It is no secret that the real estate investment market is huge. In 2017 there was $464bn of transaction volume in the Commercial Real Estate (CRE) market, however many of the integral processes that make up the day-to-day of CRE investors and operators are performed manually. This is a classic example of a large industry that has been slow to adopt technology. Skyline AI is poised to transform this market and we are excited to lead its series A investment.
Utilizing big-data and AI techniques, the company has created one of the most comprehensive real estate databases in the world, comprising of over 100 data sources and enriched by using various machine learning methods, including NLP and unsupervised learning, all in an effort to more precisely analyze and assess real estate assets. The combination of the copious amounts of data on hundreds of thousands of properties and Skyline AI’s artificial intelligence algorithms, enables the company to better identify undervalued or undermanaged properties instantly. In addition, Skyline AI can perform the majority of the diligence that a regular property investment firm would do with just the click of a button.
Granted, some of the largest real estate investors do indeed use data to enhance their analysis, but until today this practice has largely been limited to Tier-1 firms due to the cost of hiring data scientists and an R&D team. Skyline AI intends to democratize the use of these advanced diligence techniques, thereby making data driven real estate investment decisions through their platform.
Yet, the most important aspect of Skyline AI that generated such enthusiasm from us was the founding team. Guy, Or, Iri and Amir are not only experienced individual entrepreneurs — they are an experiencedteam. It is surprisingly rare to find teams that have gone through several cycles together, and the cohesion and effectiveness of this group was abundantly apparent to us throughout the investment process. And the quality of the team they have built around them is second to none.
End-to-End – A Business Model Innovation
An additional aspect of Skyline AI’s business that caught our attention was their business model. There are thousands of real estate investment firms in the world, all of whom could benefit from licensing Skyline AI’s technology. But rather than sell their software to these firms, Skyline AI’s vision is to partner with these investors and operators and participate in the investments themselves, thereby gaining access to tier-1 investment opportunities. After all, it is the company’s technology that plays a crucial role in determining which assets are strong investment opportunities. This approach significantly increases the value that accrues to Skyline AI and opens up an additional route to a sustainable competitive advantage in the form of a network effect.
The company recently put this into action with its first acquisition earlier this summer. After speaking to several key players in the industry, it became clear to us that not only is the CRE market open to the idea of applying technology to their workflow, but it is also actively searching for solutions to help them do just that. And moreover, a significant competitive advantage in this market is being able to analyze such investment opportunities quickly — a classic advantage to a technology-based approach.
We are super excited to join the founding team on this journey and believe that Skyline AI is well positioned to disrupt the CRE market and become a major player.