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Beyond Pricing鈥檚 automated data-driven software – which the company claims to be 鈥渢he first of its kind in the industry鈥� – is aimed at independent property owners, managers and developers, a group the company says are 鈥渦nderserved.鈥�

These independents are 鈥渋ncreasingly fighting off competition in the form of VC-backed vacation rental platforms and hospitality conglomerates that are entering the fast-growing space,鈥� Beyond Pricing said.

It charges 1 percent per booking, with the goal of hitting “that sweet spot in terms of supply and demand.”

The startup defines short-term rentals as vacation rentals, such as the homes and apartments you鈥檇 find on Airbnb or HomeAway, as well as other rentals like apart-hotels, which are increasing in popularity across the U.S.

鈥淎ny property that serves as a home base for a short-term stay, in the same fashion as a hotel might, is a property we can serve,鈥� said CEO .

Background

Co-founded in 2013 by McHenry and CTO (veterans of the airline and hotel industries), the San Francisco-based company said it leverages over 10 billion proprietary data points in an effort 鈥渢o make the most accurate pricing recommendations in the industry.鈥� Its goal is to give independents the ability to 鈥渃ompetitively price their properties, regardless of the platform they list on, and see up to a 40 percent increase in revenue.鈥�

鈥淥ur customers make up the majority of the short term rental industry, but don鈥檛 have the resources to invest in their own software, and have traditionally relied on analog ways of pricing their properties,鈥� McHenry said.

It鈥檚 platform agnostic so its software integrates with sites like Airbnb and VRBO, as well as systems like HomeAway Software and Streamline, to give property owners and managers the ability 鈥渢o harness..[its] big data machine learning algorithms to automatically adjust and update their prices everywhere they list.鈥�

Beyond Pricing previously raised a total of $3.5 million in in 2015 and 2016. Via email, McHenry said the company鈥檚 revenue grew by over 2.5 times last year. Its headcount has also climbed to 60, compared to 25 a year ago.

Looking Ahead

Beyond Pricing currently dynamically prices more than 150,000 listings in over 7,000 cities globally, and has priced more than $2 billion in bookings. The company plans to use its new capital to develop an expanded suite of products. It also plans to grow its presence in Europe, starting with an office in Lisbon, Portugal.

鈥淲e have spent so much time proving our model with our existing customers that we鈥檙e keenly aware of what their unique pain points are,鈥� McHenry wrote. 鈥淚n addition, the short term rental and vacation rental market in Europe is twice that of the US, so while we plan to continue to expand in the US we see a huge opportunity to continue to grow in Europe.鈥�

, a partner at Bessemer Venture Partners, said Beyond Pricing is an example of a company that is 鈥渢ransforming鈥� an industry that has been 鈥渉istorically underserved by software.鈥�

鈥淲hile hotels have fully embraced technology and dynamic pricing, the short term rental industry is still underpenetrated,鈥� he said. 鈥淲e were impressed with the Beyond Pricing team鈥檚 ability to consistently deliver revenue growth for their customers and think they are positioned to become the market leader in short term rental software.鈥�

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Commercial real estate brokerage participated in the rather large seed round along with , and the , which earlier this year (dubbed ).

San Diego-based Biproxi鈥檚 target users are commercial real estate brokers, buyers and tenants. It鈥檚 not, however, aimed at those conducting transactions around nine-digit or higher-valued properties. Instead, it wants to help a segment of the commercial real estate world that is considered to be 鈥渢he middle market,鈥� such as independent brokerages that might have less to spend on marketing.

鈥淭he platform gives independent agents the resources and reach to compete with larger brokerage houses while maintaining their independence,鈥� according to the company, with the goal of giving them a way to 鈥渞un a real estate deal from listing to closing鈥� with one platform instead of working with (and paying for) several.

As part of the funding announcement, the startup also said it unveiled today an algorithmic-based data product that provides 鈥渋nstant property and valuation data on over 32 million off market commercial properties.鈥� Biproxi says it gives users access to detailed information such as property data, historical sales data, assessed property values and financing history.

The company had previously launched a free product that offered biproximateTM, which provided 鈥渂iproximate鈥� (not perfect) values on more than 10 million commercial properties across the United States. That product also contained information on each property, including sales and financing history.

The offering of such data for free is unique in the CRE industry, according to CEO , who said that historically, accessing transaction history or the current market value of a commercial real estate property has required 鈥渁n expensive data subscription.鈥�

鈥淲ith Biproxi, we鈥檙e trying to take four or five tools the CRE industry uses and put it all onto one platform,鈥� he told 附近上门 News. 鈥淚n the United States, there are $600 billion in investment sales a year, and 75 percent of that volume is under $25 million. There鈥檚 a lot of opportunity there.鈥�

Biproxi also claims to do other things for a lower cost than traditional companies and other startups might. For example, Smith said it can conduct an appraisal within three to seven days for about $2400 whereas in the 鈥渢raditional appraisal world,鈥� it can cost closer to $5,000 to $7,000 and take three to four weeks.

Smith co-founded the company along with , and , in early 2018, one year after leaving now competitor , a commercial real estate exchange that he first became involved with when working at private equity firm . All co-founders have experience working in the CRE industry, a fact that led the startup to purposely not seek strategic investments from industry-focused VCs.

鈥淲e didn鈥檛 seek a proptech investment base because our team has been in the business for a long time, and we really didn鈥檛 need that kind of expertise,鈥� he said. 鈥淲e knew that a lead investor like Greycroft could really help build a business.鈥�

, operating partner at Greycroft, said his firm recognizes that the CRE industry is a 鈥渓arge market.鈥�

鈥淲e believe Biproxi has created a more efficient way for brokers and investors to do business,鈥� he wrote via email. 鈥淏iproxi has created an end-to-end solution for commercial agents to complete an entire real estate deal on one free platform. We鈥檝e never seen all of these features packaged into one toolset.鈥�

Looking Ahead

The company will ultimately have three intended primary revenue streams, including charging buyers a transaction fee. Most brokers “are happy to rebate” such fees, according to Smith, because most are already getting 鈥渂oth sides of the commission鈥� on deals conducted on its platform. Down the line, it also plans to offer financing on deals (it’s already partnered with a title company) and charge for some of its data products.

Currently, Biproxi has 100,000 listings on its site and Smith hopes to double that number by month鈥檚 end. It also has roughly 4,000 registered users and about 15 employees, a number the company expects to grow to about 50 by year鈥檚 end by bringing a currently-outsourced technology team 鈥渋n house.鈥�

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Proptech (short for 鈥減roperty tech鈥�) companies especially like the city, as evidenced by a number of startups opting to move their headquarters there from other locales. This is in addition to the proptech companies who started operations in the area.

It appears that real estate-related companies aren鈥檛 the only ones choosing New York over the West Coast. Earlier this year, Bloomberg reported that found 鈥淣ew York ranked first in an index 30 global tech-heavy cities鈥� as analyzed by real estate brokerage Savills Plc. (San Francisco came in second and London third.)

That index cited New York鈥檚 strengths as its 鈥渧olume of venture capital cash, large pool of talent — both homegrown and people attracted to the city — and the opportunities that exist for them.鈥�

Indeed, , founder and executive director of , a nonprofit representing New York City technology companies and innovation-friendly policies, said that New York used to be considered more expensive of a place to do business than the Bay Area, but not anymore.

鈥淎t this point, it鈥檚 not more expensive than the West Coast and in fact, it might even be a little cheaper these days,鈥� she told 附近上门 News. 鈥淭he culture of New York is about attracting people who want to build big things and meaningful products that impact existing industries and society.鈥�

And proptech companies are a perfect example of that, Samuels said,

鈥淚f you鈥檙e a proptech company, you need technical expertise as well as expertise in the real estate sector,鈥� she told 附近上门 News. 鈥淪o you鈥檙e probably going to have better luck getting capital, expertise and potentially mentorship from the real estate sector in New York as all of those things are uniquely here.鈥�

On top of that, access to potential customers abound in the city, which is another big draw. And let’s not forget that New York is one of the nation’s largest, if not the largest, metropolitan real estate markets.

Who鈥檚 Who

Early-stage venture capital firm聽 provided us with a short list of companies in the space that have moved in recent years:

• Commercial leasing management platform (which merged with leasing and asset management platform from Seattle
• , which describes itself as a 鈥淶illow for office space鈥� from Texas
• (previously known as OnTarget), which aims to Increase productivity and safety on construction sites using IoT and AI,聽 from the Bay Area
• , which uses machine learning and AI聽 to provide personalized notifications for asset management, property management and engineering teams, from the Bay Area

The list does not include other proptech companies such as data platform and virtual open house startup which are based in the city. It also doesn鈥檛 include larger real estate-focused startups such as real estate brokerage and marketplace .

鈥淔or a long time, technical talent was incredibly difficult to come by here and for many years, there was more of it on the West Coast than the East Coast,鈥� Samuels said. 鈥淭hat鈥檚 increasingly not the case anymore. Once you take that advantage off the table for the West Coast, it seems inevitable that companies building tech for the real estate space would want to be in New聽 York.鈥�

Startup Side

The aforementioned , a platform that aims to help companies find workspaces, moved to New York from Houston in 2013.

, the company鈥檚 co-founder and CEO and Columbia Business School graduate, said while Houston was strong in the biotech and healthcare tech arenas, it was simply 鈥渘ot a big real estate city.鈥�

New York City, he said, is 鈥渟econd to none鈥� from a real estate perspective.

鈥淪ilicon Valley is not the end all be all,鈥� he told 附近上门 news. 鈥淔rom an office point, New York is one of the most expensive commercial markets, if not the most, in the country with the largest number of square feet. Plus, a significant percentage of real estate decisions get made within 20 blocks of my office.鈥�

Things appear to be going well for SquareFoot, which has raised about $13 million over time. Wasserstrum said the 56-person company has 鈥渕ore than doubled revenue鈥� over the last 12 months.

鈥淢oving to NYC was the best decision for the company,鈥� he continued. 鈥淭he quality of talent here on the tech side and the depth of real estate expertise in the city has been invaluable.鈥�

, co-founder of , relocated his company to New York from San Francisco in 2017. The company uses artificial intelligence and IoT to help contractors have a 鈥渕ore data-driven approach to making decisions,鈥� and thus help improve construction productivity and safety.

After raising a seed round that MetaProp participated in, Shrestha said he realized New York City was just 鈥渁 better fit鈥� for the company鈥檚 headquarters.

鈥淭he accessibility to construction sites, and (thus) customers, is just one example of why,鈥� he told 附近上门 News. 鈥淲e can step out the door and have so many projects just around the corner for us.鈥�

The U.S. construction market alone is estimated at $1 trillion, he said, 鈥渁nd New York is the biggest hub for that.鈥�

While I鈥檓 sure there are other proptech or real estate-related companies that we鈥檝e missed in this go-around, what we鈥檙e seeing confirms that NYC is definitely emerging as a hotbed for these types of startups. There鈥檚 just something to be said for the Big Apple.

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The seven-year-old company has raised in its lifetime. This latest round, led by Brookfield Ventures, the investment arm of , is 鈥渂elieved to be the largest venture financing in the history of commercial real estate software,鈥� according to the company鈥檚 .

Brookfield Asset Management is a publicly disclosed VTS customer. Other new investors in the round include strategic investors (and other VTS customers) GLP and , as well as previous backer , among others.

No doubt the commercial real estate market potential is huge, with the industry valued at in the U.S. alone in 2017, according to the National Association of Real Estate Investment Trusts.

聽VTS, which employs a SaaS business model, is break even and saw its revenue grow聽70 percent YoY in 2018, according to Amy Millard, CMO. It’s been conservative in hiring as it moves toward profitability, she added, with just under 200 employees. The company claims that its software platform gives landlords the ability to 鈥渃onvert leads to leases鈥� 41 percent faster by building 鈥渄ata-led strategies.鈥� It also offers a benchmarking and analytics product called “MarketView.”

VTS and competitor merged in 2016 and grew square footage of聽office, retail, and industrial assets managed聽from a combined 2 billion to 10 billion at the end of last year.聽The company has a user base of over 35,000 including some of the biggest names in CRE such as Blackstone, Hines, Jones Lang LaSalle, and Boston Properties.

VTS said it plans to use the money to enhance its platform both domestically and globally. It also plans to accelerate the launch of its commercial real estate (CRE) marketplace, Truva, which is slated to go live later this year.

Jesse Weber, a senior managing director in Newmark Knight Frank’s Austin office, told me he’s watched VTS grow “exponentially” since its merger with Hightower. That, according to Weber, was the first signal that the merged company had the potential to be a leader in the CRE tech space.

Another interesting point about the recent raise, to Weber, was that Brookfield Ventures, led the round.

“Generally a strong sign in any industry when a company鈥檚 largest customers are their leading investors,” he said. “In my opinion, the long-term outlook for VTS is extremely bright as it has found a way to equally align with brokers and owners with value creation tools that optimize otherwise archaic processes.”

Photo Credit: Katie Manning, Unsplash