Financial Diligence in Commercial Real Estate Technology
Invest in a tenant experience platform you can trust.
Building software is expensive, and it’s hard to get right. One key area of due diligence to focus on is the financial viability of the partner you are working with to develop your software. After all, if you are going to make an investment in tools that will be given to your customers, it’s best to make sure the company and tools will be around for the long term. This is a major topic our co-founder and CEO Chase Garbarino discussed in his new eBook, The State of Tenant Experience in 2020, which you can download by filling out the form to the right.
To properly assess financial stability, you’ll want to focus on the following 4 indicators of financial health with your prospective TeX partner:
- Cash on hand
- Development costs
- Pricing model
How is a company funded, how much has been raised, and from which investors?
In HqO’s case, we’ve raised $53M in funding since our inception, by far the most funding in the tenant experience technology space. HqO is backed by Insight Partners, arguably the largest and most successful B2B SaaS investor in the world, along with industry investors including Blackstone, Jamestown, DivcoWest, and more. Finally, Boston VC Accomplice is supporting the founding team for a second time after they successfully exited their last venture together.
Cash on Hand
When was the most recent round of funding and what is the burn rate?
Having a good understanding of the cash in the bank and the runway for the company can help ensure that you are picking a long term partner who will be able to deliver on the needs of today and innovate for the needs of tomorrow. Our most recent Series B round of $34.2M, was announced in late 2019.
How does the company make money and does it make sense?
Building software is expensive, especially when it is done right. There are over 3M apps in the app store. Building apps is easy. Building a platform for buildings that drives value for users, tenants and landlords is much harder. HqO is not the least expensive solution on the market. Our business model is designed to set us up for long term success and partnership with our customers. Our platform has been shown to increase tenant retention, shorten leasing cycles, provide informed data for better spending and decision making, and overall increase an asset’s NOI.
How much does it cost to effectively build a proprietary tenant experience platform from the ground up? Put it this way:
A 1M sq ft building paying $0.01 per square foot would pay $10,000 annually for its app or platform. That’s less than 25% of the salary for an entry level software engineer. From there, you’ll need the engagement strategy and execution to extract value from the technology. Does that price sound profitable or sustainable?
Don’t be fooled by low prices. If it sounds too good to be true, it probably is.
For more information about financial diligence and choosing the right tenant experience partner, fill out the form to the right and download The State of TeX in 2020 today!