“3 Reasons Why” is a new approach to VC funding announcements, where we make public the reasons we invest in a new company so the entire Founder community can benefit.
NFX investor: Pete Flint
Industry: Real estate tech
What they do: Radius is the first mobile-powered platform that enables real estate agents to grow their business by easily exchanging referrals and market information.
Round & Size: Series A / $4 million
Co-Investors: Tim Guleri (Partner - Sierra Ventures), Gary Beasley (CEO - Roofstock), Paul Levine (former President - Trulia), Jake Seid (Former President, Real Estate Marketplace - Ten-X, Auction.com), Gokul Rajaram (Head of Product - Square), Bobby Yazdani (Partner - Cota Capital)
1 - What excited you about Radius?
First - from my time at Trulia, I saw firsthand that so many real estate transactions come from agents sharing deals with other agents. It’s a significant part of how the real estate industry works and a meaningful part of the enormous $70+ Billion in annual real estate commissions.
Second - today’s real estate agents work predominantly on mobile devices whereas many of the leading companies in this space are oriented around desktop applications. Radius was smart to build a mobile-first platform that was developed end-to-end based on the way agents actually work.
Third - Perhaps something not a lot of Founders think about is the value of an aligned incentive model. Radius only makes money when their referring agents do. In an industry as close-knit as real estate, I’ve found aligned incentives to often be a critical component of effective business models.
2 - What are the risks you had to get over?
Real estate transactions can take a long time because of the complexity of having multiple agents intersecting across both online and offline activities, so that’s always a concern. But there were 2 things that made this a “yes” for me.
First, Radius is incredibly strong at product and technology which is badly needed in the real estate industry. The team thought about embedding network effects from the beginning and the core utility of agents collaborating with other agents on a neutral platform in an easy-to-use way is key to the proposition and sought after by the industry.
Second, they assembled a team of partners, investors, and advisors that bring a caliber of expertise and connections that is quite unique for an early stage team. In addition to the new investors, advisors & partners include Mark Choey (Founder, ClimbSF), Lana Vukovljak (CEO, Residential Real Estate Council), and Hope Atuel (Executive Director, Asian Real Estate Association of America).
All early-stage startups have associated risk, but the key for Founders is to make sure they address and effectively mitigate the critical ones, and Radius did a great job at this.
3 - Why did you say "yes" to the 1st meeting? And the 2nd meeting?
I first met Biju, the Founder, in Sept 2017 through their seed investor, Tim Guleri, who knew my Partner James Currier. When Biju first pitched me on investing, we declined because though we liked the team, we wanted to see more traction and focus. At the time, the product was doing many things but we felt strongly they would need to focus on just a few things and do them well. We told Biju that if he could achieve this, we would love to reconsider.
And here’s what was so impressive - 3 months later, I get an email from Biju showing all the data on how he successfully executed against our recommendations. He achieved strong traction, and I knew this was someone I wanted to partner with.
As a Founder building Trulia, I recall vividly being initially turned down by many top Silicon Valley investors, and doing the exact same thing - building a relationship with an investor and turning a rejection and feedback into a positive. That kind of grit, focus, and boldness is what’s needed throughout the arduous journey of a successful startup.