"Real estate is a dinosaur business."
Aaron Block speaks as someone with industry experience and the messianic belief that he can help reshape how the industry moves forward. A former Cushman & Wakefield Senior Managing Director and now co-founder and managing director of the new real estate-focused tech accelerator MetaProp NYC, a program for technology companies that will begin operating out of Manhattan's Flatiron neighborhood this fall, Block is hoping to create a catalyst for the sorts of businesses that have changed so many other industries. He's convinced that by connecting growing real estate companies with the funding and industry leaders only present in New York City, the "capital of the real estate universe," he and his partners will fill an important niche in a growing real estate tech scene.
"We're global in scope, but the fact that it's NY-centric drives a lot of interest from everyone in the ecosystem," he says.
It's important to understand the MetaProp NYC isn't the only real estate-focused tech accelerator out there, nor is it strictly a lab for brand-new ideas. But as this sector of the tech economy continues to grow, MetaProp is looking to become an organization builder, assisting firms that have already gotten off the ground navigate through startup adolescence. Started by Block and partners Clelia Peters (Warburg Realty) and Zach Aarons (Millennium Partners), the accelerator is launching with six corporate partners—Zillow Group, Warburg Realty, DLA Piper, The Real Estate Board of New York, EisnerAmper and News Funnel— and will offer the inaugural class of eight companies $25,000 each in equity investment, mentorship, and connections when the 16-week program launches this fall. In return, the accelerator will receive 6 percent common equity in any participating company. It's all part of the accelerator's long-term goal of investing $4-$5 million in dozens of companies over the next five years.
Block's NYC bias may sound like typical New York boosterism, but other real estate startups agree the while VC funding can be found on both coasts, it's worth moving to New York to establish the connections needed to grow.
"For us, it made a lot more sense to launch in New York City rather than San Francisco," says Julien Smith, CEO of Breather, an on-demand room service and app that started in Montreal but has found much more funding and growth potential in New York. "If you went to 10 firms in New York and San Francisco with the same pitch, the people in New York would understand the problem better, or would be able to speak to someone who understands the problem."
Smith says that since the company came to New York 18 months ago, there was enormous growth right away. From their perspective, this was a market where they "had to win it." That mindset is partially an outgrowth of the way the real estate industry works, says Smith. It's been slow to move and adapt to technology, and compared to other industries, its dominated by a smaller number of bigger players. That reduces the incentive to iterate, he says.
It also means that making the right impressions and connections within the small circle of big players here is very important. That's one of the reasons Ryan Coon, founder of Rentalutions, a Chicago-based startup that just signed onto MetaProp, is so excited about the program. Founded in 2012, Rentalutions offers small-scale property owners, who Coon calls "do-it-yourself landlords," access to the type of management and payment solutions that the big players have been using for years. So far, the company has attracted 13,000 paying customers. But with a user base spread over more than 5,000 zip codes, the startup needs more pickup in larger markets. Coon looked at other accelerator programs, including one run by the National Association of Realtors in Chicago, but chose MetaProp.
"There are three things we're excited about with MetaProp," he says. "The access to funding and investment, meeting the who's who of the real estate business community, and getting advice from the great team they've put together. Chicago has come a long way in the past 3-5 years in terms of the tech startup ecosystem, but in terms of investment capital, New York and the West Coast are where most of the money still is."
It's the concentration of money and real estate connections, Block says, that will create critical mass. The entire real estate value chain up is pried for change, he says, including space usage, management payment and even what he calls "basement tech" (energy and systems monitoring).
"Real estate is a really tough industry to go after, and since there are accelerators for every other type of business community, we thought, why the hell not real estate tech?" Block says. "We're looking for companies laser-focused on growth, growth, growth. We have people attacking every aspect of the business."
∙ Bridging the Divide Between Technology and Real Estate [Curbed Chicago]
∙ With Algorithms Buying Homes, What Could Go Wrong? [Curbed]