The Hyde Park Angels “New Investment Series” profiles our most recent investments by examining the portfolio company and its future trajectory from two perspectives: the portfolio company founders and the HPA leaders who made the deal happen. This edition focuses on Truss.
Truss is a commercial real estate technology platform that allows tenants looking for office spaces under 10,000 square feet to quickly and easily find them. The company recently raised $7.7M in a round led by Navitas Capital with participation from Hyde Park Angels and Hyde Park Venture Partners. We spoke with Truss Co-Founders Tom Smith and Andy Bokor to learn more about trends in real estate technology, how they are seizing market share, and why the team raised venture capital. Hyde Park Angels members Jeff Hammes (Truss Board Director) and Meredith Mendes (Board Observer) shared their perspectives on Truss as investors.
The idea for Truss came into being in March of 2016. Andy, who co-founded Trustwave, and Bobby Goodman, who served as his broker from JLL there, had left their respective roles lamented the difficulty of navigating commercial real estate leases.
“There have been improvements on the residential side, but the commercial side has been neglected. We had a vision of changing the way people on the commercial side transact,” said Andy.
Andy and Bobby teamed up with Thomas Smith and Marshall Hudes, who had all been working together in various capacities for 25 years and had significant commercial real estate experience, to solve the problem. Their goal was to take the opaque, time-consuming commercial lease model and boil it down to a mere minutes-long, tech-enabled process focused on small and medium businesses. This approach was highly unusual in an industry known for adopting technology at a slower rate than other industries, and one that turns a profit on transactions for 100,000 square feet or more.
The co-founders created what Tom describes as “an open listing platform for prospective tenants to browse and match inventory for them at their own pace and in their own way without an intermediary.”
The platform includes AI – specifically, a helpful guide named Vera who takes prospective tenants through the process – and makes actual recommendations denoted with confidence ratings. To be as tenant-focused as possible, Truss mandates all listings feature their full prices, including hidden costs.
Since first starting early last year, the company has added nearly 100% of all the open commercial real estate inventory in Chicago to the platform and has achieved similar results in Houston and Dallas. In Chicago, Truss has successfully grown a group of over 80 small and medium businesses into clients and plans to keep expanding that number.
“To keep growing, word of mouth [is essential]. We are focusing on each company that gets referred and making sure they have the best experience possible. Our best type of customer is one who has already transacted before and knows the pain of being in an underserved market,” said Tom.
While raising venture capital was not originally the company’s goal, the aim to reach these prospective tenants helped motivate the decision to raise. In the early stages, their networks led them to VC meetings, where investors immediately understood the opportunity, a trend that continued as they went on to raise again.
As part of Hyde Park Angels, Jeff Hammes saw Truss as uniquely positioned in the market. “It’s led by a strong team made up of entrepreneurs with a demonstrated track record in establishing and building successful tech companies. The commercial real estate space is ripe for disruption at the SMB level, and Truss is meeting the needs of these smaller tenants in a way that no other company has been able to do,” said Jeff.
On the flip side, the Truss founders increasingly understood investors could create value for their business and help them grow. Partnering with Navitas, which focuses on real estate technology, helped solidify an extremely important partnership with their portfolio company Matterport, which uses data visualization technology to allow tenants to see spaces online, down to the exact dimensions. Relationships with Hyde Park Angels investors Jeff Hammes and Meredith Mendes have opened doors to both landlords and tenants that wouldn’t have otherwise been possible, making the race to success “more downhill than uphill,” according to Tom.
This kind of strategic support is exactly what Meredith Mendes is hoping to provide. “In my board role, I hope to be a support system. I plan to help by providing strategy, advice and connections to help grow the business,” said Meredith.
Truss’ fundraising story is one most founders would hope for, and one that the founders say is possible through two key tactics. First, force as many initial face-to-face meetings between VCs and the founders as you can so that you develop strong relationships and communicate your core messages from the start. Second, look for both generalist firms and ones that specialize in your industry vertical or technology. This will create more investment interest, balance among your investors, and exposure to a wider array of resources.
On the heels of this new raise, Truss sees opportunity ahead. “We’re revolutionizing the leasing of commercial space through the blend of people, process, and technology,” said Andy. It’s this blend that is creating the differentiation Truss needs to win the market.