Trivium Real Estate
Developments in technology are paving the way for a new age of automation. A recent McKinsey study estimates that 45% of work across a wide range of occupations can be automated using existing technology. This number rises to 64%–69% for activities that involve data collection and processing - prominent practices in the real estate industry.
Real estate is the largest asset class on the planet. However, it seems to us that technology has had little impact on its processes to date, with much reporting and deal analysis still done manually. Ask a real estate professional; what has been the biggest technological advance in your professional life in the last 5 years? Which innovation has enhanced your productivity, freeing up time to spend on higher-value tasks? Smart devices allow us to work from anywhere, but in our view they can’t reduce the time we spend on data processing, or provide new strategic insights into investments.
We believe that the data itself lies at the heart of the issue. Real estate data comes in a huge number of formats. For us, data standardisation holds the key to productivity gains through automation. At Trivium, we are building an AI-enabled software platform that aims to automatically recognise and standardise rent roll data and store it securely in a cloud-based database.
We are aiming to push boundaries at two frontiers:
1) True automation. From our experience, real estate professionals spend significant time and resource on data-processing tasks and reporting. We benchmark our success against the time it takes to complete these tasks manually.
2) Data accessibility. Larger real estate firms accrue substantial market data, but information can be lost within unstructured and inconsistent files spread across a shared drive. We want to enable real estate companies to leverage the true potential of their data, unlocking its full value and enabling previously unseen insights.
Substantial accomplishments to date
We have built an artificial intelligence-enabled prototype in VBA and MATLAB that can automatically:
• Locate rent rolls in excel files.
• Standardise and clean data.
• Perform data auditing and review.
• Create reporting outputs.
We invite investors to try our prototype to find out for themselves the difference this can make to the time spent on rent roll analysis. The software also automatically tracks changes for subsequent rent roll uploads, keeping users informed of all changes in a fund or portfolio, without spending time making manual comparison reports.
Our team of eight highly skilled real estate professionals, software engineers and data scientists are currently implementing the software in a scalable cloud environment. We believe we have made great progress towards building the first iteration of capabilities to automatically identify rent rolls in Excel files and standardise them.
• We explored the highest-value target pain points and the potential of technology to make a change to real estate workflows.
• We raised the first round of funding in Q3.
• We built an expert team of real estate professionals, data scientists and software engineers.
• We progressed our product development according to plan; by end of year our MVP Development was ~40% completed.
We plan to utilise two main revenue models:
Software as a Service - SaaS.
We plan to release the product using a SaaS pricing model, charging clients on a per user basis with a price discount for larger companies.
Data - Leasing commission.
We believe that the data stored on Trivium’s platform opens new revenue opportunities as soon as a sufficient user base is reached. One of these revenue models that we will investigate is the matching of potential tenants with landlords that have suitable vacant units or upcoming vacant units in their portfolio. Trivium would charge a small fee as leasing commission.
We believe that Trivium’s main value driver is the data stored on its platform: the more data it captures, the higher our value. Future applications could include complete lease by lease market due diligence and comps for investments, tenant credit scoring, and more.
Use of proceeds
First and foremost, funds are planned to finalise the software and achieve the best product-market fit. Capital allocation is currently forecast as 80% for Payroll, 10% for Office & Equipment, and 10% for Corporate & Other.
Trivium is built to target the institutional real estate market. This was estimated at around $7.6tn, as defined by commercial real estate assets held by public and private professional investment managers.
However, we think Trivium’s true addressable market can be estimated by looking at how much potential revenue would be released through the greater efficiency unlocked by automation. We estimated industry costs over the life cycle of a property, i.e. for transacting and managing real estate, to be around $72bn per year. Using our estimates, and assuming that technology generates a 5% increase in efficiency/productivity, the global addressable market would amount to around $3.5bn per year.
In addition, our current approach does not consider the debt market. We're confident the same issues around data inconsistency exist on both the equity and debt sides, representing an opportunity for substantial future growth when we start servicing this market.
Characteristics of target market
Almost every industry is being confronted with the challenge of evolving towards a digital future. We think the same applies to the institutional real estate market, which we see as often characterised by traditional workflows and slow uptake of technology. Switching costs can discourage companies from adopting new technologies; and in addition, the substantial profits generated by the industry can provide little incentive for companies to optimise their workflow efficiency.
However, we don't believe that the smart advances other industries have made with the adoption of technology have gone unnoticed in the real estate industry. We feel decision makers in the property market have realised that to remain viable, digital solutions need to become part of their strategy.
We believe that leveraging industry relationships is the most effective marketing tool for the period shortly after launch, so our early marketing activities will focus on the network of the founders, strategic partners and investors. We feel that this crowdfunding campaign will also play a key role, to raise funds, strengthen partnerships and incentivise industry participants to promote Trivium in the market.
We are designing our product and customer approach to shorten the sales cycle relative to other PropTech offerings. We plan the following features:
1) Free trial. Customers will be allowed to trial our product for free.
2) Streamlined setup and maintenance. We think that users will need to invest minimal time in integrating and maintaining the platform.
3) Enhancement of existing software. We do not aim to replace software that dominates the market, such as Excel. Instead, we want to enhance the capabilities of it.
4) Minimal on-boarding. Users can try the software almost instantly and make their own decision about whether it will suit them.
In the words of serial entrepreneur Steve Blank, "No business plan survives first contact with customers." We know the pain points of the institutional real estate market through our experience. But we also understand that product pivots, based on constant customer feedback, are often the key to developing an outstanding product and staying ahead of the competition. We want to establish a feedback loop as early as possible, based on a soft product release with trusted partners ahead of the official release. This funding round will help us to achieve this goal.