Four Startups Enter Our CRE Shark Tank, But One Emerges Victorious
Four contending tech startups vying to be the next disruption in the commercial real estate industry squared off this week to impress some of the most tech-savvy professionals in Chicago CRE.
These entrepreneurs attended Bisnow's "Disrupt Chicago: Future of CRE Tech" event Tuesday at the University Club of Chicago not only to wow major industry players, but also to learn whether or not their products will truly be viable in a larger CRE platform. Sharks included KIG principal Susan Tjarksen, @properties co-founder Thaddeus Wong, Chicago Ventures principal Ezra Galston and MATH Venture Partners managing director Mark Achler.
Leading off was tech startup (RE)Meter, which CEO Jack Buck (who hails from Chicago CRE royalty) described as a FICA score for tenants. Buck told the sharks that (RE)Meter uses IRS data to determine the credit score of tenants looking to sign leases, which would be handy for landlords — especially in a retail sector that has been rocked in Q1 by mass closings and stores struggling to stay afloat. Buck told the sharks that (RE)Meter's target customer base would be institutional firms and asset managers, but admitted under questioning from Achler and Tjarksen that getting those firms to buy in has been a challenge. Buck also said he needs to hire a couple of people to focus on integration before (RE)Meter can truly take off.
Next up was VirtualAPT, which co-founder and CEO Bryan Colin said is a service that sets up 360-degree virtual reality tours of apartments and office spaces for rent, filmed in 4K quality. Colin called this "Google Street View on steroids."
While what the robot VirtualAPT uses to film the tours is impressive, the $15K to $20K cost of building one led the sharks to question Colin's ability to scale the service. Wong said he sees plenty of potential for VirtualAPT in the commercial sector particularly because hardware costs make it prohibitive for residential use. Achler felt that Colin's presentation was heavy on the tech and did not focus enough on the customer.
Richard Waryn said he and his partner, Cameron Doherty, hit upon the idea for their package delivery app DropSpot after having bad experiences ordering wine online. (Waryn even brought bottles of wine for the sharks to take home.) DropSpot, which started as a parking app, is expanding to offer package delivery drop-offs to retail partners and dedicated spots within buildings, preventing theft, while also being insured in case a package is damaged during delivery. Waryn said that DropSpot's target customer base is the 50 million apartment renters across the country, and the app is available in iOS and Android platforms. The expansion will allow DropSpot customers to be offered a "freemium" charge for deliveries, Waryn said, with revenues coming from holding and late fees.
Galston had some pointed questions for Waryn, specifically wondering how he planned to convince property managers to get rid of an amenity where there has been considerable investment in recent years. Achler had doubts about DropSpot's "freemium" business model, while Tjarksen asked Waryn how DropSpot would accommodate the erratic work schedules of Millennials while joking that the app would be great "if it could stop all the deliveries coming to my office."
Ingenious Construction founder Nick Carter said his startup is geared toward eliminating inefficiencies in the construction of projects, using real-time online data exchanges between developers, general contractors and subcontractors. By doing so, Carter believes project timelines would come in under budget and improve communication between developers, GCs and subcontractors.
After some deliberation, the sharks voted that Ingenious Construction had the best presentation and most fully realized startup. Wong said after the presentations were completed that Carter did the best answering the panel's questions about revenue stream, scalability, the functionality of Ingenious's platform and data storage costs. Wong said he was able to see the immediate benefits laid out by Carter and that the platform could be a useful tool to improving the quality of communication and work on a development.
With the win, Ingenious Construction won a free sponsorship to a future Bisnow event.