Proptech firm TestFit picked up a $20 million round of Series-A funding, bulking up the initial $2 million it had previously received.
Leading the round was Parkway Venture Capital, a VC firm that focuses its investments in companies that apply artificial intelligence and simulation technologies to solve a variety of problems in different industries.
In the case of TestFit, the problem is to let developers, architects, and contractors in multifamily, commercial, industrial, mixed use, and single-family building use simulation and AI for better insight into design, constructability, and costs. This is effectively like having access to complex what-if scenario planning that happens quickly so someone can consider options early on before committing to a specific plan.
The software connects "pro forma, construction cost, and asset design in our building configurator software, de-risking decisions and enabling critical time-savings when developing new commodity real estate," co-founder and CEO Clifton Harness said in prepared remarks. He also noted that the additional funding "will enable us to quadruple down on our product and engineering teams."
According to the TestFit website, users can "change unit mix, road layout, parking configurations and much more on the fly for instant deal iteration." Financials, including land, soft costs, hard costs, income, expenses, and yield-on-cost update in real time. Embedded geographic information systems data can help validate design choices. Instead of jumping back and forth between site plans, users can change such variables as height, whether there's a retail base, and types of parking structures and then see how that would affect deal financials. This is also parameter-based software, so changing configurations doesn't require CAD skills. Instead, it's a matter of altering the project parameters. Then it's possible to share results with backers, lenders, city planners, and other stakeholders.
"Their approach enables teams to kill bad real estate deals quickly," said Gregg Hill, co-founder and managing partner at Parkway. "The AI-powered building configurator provides a unique interaction experience, enabling instantaneous control of feasibility studies and pro forma plans."
The actual results for people in the industry will have to prove themselves out. Modeling and AI-powered applications make many assumptions, and extrapolate from pre-existing examples, to do what they promise. The question will ultimately be whether the conceptual framework behind the curtains will be flexible enough to truly perform the tasks the company promises will be easy.
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