Construction projects are complex and have a tremendous number of moving parts that need to move in tandem to ensure that a project is completed on time and on budget. However, traditionally there has been a lack of coordination between the various parties involved in the process. For property developers, a slight delay can make the difference between levels of profitability when dealing with leverage and lenders to finance projects. Enter Honest Buildings, a project management software portal built specifically for the needs of property owners to provide a holistic view on the status of projects and entire real estate portfolios. Gone are the days of tracking a project through site visits and spreadsheets. Already, notable real estate owners trust the Honest Buildings platform to manage their projects and many of these same leading real estate firms are also investors in the startup that was founded in 2012.
AlleyWatch sat down with cofounder and CEO Riggs Kubiak to learn more about the business, its origin, its future plans, latest close of funding for its Series B round, and the state of real estate tech.
Who were your investors and how much did you raise?
This was an extension to our Series B round, with added investment of $3.5M from two new investors who weren’t ready to close when we did the previous closing: Canadian Real Estate Leader QuadReal and Global Real Estate Technology & Advisory Firm Altus Group. The total raised in our Series B is $25M and these new investors joined existing Series B industry investors Brookfield Property Partners, Oxford Properties Group, The Durst Organization, DivcoWest Real Estate Investments, Rudin Ventures and C-III Capital Partners, in addition to leading venture capital funds Thrive Capital, Navitas Capital, Greensoil Building Innovation Fund, Bienville Capital Management, Riverpark Funds, The Westly Group, Rockport Capital, and Circle Ventures. Total investment to date is $43 million and we think this is really interesting because the largest real estate owners in the world are now not only just users but are also coming together to back the a platform that is creating value for them collectively.
Tell us about Honest Buildings.
Honest Buildings is the only project management platform built for owners and backed by owners to ensure capital and construction projects are on time and on budget. Industry leaders like Brookfield, Oxford Properties, Beacon Capital Partners, Invesco, SL Green, The Durst Organization, Silverstein Properties, JBG Smith, Harvest Properties, Parkway Properties, and Rudin Management utilize the intuitive software to streamline project management processes, increase revenue through faster project delivery, reduce project costs and make data-driven decisions on projects portfolio-wide.
Owners, operators and managers rely on Honest Buildings to manage billions of dollars in total project value through centralizing project data, increasing transparency, automating bid management, capital planning, reforecasting and standardizing reporting.
Before founding Honest Buildings I worked in real estate as an investment banker and then as an asset manager for a large portfolio owner in New York City. Our team was constantly looking for updated information from property managers, construction managers, architects, and general contractors to understand where we stood compared to budget and overall business plans at each asset. This vital information was difficult and time consuming to obtain — and in this day and age where we can book reservations, order groceries, and manage our portfolios all at the same time from our mobile phones, I thought there had to be a better way. In partnership with a few of the most influential real estate owners in NYC, we have now built the product they need to manage their capital deployment through construction projects. We see this as a systemic opportunity across every type of building to enhance the way that projects are being initiated, tracked and completed.
Now, Honest Buildings allows real estate ownership teams, including asset managers, property managers, project managers, COOs, CTOs and CFOS and their teams access to business intelligence on a project, building, or portfolio basis in seconds. This replaces a process that previously entailed several calls, emails and visits to construction sites to understand where the projects stood.
From a project management perspective, all assets have capital, construction and service contract projects, whether they are within an office building, a warehouse, a store, a school, or a hospital. Traditionally these projects are tracked using spreadsheets or pen and paper, saved in local and shared drives or email inboxes. Globally, construction is a $10 trillion dollar industry which impacts nearly every person on the planet. We knew there had to be a better solution — so we built one.
How is Honest Buildings different?
Honest Buildings was built specifically for, and in conjunction with, large real estate owners to directly solve the pain points around completing projects efficiently. The platform brings value in four specific ways.
- Protects top line revenue by delivering projects faster.
- Reduces overall project costs through increased collaboration, less change orders and more competitive vendor bids.
- Makes project teams happier by saving them hours of time normally spent on administrative and reporting tasks.
- Increases asset value by enabling teams to make better decisions by leveraging historical data.
One of the biggest differentiators of Honest Buildings is our deep dedication to user experience and design. Our product team spends countless hours working directly with our customers, watching them use our product. They look for ways to make this business software as intuitive, or even more so, than many of the consumer applications that people rely upon in their personal lives. By listening to our users, we have been able to successfully embed hugely technical algorithms that help owners keep thousands of large and complicated projects on time and on budget in a way that they find is easy to use.
What market does Honest Buildings target and how big is it?
We are targeting the $10 trillion global real estate operations and construction community. Owners, operators, and managers rely on Honest Buildings to manage billions of dollars in total project value through centralizing planning and project data, increasing transparency, automating bid management, and standardizing reporting. Recent reports have shown that the global construction market will increase to be over $25 trillion per year in spend. We believe we could be one of the first trillion dollar marketplaces on the Internet while also making cities better places to live for society. Our mission is to accelerate urban progress by empowering owners with collaborative, data-driven decision making that they can apply project by project, building by building, city by city.
What factors about your business led your investors to write the check?
We take a partnership approach to the market where we feel like working closely with many of the larger real estate owners in the world to develop our product will allow us to create more value for not only them as owners but the whole real estate industry. It’s how we know we’re solving a priority pain point for owners vs. just a nice to have feature. Throughout the process of working so closely with owners, a handful expressed interest in also investing alongside our VC investors which we believed to be the highest compliment. We wanted to make sure that it’s the market speaking and not just one owner which is why we then offered the opportunity to many of our other users and were honored so many of them wanted to invest in the company. We believe the future of real estate tech is a partnership between the owners and the tech companies themselves and that there will likely be many more companies that follow in our footsteps with this model.
What are the milestones you plan to achieve in the next six months?
In 2017, Honest Buildings powered a 500% year-over-year increase in project volume and facilitated $10 billion in projects managed over the last 24 months. We are on the way to facilitating more than $10 billion additional in marketplace transactions managed on the platform in 2018 and have plans to even further expand across North America, and beyond, to further grow our product and business development teams, and to explore new partnerships and integrations. These partnerships and integrations are all steps toward streamlining workflows in the built environment, which we feel will get us closer to accelerating urban progress building by building, all over the world. As more than 50% of the world’s population now lives in cities, which is projected to exceed 75% in the next 50 years, we see this as one of the most imperative opportunities and challenges of our time.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
I’d say to think about 3 things.
- Get to knowing the industry intimately. Sitting down and listening to your customers is the key to providing tangible value in our space.
- Build a world-class team who are passionate about the company’s mission and want to make a real impact.
- Make sure you have the right capital partners and providers who understand your business, support the team and provide guidance to deliver value.