[UPDATE] Lyte Ventures offers agents advances on commissions, with funding from Azure-Lyte Fund

By Goola Warden / EdgeProp Singapore | November 6, 2020 6:00 AM SGT
SINGAPORE (EDGEPROP) - Real estate agents typically have to wait as long as six months to receive their commissions. LytePay, a Singapore-based payment processing platform, offers to plug the gap by paying the agent earlier than he or she would have been paid.
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Agents and potential buyers at a sales gallery at Parc Canberra executive condo in February in the early days of Covid-19 (Photo: Albert Chua/EdgeProp Singapore)
“Many ERA agents currently use LytePay,” says Poh Chee Yong, CFO of APAC Realty, the Singapore-listed real estate services brokerage firm that holds the master franchise for ERA in Asia Pacific.
In fact, ERA Realty Network, one of the largest real estate agencies in Singapore with 7,472 registered agents as at Nov 3, was the first to announce a partnership with LytePay in November 2018. “LytePay helps assure all ERA agents by smoothening out their income over time,” says Poh.
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With LytePay, property agents from ERA can apply for instant payment on commissions from their new launch projects 10 weeks after their clients exercise their Option to Purchase. Agents can receive as much as 80% of their total net commissions early, with the remaining amount when the developer pays ERA.
Beyond new launches, LytePay can be used for advances from commissions receivables for private resale and HDB resale transactions too. In terms of usage, it is evenly split across all segments, says Poh.
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Jack Chua, executive chairman of APAC Realty and CEO of ERA Realty Network Singapore (centre) with Dennis Goh (2nd from left) of Lyte Ventures at the launch of ERA's Commission Advancement Initiative with LytePay and Rapyd in August (Photo: ERA)
ERA is also the first and only real estate agency in Singapore to adopt LyteMoney, adds Poh. Launched in August, LyteMoney is a facility where agents who sign up will be allocated a credit amount equivalent to their commissions receivables. They can then request for advances by “withdrawing” or cashing out from their credit balances, Poh explains. “The process is seamless and conducted electronically.”
LytePay and LyteMoney are the brainchild of Dennis Goh and Vincent Ha, co-founders of tech start-up Lyte Ventures. Goh and Ha started the company in 2017 as a decentralised finance platform “to serve freelancers”.
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He spent the past three years “in stealth mode”, building his LytePay platform in secret. “One of the key pain points of freelancers are financing gaps,” says Goh. “They don’t have the same income stability that normal employees do.”
A Cambridge University graduate who became a serial entrepreneur after completing his scholarship bond at the Prime Minister’s Office, Goh founded Hungrygowhere in 2006 with two other friends. The food and restaurant review and recommendation website was sold for $12 million to Singapore Telecommunications in 2012 after which Goh became a venture capitalist then.
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Goh: One of the key pain points of freelancers are financing gaps (Photo: Albert Chua/EdgeProp Singapore)
To provide funding for LytePay, he teamed up with long-time friend and former classmate at Hwa Chong Institution, Terence Wong. Incidentally, Wong is the CEO and executive director of fund management company, Azure Capital. Together, the duo incorporated Azure-Lyte Fund (Lyte Fund) in June last year and launched the fund in August 2019.
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De-risking a high-risk business

As Goh tells it, LytePay takes the invoices from the property agents and collects the money from the developers. The technology allows this invoice financing to de-risk what seems to be a high-risk business. He describes LytePay as a process which “seeks to simplify and expedite freelance payment management”. This is done by financing cash advances based on a discounted rate through instant payment upon job completion to freelancers globally, with a primary focus on Singapore.
Factoring is in two parts: Lyte Fund funds the agents’ receivables and LytePay pays the agents while using AI and machine learning to work out the risk factor. This determines the fee that agents pay for receiving their commissions earlier than they otherwise would have. “We’re not obligated to finance everyone because different invoices have different risks, and we only focus on invoices that are funded by stable companies,” Goh says. “In real estate, we finance the freelances, the real estate agents; we don’t chase people for money. The risks are borne by the developers.”
LytePay has exclusive contracts with several real estate agencies, including ERA, Huttons and SRI. “We choose only good quality receivables,” says Wong of Azure Capital. “Over the last couple of years, the payment has lengthened for the agents. So, there is a need to plug the gap.”
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Wong: When they get the money from commissions for a new launch, they can use the money on marketing the next project, and close deals more quickly (Photo: Albert Chua/EdgeProp Singapore)
Nowadays, commissions range from 3% to 8%, depending on the projects, estimates Wong. “When they get the money from commissions for a new launch, they can use the money on marketing the next project, and close deals more quickly. Whatever they earn will be more than enough to make up for the small sacrifice in terms of fees for using LytePay,” Wong points out.

Stable growth

“I’m building a lot more services in the property vertical that will change how real estate agents work,” says Goh. “LytePay will continue to de-risk factors that will make Lyte Fund even safer.”
Lyte Fund is open only to accredited investors, and the minimum investment threshold is $1 million. “You get decent returns,” says Wong. “There has been no default [so far].”
Interestingly, there is no leverage in this fund either. “When the [stock] market was collapsing, our fund was very stable,” says Wong. The dividends at the end of the financial year in June was between 6% and 7% on an annualised basis, he estimates. The fund has no debt and zero default rate. “This is the only investment I’ve recommended to my grandmother,” he quips.
And the fund’s NAV has been rising every month since its launch in August last year. “The NAV is very stable; It increases at a slow and steady level and has gone up every month since its inception,” says Wong. “We pay out all permissible distributable income.”
Wong is excited about the rebound in residential sales over the past five months. “The market can absorb a lot more property sales now that we’re in Phase Two reopening and showflats are open,” Wong says.
APAC Realty’s FY2019 results showed that around 27.5% of total brokerage transaction value of $18.7 billion came from new launches. If commissions average 4%, the addressable market is likely to be nearer $210 million.
Most agencies are supportive of the LytePay mode. However the potential addressable market at present maybe less than the projected $600 million
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Agents and prospective buyers at the preview of Parc Clematis last year (Photo: SingHaiyi Group)

Most agencies are supportive

Another risk is that the agencies already offer this service to their agents. Ismail Gafoor, CEO of PropNex, the biggest agency in Singapore in terms of salesforce with 8,830 agents, says, “As a company, we have been providing this commission advancement service to our agents even before LytePay came into the market.”
During the “circuit-breaker”, the service was extended to PropNex agents at “zero cost, without any administration or processing fee”, says Gafoor. PropNex also rolled out a $30 million Resilience Support Scheme on April 6. It is a relief support package for PropNex agents, with $25 million going towards an Advance Commission Scheme for new launches (80%) and resale transactions (20%).
“We have worked with LytePay for special projects by Oxley Holdings, and we have been in discussion with LytePay to explore if there are any areas they can further value add to our agents,” says Gafoor.
Steven Tan, managing director of OrangeTee & Tie, the third-largest firm in terms of number of agents, likewise says, the firm has its own system to provide advanced commission for agents who need it. “Agents who need help can speak to us directly, and we will evaluate them on a case-by-case basis to see if it’s genuine,” says Tan. “It’s an advanced commission policy that is more straightforward.”
According to Tan, more agents needed help during the two months of the Covid-19 circuit breaker. “But we haven’t seen a significant increase in people requesting for this since, because the market recovery was quite fast,” he says. “The government has also provided income relief schemes for agents who needed help.”
SRI, the fifth largest firm by way of number of agents, has adopted LytePay since 2019, even though it has its own commission advancement package, according to sources.
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Freelancers are an underserved segment and were collectively paid US$4 trillion ($5.4 trillion) in 2019 (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Beyond real estate

Lyte Ventures’ Goh is unfazed. He sees a huge opportunity in other sectors besides real estate. For example, through invoice factoring, LytePay should be able to gauge the behaviour of freelancers who start using its service.
Goh does not give anything away on the technology, but LytePay is likely to work a bit like TMRW, United Overseas Bank’s digital-only bank, which uses AI and machine learning to identify credit risk and customer behaviour such as spending and saving habits.
According to Goh, freelancers are an underserved segment and were collectively paid US$4 trillion ($5.4 trillion) in 2019. Freelancers include tuition teachers, remisiers, property agents, insurance agents, computer programmers, designers, online influencers, musicians, music producers, movie producers in Hollywood, Bollywood and China. This first wave of freelancers are essentially “freelancers by choice”, notes Goh.
A bigger, second wave of freelancers are those whose jobs are displaced due to economic restructuring and rapid changes in the workplace, with machine learning, AI and robotics. “The wave of retrenchment is coming,” says Goh. “I’m trying to create an ecosystem to help improve the odds of them succeeding as freelancers.”
One way of providing income stability is through “invoice financing”, he adds. “It’s extremely safe and stable because these invoices are good quality invoices from large companies.”
For instance, the receivables or the factoring undertaken by LytePay will be funded by Lyte Fund. Factoring is a type of debtor finance in which a business, for instance, real estate agents or agencies, sell their commissions receivables to a third party — Lyte Fund — at a discount. In the case of Lyte Fund, the fee (which corresponds to the discount) works out to be a double-digit figure based on commissions.
In a way, the Lyte Fund is doing good in a socially redemptive way because a lot of freelancers live from month to month, Goh continues. “It allows agents to focus on their selling and it takes the stress off them from having to worry about matching income and expenses.”
APAC Realty’s Poh agrees. “Our partner, Lyte Ventures has really helped our ERA agents. The value proposition of the LytePay and LyteMoney scheme is tremendously strong. And a significant number of our agents use it.”
— with additional reporting by Cecilia Chow