VC Index Ventures led the Series B round
Data startup GeoPhy raised a $33 million Series B round led by Index Ventures. The company seeks to automate valuations for commercial real estate assets with machine learning. It also optimizes the traditional appraisal process.
The Founder explains his secret sauce to Bloomberg… “The key in valuations is the hipster factor – true data tells you where gentrification will happen. This is the key indicator of where rents will increase and where property values will be going up… Data inputs include information about the success of independent coffee shops, tweets about people with mustaches in the area, and specific events in the neighborhood.” A VC just drank the Kool-Aid.
Worth Noting: Competitor Skyline AI claims to use technology to identify solid investment opportunities. They raised $18 million in a Series A round this past summer after only four months of operation.
Glimpse into the boardroom: A real estate owner who was pitched by Skyline AI for their Series A round was not impressed. He said that properties pinpointed by the algorithm as attractive opportunities weren’t good deals.
The major flaw with these startups: We agree that there’s information asymmetry in the real estate industry. With that being said, It’s imperative that smart engineers have an unvarnished understanding of traditional underwriting. Otherwise, the critical data inputs in their models will be flawed.