Deal Team: Travis Skelly, Adi Sivaraman
Last week we announced our investment in HqO’s $60M Series C. To help you become more familiar with PruVen we’d like to share some insights on why we invested.
Shifting Industry
The commercial real estate industry is in the process of shifting the value equation away from the physical nature of the buildings themselves to the tenants and employees who occupy them. This transformation from B2B-to-B2C is producing a period of rapid change and digital acceptance that has been further accelerated by COVID. Tenant Experience (TeX) solutions are helping landlords adapt to this industry shift by providing the link to connect digital experiences, services, and communications with the physical world.
In 2020, TeX solutions went from a ‘nice-to-have’ to a ‘must-have’ as companies were forced to transition to a digital-first operating environment. Communications between landlords, managers, and tenants are essential not just to reopening, but to operating in the most efficient, safest, and transparent manner possible, and TeX apps are facilitating this communication. According to Deloitte’s 2020 Commercial Real Estate Outlook, 92% of CRE executives plan to maintain or increase their tenant experience related technology investments over the next 18 months. TeX not only ensures a safer return to work, but also serves as a differentiator in an otherwise uncertain, highly competitive market. With digital alternatives to the physical office, landlords can no longer solely rely on the contractual obligation of a long-term lease to retain tenants. Moving forward, they will need to win loyalty by providing superior customer experiences.
Following the lead of startup office cultures and coworking operators (e.g. WeWork), CRE owners are now adopting a far more employee-centric approach to creating and cultivating work environments. Tenants expect a workplace that not only satisfies, but also inspires an always connected workforce. Tenants want a workplace that allows for greater flexibility, enables third-party services, and includes top-tier amenities. As a result, landlords are striving to find the right combination of amenities, social programming, and technology to create a tenant experience that will give them an edge over their market competitors in attracting and retaining tenants.
HqO’s Solution
HqO has built a unique solution that provides the crucial connective tissue between physical infrastructure and tenant experience, and tenants love it. The company’s core product (HqOS) is the software that the CRE industry needs to transform the office experience. HqOS combines an intuitive front-end with a flexible, highly scalable integration layer, yielding a rich data analytics and visualization back-end.
Tenants experience HqO as a unified pane of glass from which they can access any of the technology in their building from access controls, maintenance management, amenity reservations, and much more. Building operators experience HqO as a platform and marketplace through which to choose and integrate technology partners for all of their specific point-solution requirements. In addition, HqO’s data analytics layer lets property managers monitor how tenants are engaging with the physical property, helping them improve the experience for tenants and make better capex decisions for their properties. Ultimately, the proof is in the results: HqO’s customer satisfaction has been best-in-class with a NPS that is more than double the enterprise software industry average.
We aim to invest in startups that will become market leaders, but it is not always obvious who that will be. With HqO, we have strong conviction that we have backed the market leading TeX technology with tremendous growth still ahead. The company has more than 150M square feet under management and it has tripled its revenue in the past 12 months. It did this all during a period when the commercial real estate industry was under tremendous pressure.
Hopefully these insights help you understand why we are excited to work with Chase Garbarino and rest of the HqO team on their next stage of growth. Congrats again to HqO!