This article was originally published by HousingWire, an HW Media publication dedicated to serving mortgage and real estate professionals.
Proper, an AI-powered accounting and bookkeeping service for the multifamily industry, announced Wednesday it has raised $4.8 million in seed funding in a round led by MetaProp.
Expa (which was founded by Uber co-founder Garret Camp) and Bling Capital (founded by Ben Ling who has invested in the likes of Square and Palantir) also participated in the financing, which actually closed in May but is just now being publicly announced.
San Francisco-based Proper was founded in February of 2017 with the goal of providing “expert” accounting and bookkeeping services to property managers, asset managers, and “anyone in the world of property.”
The startup uses artificial intelligence (AI) and machine learning technology to offer “scalable” accounting and bookkeeping services more efficiently and cost-effectively than traditional in-house accounting models. Specifically, Proper says its model allows it to offer its accounting services for about 30% less than in-house property accounting solutions.
Proper says its offering gives property managers and owners, and asset managers across all real estate classes a way “to grow their portfolios without fear of operational limitations” while significantly cutting down on the time their accountants need to spend performing routine tasks.
“Admittedly, property accounting doesn’t sound like a very sexy opportunity for disrupting a global market,” said Proper Founder and CEO Mark Rojas. “But a taxi service didn’t sound sexy until Uber used it as an entry point for creating a global logistics network. With Proper, accounting is our entry point for eventually processing all transactions surrounding property – the most valuable asset class in the world.”
The startup’s team is made up of accounting professionals with over 150 combined years of experience in small and large property firms, Fortune 500 companies, and Big Four accounting firms.
Proper’s headcount has grown fivefold in the past year – from 12 employees a year ago to 61 today, according to Rojas. Its fully remote model has lent itself well to growth during the COVID-19 pandemic. The company’s ARR surged from zero in January to $1.1 million in May of 2020, Rojas said.
That bump in growth was attractive to New York-based MetaProp.
“When a company can accelerate revenue growth through one of the historically most challenging sales environments in the real estate business, that type of traction will certainly catch the eye of a venture capitalist,” said Zach Aarons, co-founder and general partner at MetaProp.
Proper customer Rusty Heyman, founder of Archways Property Management, said by outsourcing the accounting function to the startup, his company has been able to substantially reduce costs when it comes to labor and office space.
“Property management is a low-margin, high-volume business. All the companies who are not using some sort of AI for routine tasks will be left behind,” Heyman said.
Overall, Proper has 40 customers, ranging from 250 to 10,000 units across the US. Its target customer demographic is property managers with 200-10,000 units, Rojas said. The company is focused on residential and serve multifamily, SFRs and HOAs. Most of its customers have some commercial properties in their portfolio and Proper plans to move more into that space in 2021.
The company plans to use its new capital to advance its automation tools and “bolster the fundamentals of the business.”