Original article by Matt Night, May 4, 2018
Last week, we made one of our first investments in our VC fund at Shadow Ventures. We invested in Amenify in San Francisco.
I realized as I spoke to a few of our investors and partners that it might be enlightening to hear the thought process behind why we chose Amenify over the other 200 we have reviewed this year alone.
Without giving away any private metrics or secrets, I thought I would share the analysis.
First, what is Amenify?
Amenify is a technology platform focusing on amenity services for properties. They created an amenity marketplace that integrates into management software and provides tools to local businesses. This includes onsite fitness, pet care services, cleaning, massages, ridesharing, and other amenities. There is no cost to the resident to use the service, which is often white-labeled for a portfolio of assets.
There are basically three questions I need to answer before we invest in any company —
- Can we add value?
- Is the team capable of scaling?
- Does the business model sell?
This may seem like an odd place to start as an investor, but we don’t play games unless we have an unfair advantage. Venture Capital is too unpredictable for us to simply be a source of funds and not a strategic investor.
Since we see remarkable technology almost daily, we have to prioritize our time and capital into investments where our skill set and network can drive the most value.
With Amenify, our knowledge of how two-sided marketplaces are actually built as well as our substantial connections in the apartment sector gave us reason to be interested. After digging into their tech and sales, we realized we could create an unfair advantage for Amenify to help them gain and retain marketshare when the inevitable competitors come along.
2. Is the team capable of scaling?
This is probably Amenify’s biggest strength — team. Remember, we have seen hundreds of startups and spoken to their CEOs just in 2018. So we have hundreds of data points to compare teams against.
Everett is one of the best communicators that we have come across and the management team he has built around himself provides the depth we wanted for growth, sales, media, etc.
As with any team, they will need to add headcount and tech capabilities as they grow. We have discussed each with the team and we were always on the same page about the strengths and weaknesses of their team.
3. Does the business model sell?
This is the hardest part about our business. Tech is fixable. Teams are recruitable. Great teams with a great product will still struggle selling tech to an industry that hates tech.
Look at some of the demographic analysis of leaders in the real estate and construction industry. Don’t hold your breath for any diversity awards. You are selling into a sea of male, caucasian baby-boomers whose financially formative years were in the 80s and 90s before pesky things like cell phones and the internet were available.
Think they will just line up to buy your super neato tech because it’s so awesome?
Amenify understands this.
Without giving away the financial model, they came up with a unique approach that is a mathematical no-brainer for institutional managers and owners.
Too many times I see companies come to me with a “premium” product worth thousands of dollars a month and then they are SHOCKED when sales are slower than they thought.
Amenify took a different approach and it really just boils down to the fact that they priced their product thoughtfully.
That has generated some tremendous momentum. We want to be a part of that.
. . . and we can help.
Obviously, there is a ton that goes into these decisions and this one was basically a year in the making, but the underlying logic here was that we would be a strategic partner, the team can scale, and the product is priced well.
Now, we get to work helping them grow.
Want to learn more? Check out Amenify.com
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