Commercial real estate is a $15+ trillion, yes that’s TRILLION, asset class. Despite its sheer size, traditionally there has not much data easily accessible in respect to commercial buildings at scale like there is with the residential market where you can get a myriad of information on properties at a parcel level. Enter Reonomy, a SaaS platform that provides actionable information on 45M+ commercial properties in the US to its customer base which consist of brokerages, hedge funds, developers, and lenders. Going beyond creating a directory, the company has brilliantly moved the industry forward by also applying machine learning and data science to its data set to provide market intelligence, increase efficiencies, and validate the data offering.
Today we chat with founder and CEO Richard Sarkis about the company’s most recent round of funding, its future plans, and how it all came together.
Who were your investors and how much did you raise?
This funding round was led by Bain Capital Ventures. It also includes existing investors Softbank, Lerer Hippeau, Primary Ventures, KEC, SVB, and new investors Marcus & Millichap Venture Partners, Red Apple Group, and JAWS (the family office of Barry Sternlicht, chairman and CEO of Starwood Capital Group). The total raised is $16 million bringing Reonomy’s funding to date to over $38 million.
Tell us about Reonomy.
The easiest way to describe Reonomy is like Bloomberg for commercial buildings. We’ve built a SaaS platform that collects and cleanses all the data about commercial properties – including data about building ownership, debt, violations, outstanding mortgages, and other important data. We’ve built a number of web and API products to provide that data to our customers (banks, developers, brokerages, hedge funds). Our platform enables users to easily manage data and compare properties to find insights and the the best deals. Our user-friendly interface enables customers to access the information in a way that works best for their business users.
Commercial real estate (CRE) is a massive $15+ trillion asset class in the U.S. and yet it hasn’t seen much, if any, technological innovation until recently. My cofounder and I believe there’s a big opportunity to do something radically different in this huge space. Ultimately, we want to solve the vast inefficiencies in the market and apply the best data and algorithms to help inform smart business decisions.
How is Reonomy different?
For decades, the participants in the CRE industry have relied on getting their information and data the “old fashioned way” – via personal contacts or through legacy data providers who literally call brokers and lenders to get the data. Our approach is diametrically opposed to that. We’ve built a tech-driven data engine that collects, sorts, cleanses, and validates the data through our own machine learning algorithms and processes. We have machines completing time-consuming and labor-intensive tasks that were previously – and in some cases currently – done manually.
What market you are targeting and how big is it?
Reonomy provides services for the entire CRE industry, which is a multi-trillion dollar asset class in the U.S. – and spends billions of dollars on data each year. In 2017, we scaled our data engine from a New York City resource into a national platform, which now offers data on 45 million properties across 3000 countries.
What’s your business model?
We’ve developed a unique and proprietary data asset in the CRE space which we monetize two ways. The first is through a web-based application where individual subscribers pay us a monthly fee for access to our data and tools. The second is through our enterprise data feed, which delivers data to larger clients via API.
How has adoption of technology changed within the real estate community, an industry not known for embracing innovation, in your experience?
It’s definitely not a case of “if you build it, they will come.” You have to not only build the solution, but also prove to the CRE industry that what you’ve built solves their very real pain points and will help them make more money and/or make fewer bad decisions. We’ve been able to do that at this stage with hundreds of companies and thousands of users on our platform.
What was the funding process like?
It took about four weeks from start to finish and was a smooth process, given that the investors already knew us really well – either as partners or customers. Our growth into a national platform with both web-based and enterprise API products, plus our strong customer success, gave a lot of validation to what we are doing.
What are the milestones you plan to achieve in the next six months?
We successfully scaled our web application product from NYC-only coverage to complete national coverage, so we’re going to continue investing in selling and marketing that product. We’re also investing heavily in our enterprise applications because there has been such huge demand there. It’s a massive and very under-served market, and ripe for using data to transform the industry.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Give yourself as much time as possible to figure out true product market fit. Scaling our platform beyond NYC was exponentially harder than we thought it would be from an engineering and development point of view. In a sense, if you are forced to run lean because you don’t have much capital, that’s not necessarily a bad thing!
What’s your favorite restaurant in the city?
My father in law is the GM at Bobby Van’s steakhouse on Park and 46th, so I have a family obligation to say that’s my favorite restaurant!