A publicly traded property-tech company based in Dublin has brought in an overseas tech team while calling off a separate local acquisition.
ReAlpha Tech Corp. also is pivoting its business model to more sales of its software to the real estate industry, according to a recent SEC filing.
The startup has paused its original plan of using AI to identify short-term rental properties to acquire and then offering fractional shares in those properties to open real estate investment to a wider group of people.
“Due to current macroeconomic conditions, such as escalating interest rates, inflation and elevated property prices, our real estate acquisition operations have been halted,” according to the prospectus filed with the U.S. Securities and Exchange Commission.
“Instead, our current focus will be directed toward the continuous enhancement and refinement of our AI technologies for commercial use to generate technology-derived revenue.”
To that end, ReAlpha (Nasdaq: AIRE) in early May closed its acquisition of Naamche Inc., the U.S. arm, and its sister company based in Nepal. The cash-and-stock deal for both entities totals about $2.9 million, according to purchase agreements filed with the SEC.
However, in April ReAlpha opted not to go ahead with its planned $40 million acquisition of Dublin IT consulting firm United Software Group Inc., according to a recent SEC filing. The companies had announced their intent to merge in December, under which USG’s 2,000 full-time and contract employees would join ReAlpha.
ReAlpha’s media contact was not immediately available.
USG’s Dublin office phone was not accepting new messages. An email was sent to a general address seeking comment, as well as a LinkedIn message to CEO Anju Vallabhaneni.
Following the Naamche deal, ReAlpha now has seven U.S. employees, eight in India and 41 in Nepal, according to the SEC filing.
Naamche built ReAlpha’s recently released software product called Claire, which uses generative AI to act as a virtual buyer’s agent. The company says it charges zero commission and has a waitlist for the public to try the tool on its website.
“This transaction marks a milestone in our strategy to build and scale our capabilities for creating and delivering AI-powered real estate solutions,” ReAlpha CEO Giri Devanur said in a release about the Naamche acquisition.
Also this year, ReAlpha launched Gena, a marketing tool used to generate property listings and draft social media posts on properties for sale or rent.
ReAlpha could resume the “asset-heavy” short-term rental and fractional investment side of the business if interest rates and other macroeconomic conditions improve, the SEC filing said.
The company had a net loss of $1.4 million on $20,000 in revenue for the three months that ended March 31, bringing ReAlpha’s accumulated deficit to $13.7 million, the filing said.
Revenue has dropped because the company sold off its handful of short-term rental properties since going public in October.
The purpose of the prospectus was to register shares for future draw-downs of a promised $100 million investment by GEM Global Yield LLC SCS, a subsidiary of the firm Global Emerging Markets, based in New York City, Paris and the Bahamas.
ReAlplha went public in a direct Nasdaq listing in October and closed at $407 that first day. Today its shares are trading for less than $1.
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