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[Korean Startup Interview] Contactus Innovates Small to Medium-Sized Building Management with IoT and AI

2023-10-10 4 min read

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[Korean Startup Interview] Contactus Innovates Small to Medium-Sized Building Management with IoT and AI

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Proptech startup, Contactus, operates a building management solution tailored for small to medium-sized buildings called ‘Doongji’. 

Targeting mid-sized structures, ‘doongji’ provides services beyond mere facility management, encompassing rental management and administrative services. With ‘doongji’, users can access real-time updates on building statuses, from management fee delinquencies to facility management history. 

The service covers a wide range of issues, including building use contracts, defects, brokering, maintenance, and repairs, catering to building owners, landlords, and tenants alike.

Song Hee-guk, a former Marine Corps officer and a serial entrepreneur, is the CEO of Contactus. He first ventured into corporate risk management. Business relationships with manufacturers in the metropolitan area led him to found Contactus. 

Inspired by his father’s experience in real estate mediation and the challenges faced after purchasing a small building, he decided to start a small to medium-sized building asset management service. Most of the initial angel investors, with whom ties were established at his former company, joined the digital transformation, recognizing the need for small to medium-sized building management services.

CEO Song Hee-guk said, “Our target market comprises about 450,000 buildings nationwide that are 330 square meters and below 30 stories. This includes almost all buildings excluding major ones in areas like Yeouido, Teheran-ro, and Jongno.”

Based on IoT, ‘doongji’ minimizes idle time for building managers, adopting a patrolling system that dispatches appropriate professionals swiftly during emergencies, thereby reducing overhead costs. Six experts with extensive experience in managing large buildings work in a patrol style from designated hubs, resolving building management challenges.

Having already exceeded this year’s projected revenue of 1.5 billion won, Contactus is currently raising Series A investment until October. 

As part of the GMEP (Global Market Expansion Program) supported by the Korea Institute of Startup & Entrepreneurship Development, they are also participating in the ‘Smart City Startup Vietnam Expansion Program’ hosted by TheInventionLab, exploring global market opportunities.

CEO Song Hee-guk stated, “Contactus isn’t just a PM service. We’re moving towards AM and SM. Compared to other companies, we have a dominant competitive edge in solving clients’ building facility management woes. Stay tuned for the endless possibilities ‘doongji’ can offer.”

Solving Rental Management Issues in Commercial Real Estate

For commercial real estate, many properties are purchased as an investment strategy. Unlike financial products, once a property is acquired, the owner immediately faces tasks like rental and facility management. ‘doongji’ provides a solution, allowing investors to focus on their primary business goals.

We deliver management quality equivalent to large buildings, yet optimized for small to medium-sized structures at appropriate rates. Our offerings span rental areas, including billing, delinquency management, tax invoice issuance, re-contracting, vacancy management, and building facility management, all delivered through a patrol-based rotational work system.

Solving Fixed Cost Issues with IoT-based Non-residential Rotation

Traditional facility management companies stationed personnel on-site. These were primarily manpower-based businesses, distant from digital transformation. ‘doongji’, using an IoT-based non-residential rotation system, solved the high fixed cost issue endemic to traditional management, delivering high-quality services optimized for smaller buildings.

Launched just 18 months ago, Contactus has been growing rapidly, securing 10-15 new contracts monthly due to favorable word-of-mouth. They expect a monthly steady revenue of 100 million won and an annual turnover of about 2.5 billion won within the first year.

Targeting 450,000 Small to Medium-sized Buildings

The commercial real estate market encompasses approximately 470,000 properties nationwide. Of these, ‘doongji’ targets around 450,000 small to medium-sized buildings (with an area of less than 10,000 square meters), roughly 95% of the market.

Thus, except for major buildings in cities like Teheran-ro, Jongno, and Yeouido, the majority fall under the category of smaller buildings. Most of these buildings are owned by individual asset holders, for whom ‘doongji’ offers a VIP service.

‘doongji’ follows a subscription model for small to medium building asset management. Services cover facility and rental management, with prices ranging from 500,000 won to 1.5 million won, depending on building size, rent, and the year of completion.

Expertise from Large Building Management

The team at ‘doongji’ comprises personnel from large building management teams, with each facilities team specializing in different areas. Notably, team leaders hail from ROTC officer backgrounds. The intensity and expertise in initial facility management is a significant strength.

With this team power, revenues are projected to hit around 2 billion won this year. Additionally, they are currently undertaking two POCs with Shinhan Bank and are diligently working towards launching an escrow service and a refinance product for small building landlords.

Why We Should Receive Investment!

Firstly, rapid market capture in the metropolitan area. The patrol-style facility management service that ‘doongji’ offers is a novel approach. Historically, for small buildings, services offered were either manpower dispatch for willing payers or FMS (Facility History Management Service) for those who managed themselves. Thus, ‘doongji’ presents a new service both in quality and price, making it essential to capture the market swiftly before competitors emerge.

Secondly, enhancing customer satisfaction through IoT implementation. Most visitors to ‘doongji’ related buildings are either former managers or building owners who personally visit to check on management statuses. As most smaller buildings were managed personally without digital transformation, ‘doongji’, managing CCTV, access control, and time-based management for electricity, firefighting, and elevators, allows owners to verify the current building status anytime, anywhere, maximizing satisfaction.

Thirdly, creating new touchpoints with untapped clients. Most ‘doongji’ clients, being small building owners, prefer discretion. While current client acquisition relies on keyword advertising and community introductions, post-investment will enable diverse channels for customer outreach.

What’s the Plan for Global Expansion, starting with the Vietnamese Market?

For Southeast Asia, most of the market comprises smaller buildings, even more so than in Korea. Opportunities in major Southeast Asian cities seem larger than in regional South Korean cities. Through the GMEP program, initially, they plan to test their service in Vietnam targeting Korean building owners. They aim to assess the local management market size and the extent of digital transformation. Based on these insights, post the second half of 2024, they plan to introduce ‘doongji’s IoT-based services to major Southeast Asian cities and capture the market.

[Korean Startup Interview]

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