• Tue. Jun 21st, 2022

Bowery Valuation Raises $ 35 Million for Technology-Driven Commercial Real Estate Valuation Firm

Commercial real estate values ​​are more subjective in nature than residential ones, as the underlying asset, while important, must be valued against rental income and operating costs. This leads to commercial real estate appraisals requiring substantial amounts of information from disparate sources to understand property, zoning records, demographic and lifestyle information, comparable sales, and rental data. Bowery Rating is a technology platform that unifies all of these requirements into a centralized, easy-to-use interface that makes business assessments more efficient for assessors and business applicants. Rather than using a traditional SaaS model, the company instead uses its software platform to enable its own staff to provide assessment services to clients. Using a data-driven approach has modernized one of the most time-consuming parts of a commercial real estate transaction, resulting in some of the best turnaround times in the industry. Bowery Valuation operates five offices, primarily along the East Coast, with nationwide expansion plans.

Alleyway caught up with the co-CEO John meadows to learn more about how the founding team’s experience as Microsoft Office dependent evaluators sparked the idea of ​​creating a robust software platform for industry, corporate strategic plans , the latest funding round and more.

Who were your investors and how much did you raise?

We raised $ 35 million in Series B funding led by the Growth Equity business within Goldman Sachs Asset Management (Goldman Sachs) with the participation of Capital One Ventures and existing investors, including Builders VC, Fika Ventures, Navitas Capital, Camber Creek, Nine Four Ventures, Greenspring Associates, and Alpaca VC. This investment brings our total funding to $ 66 million, following the $ 20 million Series A venture capital funding in 2019.

Tell us about the product or service offered by Bowery Valuation.

Our appraisal platform is an end-to-end software solution for commercial real estate appraisers that uses public record integration, a mobile inspection app, natural language generation and a comprehensive database.

What inspired the launch of Bowery Valuation?

Noah (Isaacs, co-founder) and I grew up together in Berkeley and have been best friends since the age of 14. We’ve always wanted to start a business together and when we stumbled upon business appraisals right out of college thanks to a friend of mine at Penn, we were immediately blown away by the age and pain of the appraisal process. . We have valued ourselves for several years, valuing over $ 5 billion between the two of us, while saving as much money as possible and learning as much as possible about the industry. We were in a local business of 20-25 people in New York using Excel sheets and Word documents someone created in the 90s and we spent time improving ourselves. After our company was acquired by a national company, we were provided with supposedly “the best in the industry” technology, which we found to be worse than our own already painful Excel sheets and Word documents. It was the last push we needed to quit our jobs and team up with our third co-founder, Caesar Devers, to build real technology with the potential to change the industry forever.

How is Bowery Valuation different?

We are different in many ways. It’s easy to say our technology because it’s the main differentiator behind our original idea, but I think it starts with our people first and foremost. We’ve handpicked the best in the evaluation industry and paired them with amazing product managers, designers and software engineers. The people of Bowery make our culture unique in our industry and make it a place that innovators and the best talent want to join and build with us. Our idea is nothing without our people. Unlike other consulting firms, all of our employees are shareholders, which gives them all a real sense of belonging. We fundamentally believe that the best people deliver the best product and the benefits will follow.

And at the end of the day, technology is how we think we can change our industry. We give our best-in-class assessors superior tools to assess more efficiently, smarter and more consistently, ultimately delivering a superior product to our customers. We seek to truly transform the value created by commissioning an assessment through internal collaboration between our technologists and assessors, as well as collaboration with our clients, to create technology that has never existed in our industry. . Finally, we also have very different ideas around the team spirit, culture, operations and customer service that sets us apart.

What is Bowery Valuation target market and how big is it?

Today we are focusing on business valuations. We are headquartered in New York, with offices in New Jersey, Philadelphia / Central Pennsylvania, Washington DC, and South Florida. Our funding will allow us to continue to grow nationally as we open offices across the United States.

What is your business model?

We don’t sell software to the outside world, we use it to enable our reviewers to deliver the highest quality reports faster than anyone else. We look at every aspect of our business and our industry and ask ourselves how can we make it better? It therefore means solving inefficiencies and problems through technological, cultural and operational innovations.

How has COVID-19 impacted your business?

April and May 2020 were hit hard, as lenders pulled back to wait to see how the market rebounded. Things started to pick up again in June and September our business really took off and we were able to come out of 2020 with the best consecutive months ever. Our business has grown steadily since then – the biggest challenge ultimately was that we slowed hiring in the spring and summer given the uncertainty and had to really try to catch up on the job side. hires in late 2020 and early 2021, which was certainly a welcome challenge to come out of a scary time.

How did the funding process go?

It was a process of about 4 to 5 months, from start to term-sheet. We’ve had a ton of investor meetings and were very lucky to land our top picks for new partners in Goldman Sachs and Capital One. While it is a lot of work and certainly very stressful, it is also an incredible opportunity to get candid feedback from objective third parties about our business and to hear opportunities for improvement.

What are the biggest challenges you have encountered when raising capital?

I think the biggest challenges we faced were that we are not a traditional SaaS company and that we are in a space that few Series B investors are familiar with. We love being in a space like this, which is still a massive industry, but it takes a lot of personal comfort to make an investment of this size. So it was really about finding the perfect fit. For us it was paramount that the potential investor understands what we are building and is also excited / inspired by what we are building. With Goldman Sachs and Capital One, we found both clients and industry powerhouses, who not only understood us, our industry and our vision, but could also help us realize our vision for the future of our space.

What factors about your business caused your investors to write the check?

They deeply understood the opportunity that exists in our space, existing in a massive industry that is decades behind. Our business is clearly operating, we have grown faster than any other evaluation company in the United States since our launch and when we demonstrate our technology it is clear how differently we approach this space. And finally, it’s about betting on this team to lead the first unicorn in our industry in the United States and our people have a truly exceptional reputation.

It also helped tremendously that Goldman Sachs and Capital One were both our clients, so they got to see our quality, efficiency and people firsthand.

What are the milestones you plan to achieve over the next six months?

Over the next six months, we plan to open four to five new offices and internally launch the latest version of our software that we have been working on for over a year, which will be a sea change in our industry.

What advice can you give to New York businesses that don’t have a new injection of capital in the bank?

We have been fortunate to have experienced rapid growth and been successful in raising capital from institutional venture capital investors, but most large companies have encountered major hurdles at one time or another. other. We spent long nights at Bowery. There are many different paths to building a great business and they are very rarely easy. Airbnb sold grain to stay alive at one point. If you really believe in your business keep going, keep showcasing it, make sure you have great people to build it with you, trust others will see it eventually, and try to enjoy the ride as much as possible. , even when it seems impossible.

But I also really believe that a huge amount of luck is crucial and if it doesn’t happen this time it doesn’t mean it won’t happen next time. We’ve been so lucky along the way that it’s honestly hard to believe or express. Meeting Caesar and meeting James, our Chief Evaluator and COO, are two first encounters where without them there’s no way we’re here. But there are countless examples of this in Bowery.

Where do you see the business going now in the short term?

Our main initiative over the next few years is to fully develop our business nationwide, both in terms of technology and evaluation coverage. There are so many long term opportunities for us in this space across so many different vectors, but at the moment we are trying to stay focused and strive to become the premier business valuation company in the United States in appealing to amazing people and continuing to create true innovative technology.

What is your favorite open-air restaurant in New York

Hands down, New York’s best outdoor restaurant is Rosella in the East Village. Jeff, Yoni, Liz and Shea are four of the nicest people we’ve met, and their sustainably sourced Japanese cuisine is simply amazing and unique. It really is Noah and my happiness in New York.

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