TestFit lands $20M to expand its real estate feasibility analytics software

TestFit lands $20M to expand its real estate feasibility analytics software

Roger Pettingell Sarasota Real Estate

TestFit Inc. has become the latest entrant in the booming market for real estate and construction technology to raise significant funding.

The Dallas-based company today announced a $20 million Series A financing round to develop its real estate feasibility software. That brings total funding for the six-year-old venture to $22 million.

TestFit’s building configurator helps real estate developers, architects and others involved in real estate planning to generate plans quickly for commodity structures such as multifamily, commercial and industrial buildings. That allows feasibility studies to be conducted more quickly.

Co-founder and Chief Executive Clifton Harness said he got the idea for the application while working in real estate development. “I hated drawing parking spaces manually as an architect and I figured the industry spent millions on that one task each year,” he said. Observing that architecture, engineering construction and real estate teams are typically not very integrated, he said, “our goal is to make the process more collaborative.”

Go/no-go decision

Commodity buildings are evaluated according to formulaic metrics like return on investment, Harness said. “The more profitable it is, the more likely it is to get built,” he said. “Our technology is meant to help design, construction and sales teams understand a project from every angle possible. Currently, that’s mostly done with paper and email.”

TestFit’s technology can factor in elements like the size of a parking stall or kitchen and build algorithms that forecast capacity and fit. “They enable the generation of a building design to be done in five seconds as compared to two weeks and optimized around things like the number of units or square feet.”

The software isn’t used for design but for feasibility analysis. “The moment a site is had, we can generate the spatial layout,” Harness said. “We don’t figure out if it will stand up. We figure out, on a pro forma basis, whether it’s worth building.”

TestFit has landed about 200 commercial customers with just the initial $2 million funding round. The company plans to use the new funds to expand the functionality of the product to include property management, construction planning and design technologies into a single platform and to branch out into sectors beyond housing.

Booming market

Real estate development has been a booming market in recent years, especially for multifamily and light industrial properties. CBRE Group Inc. estimates U.S. multifamily investments hit a record in 2021 and will eclipse that figure this year with a total output of around 300,000 units, which is still 200,000 short of demand. The firm also expects demand for warehouse and logistics space needed to meet the surge in e-commerce is expected to exceed 300 million square feet annually for the next several years.

Seed-round investor Parkway Venture Capital LLC led the funding. The firm specializes in simulation and artificial intelligence technologies. Managing Partner Jesse Coors-Blankenship previously founded Frustum Inc., which was an early developer of computer-aided design software based on generative design, in which artificial intelligence algorithms generate hundreds of models for evaluation. Managing Partner Gregg Hill was on the board of Frustum, which was sold to PTC Inc. in 2018 for $70 million.

Hill called TestFit a “disruptor,” noting that its approach “enables teams to kill bad real estate deals quickly.”

Image: TestFit

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