Prophia, which provides AI technology for lease abstraction and commercial real estate data management, announced Thursday that it has closed a $10.2 million Series A round. Cercano Management, SignalFire and other customers led the financing.
Founded in March 2018, San Francisco-based Prophia has raised a total of $15.3 million, according to Cameron Steele, co-founder and CEO of the startup. The company plans to use the new funding to expand its product team and commercial presence, Steele said.
“The [Series A] capital raise we’ve already started putting to work hiring two new data scientists,” he said. “The next phase will be adding to our commercial team. We just got the sign-off letter from a marketing person today. The next phase will be to add additional sales team members.”
Prophia uses AI and machine learning to more efficiently extract and clean the vast amount of commercial building office data found on spreadsheets, making the information more accessible and valuable for landlords and tenants.
Lease abstraction using AI is notoriously difficult in real estate, but Steele believes Prophia is making progress in moving away from the tedious manual process toward greater machine-learning technology.
“When we started, it was entirely a manual process,” Steele said of Prophia. “We knew kind of where we wanted to go, but to get there was largely people driven. Today about 60 percent of the concepts that we capture on a per-tenant basis — and our tenants across our platform have about seven documents — our AI will identify and auto-annotate those concepts.
“The remainder are recommended, and that’s where our team will go in and verify or invalidate the recommended tags. Then our team will do a review post facto of that process. So today the total process for us on an average database takes about 40 minutes.”
Prophia started by reviewing 30 or 40 concepts, but found customers asking for more data points, resulting in the company now assessing 188 concepts, said Steele. The company has 45 customers throughout the U.S., recently signing Manhattan-based RXR, along with Nuveen in Boston and Spear Street Capital in San Francisco.
SignalFire, a generalist venture capital firm and an investor in Prophia, saw the proptech startup’s AI potential in the huge real estate market as a reason to invest, said Ilya Kirnos, managing partner and chief technology officer at the VC firm.
“We’re unique in that we’re the first venture capital firm that’s built like a tech company,” said Kirnos. “We have a data science team and an engineering team. We are applying data, systems and technology to venture capital. And maybe that’s a good segue into why we invested in Prophia.”
As SignalFire has “a very technical DNA, and my background personally is in software engineering,” the fit with Prophia felt solid, said Kirnos.
Seeing that real estate was still early in its tech adoption cycle, SignalFire was impressed by Steele and his Prophia team’s knowledge of the space and their previous entrepreneurial success and backgrounds, Kirnos added.
“With the institutional growth in commercial real estate in recent years, investors have desperately needed a true and consistent way of looking at their assets with the insights to make sound portfolio decisions in a rapidly changing market,” said Stuart Nagae, partner at Cercano Management. “Prophia’s AI-powered abstraction has solved that longtime industry blind spot — and the more than 600 percent growth in square footage since 2020 is a fantastic indicator of the industry’s adoption of this type of technology.”
Prophia reported 250 percent annual recurring revenue growth in 2022, as it supports customers’ growing data sets across 160 million square feet of assets under management. Based on the increased demand over the last year, Prophia says it has doubled its customer base, maintained 100 percent customer retention, and expanded its suite of patented technologies and capabilities. Across more than 1,800 locations, the company has exceeded 1 million pages scanned with its AI-powered technology, extracting text and characters.
As seen in the Commercial Observer: https://commercialobserver.com/2022/12/prophia-series-a-round/