A Quest To Innovate Real Estate Software In Asia

When I sat down with Matt Shampine, the co-founder and CEO of Seoul-based proptech startup DNK, I expected a straightforward discussion about property management software. What unfolded, however, was a surprising story full of entrepreneurial resilience and innovation, navigating the many lows and few highs of the startup world.

DNK, founded in 2020 under the name Dongnae, embarked on its journey with a grand vision: to become the Redfin of Korea. “Finding a home in Korea is very different and much more difficult than it is in other markets. There are an average of between ten to fifteen brokerages in each apartment complex, and one of the main methods of finding available units is by checking out the pieces of paper taped to the broker’s office window; it seemed like an industry ready for disruption,” Matt explained.

He continued, “We wanted to create a centralized place for buyers and renters to find homes and for brokers to list properties—a combination of a multiple listing system (MLS) with high-quality real estate brokerage services for the Korean market.”

The idea gained traction. By December 2020, DNK had raised a $4.1 million seed round led by New York-based VC firms Flybridge and MetaProp, with several other angel investors joining. The company put together one of the largest broker networks to load up their MLS with inventory, built iOS and Android apps, and announced their product launch. Everything was going well. DNK raised a follow-on $4.1 million seed extension round led by NFX, with Pete Flint, Trulia co-founder and former Zillow board member, joining DNK’s board.

The excitement did not last long. Waves of users came after each press push, but nobody used the platform as intended. “My co-founder, Insong, and I were sure what we were building was going to change how real estate brokerage was done. We raised the money. We built a great team and product. We got the literal patent in Korea for booking tours of homes online in residential real estate. And yet, no matter what we tried, we could not get nearly enough actual customers to do business with us in a meaningful way,” Matt said. “It was incredibly frustrating and very humbling.”

As any seasoned entrepreneur knows, the startup world is anything but predictable. A consistent message the DNK team was hearing while working on the brokerage side was about the unaffordability of rent. This is because of the unique way home rental in Korea was traditionally done—the Jeonse system, which requires renters to make enormous lump-sum deposits, often up to 70% of the property value, which at that time averaged $600,000 in Seoul for a two-year lease.

“We realized this was a major pain point, especially for young professionals and newlyweds. We quickly tested the concept and realized we might be onto something, so we made the decision to pivot the business to what we called Dongnae FLEX. We curated premium apartment rentals that would lower typical renters’ housing deposits by approximately 98% by working with landlords to provide premium apartments to renters with a low deposit and fixed monthly rent.”

Momentum continued to build, and in March 2022, DNK secured a $16.4 million equity and $4.1 million debt Series A with investors from Korea and the US, including NFX, Flybridge, MetaProp, Woori Venture Partners, Hana-Magna, Hana Financial, HRZ, Chamaeleon, Maple, as well as notable angels such as WeWork co-founder Miguel McKelvey.

“We had this incredible group of proptech and fintech investors backing us. They believed in our vision, saw the market opportunity, and at that time it felt like growth was inevitable. We were ready to make a big move and scale rapidly.”

A few months after closing their Series A, the company signed a term sheet with Credit Suisse for a $100 million debt facility. All signs seemed to be pointing in the right direction. Over the next year, DNK completed all the necessary diligence, legal paperwork, entity formation, hiring, and more for this incoming capital. Signing was set for March 2023.

Fast forward to March 2023 and the chaos that ensued. The bank run on Silicon Valley Bank, which led to its failure, caught the startup world off guard. A couple of weeks later, the 167-year-old bank Credit Suisse collapsed.

“Nobody knew what was going to happen. That week we got a call from our contacts at Credit Suisse. Not only was the debt facility off, but they also had absolutely no idea what was going to happen to themselves,” recalled Matt. “It was tough for everyone involved, to say the least. We had to completely rethink our strategy. Though I also realized we should be thankful. If we had taken that debt facility earlier and started deploying it before the sharp rise of interest rates, we most likely would have been in an impossible financial situation.”

Matt and his team did not give up. They instead spotted an opportunity in this moment of crisis and moved quickly. The company acquired Stevens, a prop-tech company operating a 520-unit co-living space called Dears that was located in Pangyo, Korea’s Silicon Valley. Dears was a community-focused space for young professionals that featured flexible leases, fully furnished units, free co-working space, and events to bring people together—very WeWork-esque.

Matt elaborated, “We could not find any good software to manage the building and community, so we decided to build our own. While I spent the vast majority of my time at WeWork focused on the expansion of the business in the US and across APAC, what a lot of people do not know is that I actually got my start at the company building the initial software that did everything from leasing management, billing, and amenities such as conference room scheduling to building community through events and connecting people together. We were able to take a lot of those learnings and apply them to what we were building to run Dears.”

The two co-founders, Insong and Matt, had a realization while running Dears. The property management business was becoming increasingly commoditized, and the economics seemed to be a race to the bottom. What made Dears special and could improve the building’s economics was the property management software that was powering it. By the end of 2023, they had decided on one final pivot to transform the company into an enterprise SaaS company. This included a full rebrand to the name DNK, retiring the original company name, Dongnae, that had been used for over three years.

Transitioning to a SaaS model came with challenges, particularly in communication and team restructuring. “We had to shift from a team focused on selling real estate to one building enterprise software,” Matt said. “Transparency and ensuring everyone understood the new vision were crucial. For those that remained, we had to make sure everyone understood the why, how, and where we were going.”

Despite these hurdles, DNK has made impressive strides. As of August 2024, they will have over 17,500 units under management and are preparing for expansion into Japan by the end of this year. DNK’s approach, influenced by Matt’s experience at WeWork, aims to set the standard for rental housing management in the Asia Pacific. “We’re learning from successful software providers in our space like Yardi, who ironically bought WeWork this year, but tailoring our solution to the unique aspects of operating in Asia,” Matt explained.

This approach is already yielding positive results, with DNK landing significant clients, including the largest multifamily housing operator in South Korea, GH Partners. Looking to the future, Matt is optimistic about SaaS in the APAC market. “Timing and market directionality are important factors when you enter a new country in Asia,” he said. “It’s important to approach each in a respectful and humble manner as you build your go-to-market strategies.”

As our conversation ended, I realized DNK’s story is more than just a series of business pivots. It’s a testament to the resilience of entrepreneurs who see opportunity in crisis and are not afraid to reinvent themselves. With DNK eyeing expansion into Japan and beyond, it seems their journey is far from over.

“The conversation has been edited and condensed for clarity.”