Last week, we were first to report that Building Engines, a Waltham-based provider of property management software, closed a $26 million round of financing that involves a former partner at Bain Capital Ventures. Now we know more details of the round, which turns out to be the first outside money the company has raised in 16 years after it started.
"Our goal, in the end, is to become the dominant company in our market space."
The company officially announced Thursday that growth capital round was led by Wavecrest Growth Partners, with participation from MassMutual Ventures, Camber Creek Ventures and River Cities Capital Funds. One of Wavecrest’s founders is Deepak Sindwani, the former VC at Bain Capital Ventures.
Founded in 2000, Building Engines provides cloud-based operations management software for large commercial property owners across office, retail, medical office, industrial and mixed-use portfolios in the United States and Canada. On mobile or desktop, the software-as-a-service platform lets clients optimize property and portfolio performance through greater management visibility, control, reporting and analytics. Clients include New Balance, John Hancock, Beacon Capital Partners and “many of the largest and most successful real estate organizations in North America."
David Osborn, Building Engines’CEO and founder, told BostInno that outside of a round of financing for less than $1 million to start the company in 2000, it has been growing organically ever since then. While he declined to give revenue numbers, he said the company’s been growing in the double digits in the last few years as the real estate industry recovered from the recession.
Funding the company with its own revenue meant that it had some limits on how fast it could grow the business, Osborn said, which is why he decided to raise this round of growth equity.
“We’ve seen the tremendous uptick in appetite for the software we offer in the real estate space,” Osborn said, “and that translates into an uptick in new bookings.”
With the funding, Osborn said Building Engines plans to accelerate development of its mobile application, bring more value to its clients and scale within the marketplace. He also plans to hire in every department of the company, which currently has under 100 employees. “Our goal, in the end, is to become the dominant company in our market space,” Osborn said.
Wavecrest, which was founded last year, decided to make Building Engines its first investment for a number of reasons, Sindwani said. Beyond the quality of its management team, the company also fit other criteria Wavecrest uses to assess investment opportunities, he added. That includes having a solid business model and product market fit, growing at a certain rate every year and having annual revenues of between $5 million and $25 million.
“In David’s case, we see a well-formed, mature and high-performing management team with a great product and ability to continue the great growth they have,” Sindwani said. “We see a long runway ahead to build a very large business.”
Wavecrest actually made the investment before closing its first fund, Sindwani said, because of high investor interest. He said he expects Wavecrest’s first fund to close in early 2017, with a target of between $100 million and $150 million. From the fund, Wavecrest is looking to make eight to 10 investments, with the check size ranging from $10 million to $25 million.
The growth equity firm focuses exclusively on business-to-business SaaS technologies. Sindwani said Wavecrest is looking into multiple vertical markets, including hospitality, insurance and, of course, real estate.
“We really like real estate,” Sindwani said. “There’s a lot of dynamics in the market that’s very positive."
