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Just over a decade ago, before becoming a name familiar to tens of thousands of agents and brokers, video email marketing software provider BombBomb was looking to break into the real estate industry in a big way.
But there was one problem: The company didn’t really know how the industry worked.
“The beginning or mid-2012 was when we went to our first real estate conference,” BombBomb co-founder and CEO Conor McCluskey told Intel in a phone interview. “We were brand new to real estate at the time.”
So in November 2012, when the National Association of Realtors announced it was launching REACH, a “tech accelerator” program aimed at helping both startups and established companies learn the ropes of the real estate industry, BombBomb applied and in January 2013 was the first company chosen for the program’s first class.
Twenty twenty-three marks the 10-year anniversary of the U.S. REACH program, which is focused on residential real estate. Since REACH’s inception, a total of 80 companies have gone through the program, according to an Intel review. More than three-quarters of them (62 out of 80) are still in operation and more than one-fifth (17 out of 80) have been acquired. About one-sixth (13 out of 80) are entirely defunct while one-sixteenth (5 out of 80) were acquired and then absorbed into their parent companies.
The primary key to REACH’s success, according to participants, is how the program handles an aspect of business that real estate agents know well: Relationships.
The money behind REACH
Second Century Ventures, NAR’s for-profit investment subsidiary, incorporated REACH Ventures on Jan. 2, 2013. SCV manages the daily operations of REACH and NAR manages the daily operations of SCV, meaning the 1.5 million-member trade group is responsible for REACH, according to NAR.
Almost every year since its inception, SCV has chosen eight companies for the program with the exception of 2013 when it chose seven, 2017 when it chose nine and this year when it chose seven.
Over the course of seven to nine months, REACH offers startups education on the real estate industry as well as mentoring and networking opportunities with industry professionals enabling them to scale up. In exchange, accepted companies pay SCV a marketing fee and hand over small equity stakes in their companies.
Initially, the marketing fee was up to $25,000, payable in installments, and REACH received ownership interests between 1.75 percent and 5 percent. In the first year, REACH paid six out of the seven companies for their equity with payments ranging from $8 to $711, according to NAR’s May 2014 Finance Committee report to its board of directors. That was the first and only time NAR included how much it paid REACH participants for their equity in its annual Finance Committee reports to the board.
That first year in 2013, SCV provided REACH with starting capital of $100,000 and later an additional infusion of $110,000, ending the year at a net loss, the report reads.
In 2017, SCV began creating yearly limited partnership funds for each REACH class with the aim of attracting investment from outside accredited investors. Each fund is managed solely by REACH and invests up to $150,000 in each participant company in order to provide the company the means to pay the REACH marketing fee as well as the company’s operating expenses, according to NAR’s May 2017 Finance Committee report. That same year, REACH increased its marketing fee “to cover program costs,” but the report does not say by how much.
Subsequent reports note that the objective of the funds is “long-term capital appreciation.” REACH is not required to make capital investments in the funds, but the program gets 20 percent of the profits and losses of the funds after other investors get their initial capital investment back as well as 100 percent of certain operating expenses of the funds. SCV did not create limited partnership funds for the 2021 and 2022 REACH classes.
When NAR first announced the REACH launch, then-managing director Constance Freedman said the program’s “ultimate goal” was to “try to graduate this class into a Second Century Ventures investment, or possibly an affiliate partner of NAR, whatever might make sense. So we’re very motivated to help these companies get to a point where it would actually qualify for the stage of funding that Second Century Ventures typically invests in. Certainly if this is successful, we’ll continue doing this program.”
NAR does not promise funding as part of the REACH program. Still, SCV has backed several of its incubator enrollees, including Updater, Planwise, Knock, Plunk, Milestones, Landis, Aryeo, Courted, PunchListUSA, Pearl Certification, K4Connect, Staging & Design Network and zavvie.
Unlike other incubator programs, REACH is not focused on helping participating firms raise money. Instead, it’s aimed at helping companies grow revenue by tweaking their products to best fit the real estate industry and by providing networking channels to get them face-to-face with decision-makers, Freedman has previously said.
Participants get direct access to more than 200 mentors and advisers — including executives, digital entrepreneurs and investors — and product feedback from a panel of thousands of real estate practitioners.
The bulk of the program’s networking happens face-to-face. NAR expects founders to be either onsite at NAR’s headquarters in Chicago or attending other industry events about one week per month through the duration of the program, according to the REACH website. Events mentioned to Intel by REACH participants and mentors include NAR’s midyear and annual conferences, NAR’s iOi Summit, an event for REACH portfolio companies and Inman conferences.
For BombBomb’s McCluskey, the program’s emphasis on teaching participants about the industry and helping them meet key people was what convinced the company to apply, even though BombBomb had been founded in 2006 and was far from a startup in 2013.
“They were saying education and connections really was the thing that they were going to do for us, helping connect us with people quicker than we would otherwise by ourselves,” McCluskey said.
“The real estate market … it’s quite complex and there’s a lot of different things to it. It’s not like any other industry I’ve ever been a part of. And so being able to accelerate that education was another reason for [applying].”
Diving into the world of local Realtor associations and multiple listing services ultimately convinced BombBomb that its best go-to-market strategy was actually through brokerages, according to McCluskey.
“We decided not to go the association route,” he said. “Those deals for technology platforms are … 50 cents to $1 per user … for the year. It just didn’t make sense for us to be able to do that.”
“We ended up going directly to the brands and going to brokers. Partnering with the KWs, RE/MAXs, Berkshire Hathaways, Realogys of the world and going after the agents and brokers that way was quite successful for us,” he added.
Through the program’s mentors, BombBomb ended up launching integrations with transaction management company zipLogix and NAR’s property database subsidiary Realtors Property Resource.
“It was a great experience,” McCluskey said of BombBomb’s participation in REACH.
“There’s a whole network of [REACH portfolio companies] that get together every year and that is just really awesome. We recommend it to people, especially just getting into real estate and just a way to connect. Everybody’s connected to NAR.”
Through REACH, BombBomb was able to build lifelong relationships, according to McCluskey.
“The real estate business … as big as it is, it’s a very small, very supportive group of people. [To] have NAR behind you and being supportive of you and your company and building those relationships is probably the largest ROI that we got out of it,” he said.
“I tell this to everybody: If you want to put a number on this, like, ‘hey, I want to directly do marketing attribution to this lead that I’m going to close this deal,’ then you shouldn’t do the program because that’s not what this is about. It’s about the relationships and what NAR brings and how they bring people together.
“Ultimately, this is a relationship business. It’s what’s gonna keep Realtors in business forever. It’s what won’t be able to be automated. That’s why we recommend [REACH]. That’s why we did it. That’s why we continue to push it forward because that’s what we believe in. That’s our core values. We believe … the value in real estate is the people.”
Still, when pressed, McCluskey noted that BombBomb doubled its revenue the year it participated in REACH.
“Whether you can attribute that to REACH or not, not sure,” he said, chuckling.
For Knock, which was founded in 2015, the value of participating in the program came not only from the networking, but from the credibility that comes with having the National Association of Realtors as a partner, Knock co-founder and CEO Sean Black told Intel in a phone interview.
Back in 2021, when Knock joined REACH and also received a $2 million investment from SCV, Knock went on a “roadshow” to gin up support for an initial public offering. The company found that having NAR behind the company sent a signal to investors, according to Black.
“From an industry strategic perspective, NAR held the most weight, I think, with Wall Street and institutional investors from a long-term perspective because we were decidedly agent-friendly,” Black said.
That “agent-friendly” label, which NAR pushed in co-marketing messages for Knock, also helped with getting agents and brokers comfortable with the company, Black added.
The planned IPO was canceled in March 2022 when the market turned.
“When the market gets back to a place where we can look at a public offering again, I look at [the credibility from NAR] as being [a] huge upper hand,” Black said. “Because it’s not something any of our competitors, the ones that are actually left still, can say.”
In June 2022, SCV invested even more in the company than it had the first time and Dave Garland, an SCV managing partner, joined Knock’s board, according to Black.
“He’s everywhere and constantly on stage mentioning us, introducing us to folks within the space that we should be talking to strategically,” Black said.
“We’ve done a couple deals within the [REACH] portfolio as well, just because they were introduced and ultimately a great fit.”
Consortia, Plunk, House Canary and zavvie are the companies within REACH that Knock is now working with or in talks to work with as a result of REACH, Black later told Intel via email.
REACH’s staff, particularly Garland, have been “amazing” and “surprisingly supportive,” Black said.
“They just work pound for pound harder than most to connect people,” Black said. “That’s what they feel is [Garland’s] job is to connect folks with each other because he’s just constantly in the trenches and he’s talking to people about what they need, where they’re struggling, where they could be helpful and he’s making introductions … not just [in] the [REACH] portfolio but just folks within the industry when he thinks we could be beneficial to each other.”
For that reason, Black himself said he was happy to participate back in the program as a mentor.
When asked what Knock paid to REACH as a marketing fee, Black said, “Unfortunately, the REACH agreement has an NDA, so I cannot disclose any details like the one-time marketing fee or the long list of benefits that come with it.”
‘Most startups fail’
In order to evaluate whether a tech accelerator has helped or hindered its participants, one can look at participants’ revenue growth during and after the program, adoption of the products or services introduced by the participants, successful exits or IPOs by participants, partnerships formed between participants and other industry stakeholders and media coverage and industry recognition that participants receive, according to Jonathan Klein, founder of PropTech Consulting. (Klein was asked to be a REACH mentor, a voluntary position, late last year, but has not yet mentored a class for a full year.)
But metrics such as revenue, valuations, profits and losses and user counts tend to be private and companies keep them close to the vest. Still, Klein noted that if you compare the number of REACH companies still operating to startups in general, the ratio is “pretty good because most startups fail. So the fact that a quarter of them are succeeding [by being acquired], that’s already better odds than most.”
He also noted that programs like REACH set their participants up for long-term success by introducing them to potential strategic partners “like the LeadingREs of the world, like the CoreLogics, and the CoStars, Zillow.”
“By virtue of having an actual strategic partnership with some of these big companies through some of these accelerator programs, it allows for you to have backing for years to come and also sometimes segue to that acquisition opportunity, so that’s another very wise reason why these accelerators are so successful,” he added.
Klein acknowledged there are pitfalls to participating in a tech accelerator like REACH with a default bias to supporting agent-oriented initiatives.
“There’s a lot of great technology that is maybe not for the agent’s best interest,” Klein said.
“But then on the positive side, keeping an ear to the street and just staying in touch with the best and the brightest companies, trends, opportunities — there are only so many accelerators that have the power or the influence of REACH, given its foundation. It’s the research, it’s the association, it’s the learning and they have a lot of really good people too. Some of the accelerators frankly, they’re not as well-resourced, in terms of expertise and commitment. But the NAR REACH program is well-situated for helping startups grow long term.”
When told that 13 out of the 80 companies in the U.S. REACH program are defunct, Klein said the figure “sounds about right.”
“A lot of people say they don’t want to play in that game of supporting companies that are going to potentially go out of business, but nobody’s right all the time,” Klein said.
“You’ve got to take chances sometimes. Obviously you want to minimize those numbers as best possible, but there are a lot of different circumstances as to why these things happen. The goal is to learn and get better from them.”
When companies fail, it could be due to any number of factors, including the economy, the company’s personnel, its investors or the company’s strategy, according to Klein.
“For example, one of my previous companies — it wasn’t my company, it was a company that I worked with — GeoCV, we got sued by Matterport so we just ran out of money and pretty much gave up on investing more into the company because our investors didn’t want to keep putting money into something where we were going to be in court for the foreseeable future up against the hundred-million-dollar gorilla in the space,” Klein said.
“It was an unfortunate circumstance but wasn’t a byproduct of the business itself. Maybe we could have had a different go-to-market strategy that was more friendly to Matterport’s business model, but we’ll never know.”
While Intel wasn’t able to ascertain the reasons behind why each of the 13 REACH participants who didn’t make it shut down, what information is available for some of the companies harkens back to a Leo Tolstoy quote: “All happy families are alike, but every unhappy family is unhappy in its own way.”
For instance, Chicago-based personal safety startup Guard Llama was founded in 2014 and chosen for REACH a year later. In 2017, the founders of Guard Llama appeared on Shark Tank with a live llama who proceeded to defecate on stage in the middle of their pitch, according to Chicago Inno. Two of the company’s three founders left by 2018 and the remaining founder, Joseph Parisi, led the startup.
In 2018, complaints started coming in from customers that the company’s product — a key fob-like device that was supposed to alert the authorities in an emergency if pressed — didn’t work and that their credit cards were being charged even after trying to cancel their subscriptions. In November 2019, Parisi was charged with drug trafficking and possessing more than $80,000 worth of drugs, the news outlet said, citing police records. The company appears to have shut down around July 2020.
Another participant, Los Angeles-based real estate crowdfunding platform AssetAvenue was founded in 2013 and chosen for REACH in 2015. The company appears to have stopped originating loans sometime in 2016, according to Crowdfund Insider.
In 2017, a source told the news outlet that “deal flow had been challenging at AssetAvenue” and that the underwriting process was “too highly automated,” which wasn’t suitable for deals that demanded more customization. “The real estate crowdfunding industry may be going through a period of consolidation where the better-capitalized platforms, with deep real estate experience, will fare better,” Crowdfund Insider concluded.
In June 2016, two months after being chosen for REACH, real estate process software company Zenergyst (formerly known as Zapelo) began experiencing legal troubles and would ultimately be sued at least five times between 2016 and 2019.
One was a trademark fight Zendesk brought against Zenergyst that ended when Zenergyst abandoned its efforts to trademark its name. In two of the cases, judges entered default judgments against Zenergyst. In another, the court ordered a garnishment against the company. An April 2019 lawsuit brought against Zenergyst, by an individual lender who alleged the company had never attempted to pay back a $225,000 loan, was ultimately settled in July 2019 after the parties agreed on how the loan would be repaid. The company’s first and only tweet was in October 2018.
Personal safety device company Occly was founded in 2015 and joined REACH in 2017. In December 2020 Revolar Technology sued Occly for patent infringement, alleging Occly’s panic button device infringed on Revolar’s patent. Revolar voluntarily dismissed the suit in November 2021. It’s unclear when Occly shut down but it was making deals at least until September 2019.
Founded in 2012, Staging & Design Network, a furniture rental marketplace for home staging, joined REACH in 2019. The company’s Facebook page now lists the company as “Permanently Closed” and the last post on the page was in November 2021. The company filed for Chapter 7 bankruptcy in March 2022.
Despite revenues of nearly $3 million each in 2020 and 2021, the filing said the company owed its creditors nearly $2 million of which just over $1 million was owed to Second Century Ventures. That bankruptcy is pending.
SDN is not the only REACH participant to file for bankruptcy. Relola, an online property marketing and agent-buyer communication platform founded in 2015 was accepted into the 2017 REACH class. In April 2022, a Relola shareholder sued the company alleging Relola defrauded its investors and failed to pay back the shareholder for a loan.
In November 2022, Relola filed for Chapter 7 bankruptcy, saying it had between $0 and $50,000 in assets. The filing said the company owed $1.17 million, including the funds owed to the suing shareholder. SCV was not listed as a creditor. Both cases are pending.
Another participant, Seattle-based title company Modus, was acquired by Compass in 2020 and subsequently shut down in June 2022 as part of cost-cutting moves the brokerage made as the housing market began to cool last summer, according to GeekWire.
Kleard, which was founded in 2017 and offered an open house and identity-verification app for real estate agents, was part of REACH’s 2019 class. It’s not clear when the company shut down, but the LinkedIn page for Jonathan Martis, the company’s CEO and co-founder, shows he left the company in October 2022. Martis declined an interview request from Intel but volunteered a bit about his experience with REACH over email.
“REACH allowed Kleard to meet many people with a lot of connections in the industry that led to partnerships which gave us an increased opportunity at success,” Martis said.
“The REACH program gives real estate tech companies a fast track to growth compared to going at it solo.”
NAR declined to answer specific questions regarding how REACH works, how much the program costs participants, how much money NAR spends on it, what metrics NAR uses to evaluate the program’s success, reasons why participants succeeded or failed, financial metrics of participants and changes to the program over the years.
“I’m incredibly proud to have been involved in the initial conversations to launch REACH more than a decade ago,” SCV President and NAR CEO Bob Goldberg told Intel in an emailed statement.
“There’s no better way for NAR to live out our Members First core value than by channeling the technologies that impact agents and consumers both today and in the future. By providing a platform for innovation and collaboration, we’ve helped to foster growth for numerous promising startups, and we look forward to furthering those efforts however possible in the years to come.”