Armed with a new round of funding, HqO is focusing on mergers and acquisitions to “accelerate and continue for us to be the leading platform for real estate technology,” said Greg Gomer, HqO's co-founder and CFO.
The Boston property technology company’s latest round is over $50 million in Series D funding, the company announced Wednesday morning. The round was led by Koch Real Estate Investments, a subsidiary of Koch Industries. Existing investors also participated, including venture capital and commercial real estate firms like Accomplice, Insight Partners and Related.
HqO raised $60 million in Series C funding in 2021 and $34.2 million for a Series B round in 2019.
The company was founded in 2018 by Gomer, Chase Garbarino, Kevin McCarthy and Jared Stenquist.
Gomer said HqO focuses on improving commercial real estate experiences for employees, landlords and tenants. For employees, HqO offers essentially a “mobile app for the building,” Gomer said. Employees can monitor their commute time, check into their building and book amenities like workout classes and conference rooms. Tenants and landlords are provided with data on how people are using the building and how to provide a better experience.
Return to office is good for business
While the pandemic initially meant employees were not allowed to work from the office, Gomer said they’ve since seen a growth in demand for their services as companies make their return to office plans. Many Boston technology companies are calling their employees back to the office at least a few days per week.
“Our business was a nice to have pre-Covid,” Gomer said. “Covid really solidified the need for technology in a building. So it really moved us to an absolute must have in the building.”
Gomer said HqO’s ARR has doubled each year since 2019 and the number of active buildings has grown by 7X during that time period.
Consolidating the proptech industry
Gomer said over the last few years HqO has invested into expanding into new markets, growing aggressively and building out its products. That meant the company brought in some higher funding rounds, Gomer said.
While this Series D round weighs in a bit lower than its Series C funding, Gomer said it was the right amount for HqO at this time. The company also still has capital left over from previous rounds, he said.
“It didn’t make sense to raise money to just raise money,” Gomer said. “The right number for HqO is to set us up for the future. And what does that mean for the future? Obviously we are focused on, we are looking towards marching towards profitability and we’re looking forward to really focus on efficient growth of the business.”
Gomer said this funding round would fuel HqO’s M&A strategy. The company has already acquired Leesman and Office App. Gomer said they’re being “opportunistic” and looking at other innovative companies in the property technology and workplace experience spaces.
It’s no secret that the fundraising environment is more difficult in 2023 than the last few years, and companies looking to raise are receiving a higher level of scrutiny from investors. Gomer said HqO experienced this as they raised their Series D. But this environment also presents an opportunity for companies looking to establish their spot in emerging sectors.
“You’re going to see a lot of proptech companies that have great teams and great products that might not be able to raise that next round of capital and we’d be very interested, we’re going to continue to look at them to see if it makes sense for HqO,” Gomer said.
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