1/3 of all rentals in the US are single-family homes. Increasing home prices and institutional capital has made the single-family rental (SFR) market quite extremely attractive. As professional investors, both institutional (only~2% of the market presently) and private flock to the space, they need the appropriate tools to streamline all facets of the investment journey and are turning to technology for this need. Haystacks.ai is a real estate data platform that serves as an underwriting tool that initially helps investors identify and acquire mispriced SFR inventory that’s available. Through its proprietary ML and AI technology, the platform synthesizes 275+ disparate data distributes attributes and layers it with traditional structured data, enabling investors to source, evaluate, and forecast property values. Haystacks.ai manages the entire lifecycle of the ownership, providing reporting and tracking on an ongoing basis so owners have near real-time visibility into portfolio performances. As more institutional capital is deployed in the space, quickly processing data at scale will unlock new opportunities and Haystacks.ai is adding to its core capabilities to allow investors to deploy capital into the right opportunities.
AlleyWatch caught up with Haystacks.ai Cofounder Sourav Goswami to learn more about how the funding team’s tenure in real estate private equity served as the foundation and inspiration for the business, the company’s strategic plans, latest round of funding, which brings the total funding raised to $8M, and much, much more…
Who were your investors and how much did you raise?
$3M. New investors, RRE Ventures, Assurant Ventures, and Preface Ventures, join existing investors, Streamlined Ventures, Colle Capital, Adit Ventures (Genesis Fund), and Hyperplane. The additional funding will immediately accelerate the Company’s product and platform development, as well as hiring as demand for single-family home rental intelligence grows among institutional investors.
Tell us about the product or service that Haystacks.ai offers.
At Haystacks.AI, we layer unstructured alternative data on top of structured, primary real estate data to improve projected performance and drive alpha for institutional real estate investors and fund managers.
What inspired the start of Haystacks.ai?
The world is becoming much more narrative-driven, and residential real estate is most impacted by consumer sentiment. The flow of institutional capital into the single-family rental asset class is accelerating, yet the product has relatively opaque data. As long-time industry insiders, we wanted to build a product that we would have wanted as fund managers, with the perspective of sticks and bricks-oriented investors but enhanced by a huge repository of alternative (yet impactful) data.
Our company looks at our 275+ data attributes to forecast market and asset performance. Our team is composed of long-time industry veterans, coming from leading fund managers and academic institutions, all of which have a deep knowledge of industry pain points. On the technology side, our data science, engineering, and UI/UX team can help create a user journey and solution that mitigates these problems.
What market does Haystacks.ai target and how big is it?
The SFR market in the United States alone is $5 trillion currently (globally, it is even larger). Given NOI growth and current market demand, the gross asset value will continue to grow and could potentially eclipse $10 trillion in the next 5-7 years. Meanwhile, institutional investment into the asset class is still relatively new. We plan to help fund sponsors and institutional investors accelerate their ability to judiciously deploy capital, while surfacing opportunities that would otherwise not be available.
What’s your business model?
We operate in the REMaaS (Real Estate Management As a Service) model. Essentially, our software enables fund managers to extend the reach of a more limited team, and to greatly enhance visibility into how the assets are performing and are expected to perform.
What are your post-COVID office plans??
We abide by all of the most up-to-date regulations and requirements aimed at keeping our employees safe.
What was the funding process like?
The excitement from investors and customer interest in Haystacks.AI has been gratifying. Given the strength of the team and the robust market opportunity, once we secured our lead investors, the round came together quickly. We are excited to have such reputable VCs and some of the leading names in private equity believing in our company and the vision we have for it.
What are the biggest challenges that you faced while raising capital?
Given my history as a traditional real estate fund manager, communicating the intricacies of a technology platform to VCs was a new experience. That said, we are fortunate that the VC groups in our seed round are seasoned investors and have invested in other proptech companies in the past. Therefore, they had a working knowledge of our business model.
What factors about your business led your investors to write the check?
First and foremost, it was the team. For real estate private equity fund managers, trust in new technology needs to come from within the industry; innovation in real estate is about evolution, not revolution. The fact that the founding team is comprised of long-term industry investors and executives from leading firms, and that the solutions are being ideated through the lens of the end-users says a lot about the potential success of the company. The founding team has also developed a lot of trust and confidence within the industry over the past nearly three decades. Haystacks.AI is uniquely positioned to provide enhanced data-driven insights to investors in the space, as the landscape of the single-family rental market continues to evolve.
For real estate private equity fund managers, trust in new technology needs to come from within the industry; innovation in real estate is about evolution, not revolution. The fact that the founding team is comprised of long-term industry investors and executives from leading firms, and that the solutions are being ideated through the lens of the end-users says a lot about the potential success of the company. The founding team has also developed a lot of trust and confidence within the industry over the past nearly three decades. Haystacks.AI is uniquely positioned to provide enhanced data-driven insights to investors in the space, as the landscape of the single-family rental market continues to evolve.
What are the milestones you plan to achieve in the next six months?
We are planning to launch several pilot clients in the coming months and continue to expand our market coverage. We also plan to roll out unique product features in order to meet market demands.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Given the current environment keep a close eye on burn. Focus more on the partners you select rather than trying to maximize the last dollar of valuation, especially in early-stage companies, given these investors will serve as additional non-salaried team members.
Where do you see the company going now over the near term?
We expect to maintain strong momentum throughout 2022 and beyond. By welcoming RRE Ventures, Assurant Ventures, and Preface Ventures into our network of partners, and increasing our focus on hiring through a DE&I lens, we are confident that this year will be one of immense opportunity, innovation, and growth.
What’s your favorite outdoor dining restaurant in NYC?
Any Korean BBQ with tables available.