Idiosyncratic Phenomenon #2: Integrated Projects
As an early stage, seed investor, it’s really hard to identify promising startups just by applying general patterns based on fundamental assessment frameworks typically deployed in business. To demystify the art of identifying outlier companies at 186 Ventures, we decided to put together an internal framework that focuses on two key components that every breakout startup ends up exhibiting — idiosyncrasy and a clear market phenomenon.
Last year we published our thoughts surrounding the idiosyncratic phenomenon. This is our attempt at 186 Ventures to deconstruct an important part of our assessment approach. It’s important to note that we still apply fundamentals to each startup assessment, e.g. team, market size, differentiation, business model/economics, etc. If you missed our last edition on Wingspan, definitely be sure to check that one out too.
In this series, we focus mainly on what we find to be both idiosyncratic and a phenomenon of our breakout companies. This second edition is based on Integrated Projects (IPX). We led IPX’s April 2023 seed round after their founder, Jose Cruz Jr., had bootstrapped the company to seven digit revenue over four years with no outside financing. The idiosyncratic phenomenon was not obvious when we first met the founder, but after speaking with existing and prospective customers, industry experts across architecture and real estate, learning of recent technological shifts, and most importantly getting to know Jose on a deeper level, it was abundantly clear this was the right team tackling a market that is ready to break out.
As of today, the company is on pace to continue to grow well into seven digit revenue, has added world class enterprise logos, and has onboarded tens of millions of square feet worth of real estate across virtually every property type, from industrials to schools, to office, to residential, etc.
The Idiosyncrasy:
Jose had previously been an architect his entire career, working across a wide spectrum of architectural build outs– from “cookie cutter” WeWork projects to extremely specialized commercial buildings. Through this process, he realized that so much money and time was lost working with traditional building surveyors who played key roles in enabling the new construction, renovation, and conversion workflows of real estate development. These consulting firms and surveyors typically charge $1 — $2 / sqft and require 30 days or more to return construction-grade building plans in the form of building information models (BIMs), CADs, etc.
Jose started to see point clouds becoming ubiquitous across the real estate industry and wondered why this data couldn’t be used to help automate many, if not all, parts of the building surveying process and thus unlock a whole new world of capability. More specifically, various stakeholders within real estate use point clouds, or 3D virtual illustrations, of property for various purposes. These point clouds are generated by LiDAR-enabled cameras, and most real estate stakeholders today retrieve their point clouds from companies like Matterport, NavVis, and Faro Technologies.
In 2018, Jose decided to leave his full-time career as an architect to help the real estate industry save time and money in the way it produces construction-grade BIMs and CADs and help trailblaze a digital revolution for the world’s largest asset class. He took a very idiosyncratic approach to build out the first version– instead of trying to automate the entire point cloud to BIM conversion process from the start with AI (which many have tried and failed at), he decided to take a hybrid approach to maximize quality. He began building prediction models in tandem with building out the world’s largest point cloud annotation network. Usually, founders don’t appreciate “things that don’t scale”, but we were extremely impressed with how Jose instead took an approach that maximized quality for customers rather than jumping right into pure automation.
Another idiosyncratic component to the business was how IPX had been profitable for the four years beforehand. This underscored a ruthless dedication to building a sustainable business model with margin rich unit economics– a breath of fresh air as we came out of the 2020–2022 zero interest rate period where founders rarely took a capital efficient approach to build their business.
The market phenomenon:
Enhanced camera precision technology, which is required to generate these high fidelity BIMs from point clouds, was further commoditized soon after IPX was founded. For example, Apple introduced LiDAR to the iPhone 12 Pro in 2020 and it became clear that LiDAR technology would become further accessible, beyond the more sophisticated reality capture companies like Matterport, et al. LiDAR technology is a key component of being able to generate accurate, millimeter scale point clouds. This drastic progression in the performance and accessibility of superior camera technology made for a clear tailwind for companies like IPX that wanted to “own” the BIM and CAD file generation of indoor real estate.
In many ways this democratization of LiDAR technology has led to many 3D property scanning companies to pop up, making it even easier for architects and real estate owners to make use of IPX’s BIM and CAD generation platform. In many ways, this has laid the groundwork for *finally* bringing real estate online– something that many industry incumbents and upstarts have been calling for over the last decade. This recent Viewpoint segment on IPX sums up the digital revolution we are at the cusp of for the real estate asset class.
The results so far:
Since Q1, 2023, IPX has continued to expand its product offering and work with a wide array of customer stakeholders and distribution partners including 3D reality capture companies, like Matterport, large scale general contractors, and architectural companies like Gresham Smith, StructureTone, and Fortune 500 companies like Tesla. Companies like Matterport and FARO Technologies trust IPX to help service the BIM and CAD file needs of their customers. The timing is ripe for the entire real estate industry to take advantage of the endless possibilities of bringing their BIM and CAD data online in a centralized platform that not only allows one to save 1/10th the cost on BIM generation at 10x+ the speed, but that also allows one to leverage that data to generate things like cost segregation or carbon emissions reporting. This last part highlights the world of financial services that can be streamlined through the use of the very data IPX is bringing online through its platform.
Since we led their April, 2023 seed round, a number of the company’s metrics have continued to grow in a high momentum manner. The company was and continues to be capital efficient and laser focused on ensuring that every dollar of capital invested is put toward efforts related to growing the company, not to cover an unsustainable burn. IPX finds itself with the champagne problem of all champagne problems– not having enough capacity to satisfy all of the demand around the table for its BIM conversion product.
Despite this capacity constraint, as indicated below, the company continues to rapidly expand its revenue year on year. In many ways, a more important indicator is the amount of square footage the platform is continuing to ingest as this is the biggest direct function of the data moat they are building. As IPX continues to partner with incredible architectural and reality capture technology companies, the data moat will continue to exponentially grow.
Conclusion
It has been an honor to be on this journey with Jose and the IPX team. IPX’s vision around how BIM data can be generated and used once digitized in a centralized platform is unparalleled to anything the real estate industry has seen to date. Their technology has dramatically improved the way architects and owners can view, verify, quantify, and share building characteristics– such as architectural, mechanical, and furniture information. This profound shift will inevitably change many of the workflows involved with building and managing real estate.
We have yet to scratch the surface at which scale IPX will continue to bring tens of millions, hundreds of millions, and even billions of square feet of real estate online. They have the ability to unlock the possibility of so many efficiencies for many who interface with property today– from those who build it, those who live in it, those who regulate it, and more. If you’re an architect or a real estate owner and would like to know how you can immediately start saving thousands, hundreds of thousands, or even millions of dollars on building and maintaining your real estate portfolio, don’t hesitate to reach out directly to the IPX team.
