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“REach,” the tech incubator announced by the National Association of Realtors in 2012 to give firms a jumpstart in the real estate industry and bring new technology to Realtors, is now accepting applications for its 2014 class.
The program, run by NAR’s 5-year-old investment wing, Second Century Ventures LLC, provided the seven firms in the inaugural class of 2013 access to 150 mentors like DocuSign’s founder, Tom Gonser, and NRT LLC’s senior vice president of marketing, Dan Barnett.
Companies selected to participate in the program also benefited from feedback from approximately 500 real estate professionals who volunteered as “beta testers,” and a chance to catch the ear of power players at special industry events like Century 21 Real Estate’s leadership retreat. The program also provided office space at NAR’s Chicago headquarters.
“A focus on customer orientation was the most valuable thing we could provide for the firms,” said Constance Freedman, founder and managing director of Second Century Ventures.
Freedman said that unlike other incubator programs, REach is not focused on helping participating firms raise money. Instead, its aimed at helping companies grow revenue, by tweaking their products to best fit the industry, and by providing networking channels to get them face to face with decision-makers.
Second Century Ventures has made investments in a number of real estate-related firms over the years, including DocuSign, voice-based marketing automation system Ifbyphone, and data-management firm Symform. NAR itself has invested in realtor.com operator Move Inc., electronic lockbox firm SentriLock, and real estate forms software provider zipLogix.
Though it does not promise funding as part of the REach program, companies are required to give Second Century Ventures an equity stake.
Freedman said Second Century does plan to provide funding to one REach company in exchange for a larger ownership stake, and is evaluating whether to make similar investments in others.
The seven firms in REach’s 2013 class were:
- BombBomb: a video-focused email marketing software provider.
- Lumentus: a social media metrics provider that helps companies focus social media messaging on their brands and missions.
- Planwise: a financial planning service for individuals to visualize, via real-life scenarios, how major life events affect their financial future.
- Reach150: a referral platform that helps individuals manage their online reputations.
- Treater: an app that lets users send “treats” from their mobile phone, to be delivered by Facebook, email, Twitter or LinkedIn.
- Updater: a free online service consumers can use to easily manage a change of address.
- Workface: a live chat — via text, audio or video — software platform that facilitates one-on-one communication with a client in real time at critical points in their decision-making process.
Freedman called the 2013 program a success.
The firms each participated in an average of approximately 100 one-on-one interviews with mentors, Freedman said, and half of them raised money while participating in REach. She said many of the mentor meetings were with potential customers who provided feedback on exactly what they were looking for in a product, and how it might fit into their system.
Five of the seven REach companies landed big deals with major brands, Freedman said.
Lumentus signed a deal with Better Homes and Garden Real Estate; BombBomb made deals with several large brands; and Reach150 established deals with several brokerages affiliated with Keller Williams Realty, Coldwell Banker Real Estate and Century 21 Real Estate.
Like the class of 2013, the six to 10 firms that will be chosen in April for next year’s REach class will be expected to pay a marketing fee to Second Century Ventures, and hand over equity stakes of between 2 percent to 5 percent in order to participate.
Freedman declined to say how much the marketing fee amounts to. Some firms may negotiate lower marketing fees in exchange for granting Second Century Ventures a bigger share of equity, and vice versa, she said.
Second Century Ventures will accept firms into the 2014 REach class on a rolling basis with an early application deadline of Feb. 1 and a final deadline of March 1. Applying earlier will increase a firm’s chances of being accepted, the REach website notes.
In July, NAR put out a call for product testers of REach firm products. Currently, approximately 500 real estate pros are signed up. NAR will accept as many as care to join who want to provide feedback on REach companies’ products in exchange for discounts.