Originally posted on 8/22/2022 on ScaleVC Medium
💡 Appreciate is a vertically integrated property management software and services company. Appreciate increases real estate owner profits with access to vetted data, labor, and materials.
After a two-year hiatus, in February 2022, Scale organized the 11th Columbia Startup Weekend Historically, Columbia Startup Weekend has been hugely successful with past winners including two YC-backed unicorns: EquipmentShare (Founders Willy & Jabbok Schlacks are Scale co-Founders) and Zapier (Founder Wade Foster is a Scale advisor). This year, the first-place prize was a ticket to participate in Scale’s Cohort II with a potential investment.
Nick Farquhar, CEO & Co-Founder of Appreciate, won the 2022 Columbia Startup Weekend by pitching a tenant scoring platform based on the tenant’s record (e.g., payment history, time at each residence, maintenance requests, etc.), which would give landlords keen insight into which reliable renters. Scale provided an ultimatum to invest in Appreciate if Nick could recruit a CTO, which he did in only three weeks. After digging deeper into the issue at Scale, they discovered that the root problem is not tenant turnover but the incentive structure between property managers (PMs) and real estate owners (REOs).
Historically, PMs receive compensation as a percentage of revenue produced per property. This model creates misaligned incentives in which PMs profit from tenant turnover, property improvement, and maintenance, often to the landlord’s bottom line detriment. In tenant turnover alone, landlords lose ~$6.2B per year, while PM brokers made over $90B in 2021 on transactional fees alone. Turnover and broker fees are just the tip of the iceberg to the billions of dollars overspent on PMs. Additionally, REOs remain in the dark about incidents at and repairs to their property due to poor communication with PMs.
Enter Appreciate, a vertically integrated property management software and services platform. Appreciate is building an REO-centric tech platform that provides real-time insights into operations and a PM-driven business based on net operating income. Already, the team has 300 units under LOI with a bloating waitlist of hundreds more.
Nick’s uncanny passion and winning mentality were on display at Startup Weekend. We were also impressed by his drive to bring Brad Siegler, Co-Founder of unicorn EquipmentShare, on as a COO & Co-Founder. Nick has been faced with the pains that millions of other landlords experience as a real estate operator and landlord himself. We’ve already seen the old equipment leasing model completely dismantled by EquipmentShare, we’re ready to watch the PM model be rebuilt next.
Reach out to Brett Calhoun, Director at Scale, at email@example.com for questions about Scale and the portfolio companies. Follow us on Twitter at @scaleincubator and @brettcalhounn.