September 5, 2019
reprinted from Inside Venture Capital
Today's Goldilocks, available to all subscribers, features Cameron Steele, the co-founder and CEO of San Francisco-based commercial real estate data management provider Prophia, on the heels of a $3.5M seed round.
Prophia is building the only trusted data source for tenant and lease data in Commercial Real Estate (CRE). Prophia’s cloud platform transforms legal documents and essential reports from static, unstructured silos of information into dynamic, accessible, and actionable insights for property owners in the office, retail and industrial market segments. We support CRE owners who are making decisions daily to help deliver superior returns to their shareholders which requires high quality and readily accessible data. Collecting, confirming, and reporting tenant and lease data alone requires hours of time and resources. Eliminating manual processes and centralizing tenant and lease data is the initial problem Prophia is solving. Starting with leases.
1. Prophia raised a $3.5M Seed round led by Signalfire - what sort of pitch did you make? What sort of metrics were they interested in?
Commercial real estate (CRE) owners are frustrated with the lack of readily available and actionable data, so we are using machine learning to transform unstructured, private lease data to accessible and usable information for our customers. In our pitch, we worked on creating a crisp, clear picture of our objective and provided indisputable evidence of early traction in support of our progress including real live product demos, and early customer adoption, which SignalFire appreciated.
2. How was the process of getting this funding different from your earlier rounds? What sort of lessons did you learn from the earlier rounds that were most applicable moving forward?
When we started seeing increased customer traction, it was a signal to us to go raise venture capital - which was our first institutional round. Customer advocacy is really important to us, and thankfully we had a handful of early customers that were happy to help as references. Having deep customer engagement early on to keep us honest about our story, our solution, and the unique value we bring to the market, helped investors understand our opportunity and was fundamental to getting VC’s to engage.
3. What was different in your approach at this later stage compared to earlier ones? What insights have you gained via your interactions with investors.
Finding the right investor fit is super important - meaning that we needed investors that like B2B software, the vertical SaaS business model, the real estate market, and the right personal dynamic. That’s a lot of factors to consider, so doing your research ahead of time, getting the right intros, and building relationships ahead of your fundraising process are essential.
4. What were your goals with the new capital? How have your plans evolved in keeping with the new perspectives and horizons your expansion has opened up?
We are excited to grow both our product and commercial capabilities, and expand our product and data footprint with our customers. At this stage of the company, it’s also about finding out early ways of scaling the business, building out our team, and deeply understanding our commercial unit economics so we know how to invest thoughtfully.
5. Looking back at your company’s origins, what do you think has changed the most? Do you still feel that you are on track to fulfill the goals you set for the company at the outset?
Our initial goals were to find product-market fit and have initial customer traction with our first round of funding - we achieved those goals. What changed was the product we thought we were going to build evolved as we learned more about the market and customer needs. Our long term goals haven’t changed - in fact, we are more excited than ever about our market opportunity.
6. What sort of competition does Prophia face? How does the company interact with industries/fields that intersect with it?
The CRE technology industry is crowded, but we haven’t seen much start-up competition to date. Our biggest challenge is in the relationship many property owners have with their data - how they operate and use the information that historically has been a by-product of their work.
7. What do you think founders need to be thinking about as they look to enter the increasingly crowded startup space? How has the industry changed since you entered?
The process of raising capital has evolved dramatically in my career - the good news is there are many more funding options for start-ups than there used to be. There are accelerators, many angel groups, individual angels, seed-stage funds, Series A+ funds. etc. The bad news is that there is a lot of competition for that capital at all stages. However, we continue to be amazed at how much opportunity is out there for entrepreneurs who are thoughtful and can learn quickly. I regularly come across opportunities in our market segment that are untapped, and I’m stunned that nobody has targeted some of these opportunities. However, as a small company, we have to be focused and stay on our course - so we try and not get whiplash by new opportunities.