019. Official figures for 2020 have not been provided yet, but management has made the claim that 2020 saw revenue of $776,000. 

Admittedly, not everything is great. The company did generate a net loss of $334,111 in 2018 and $399,086 in 2019. Operating cash outflows have been similar in size. Overall though, the company’s performance has been robust. Therefore, SimpleShowing’s performance score is its highest across all five metrics.

There are certain risks that investors need to be aware of. However, the overall risk profile of SimpleShowing looks favorable. There were two main categories that appear elevated. First, there are the investment terms. A 10% discount upon conversion is not all that generous. Usually, investors would expect 20%. In addition, while the price of the company is not outrageous, $16 million on a pre-money basis is a bit lofty. Even so, the risk profile here looked only average. 

Real estate is, however, a highly cyclical market. While the company plans for multiple revenue streams, none of them appear significant in size. Additionally, mortgage products have seen continued downward pressure in terms of commissions for decades. It’s never great to participate in a race to the bottom. Because of this, SimpleShowing faces ample market risk.

For the most part, SimpleShowing looks to be an attractive prospect for early-stage investors. However, not everything about the business is great. The team is roughly average. The market rating is about average as well. Additionally, some of its investment terms could be better. Additionally, the company continues to generate net losses and net cash outflows. Ideally, growth will eventually fix this, but that could be said of any business. The key is whether the company can survive long enough to grow to that point. 

On the bullish side of the equation, SimpleShowing has a lot of good things going for it. The price of the company is not outrageous given the traction that it has generated. It has a clearly differentiated product relative to competition. Though, a case could be made that it wouldn’t be difficult to replicate this business model. The performance of the company so far has been impressive. It has identified multiple revenue avenues, and its performance has been solid while operating in just five markets. That leaves a lot of opportunity for expansion, especially when you consider that its B2B Toura platform would eliminate the need for a real estate license.

Putting everything together, SimpleShowing is an intriguing company that has proven itself so far. Management appears to be on its way to growing the firm further, and that should create upside potential for investors. In the long run, the risk/reward profile of the company looks appealing, making it a Deal to Watch.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written by Daniel Jones.