An MVP for an American Commercial Real Estate startup - the story of TrueRate

About the client

Our client is Olive Tree Ventures, an American venture group that provides strategic capital, empirical product testing / incubation, and intensive infrastructural support to early stage CRETech and Proptech firms. Backed by the founders of a multifamily property owner with a portfolio value of over $1.5B and one of the fastest-growing commercial real estate (CRE) operators in the U.S, Olive Tree Ventures is uniquely positioned to identify opportunities in CRE financing. In 2020, Olive Tree Ventures founded TrueRate Services, a commercial real estate firm whose mission is to transform CRE capital markets and investment sales outcomes by reducing transaction complexity.

TrueRate was created as an answer to the rapidly changing VUCA world that has a strong impact on the national real estate market. TrueRate’s startup goal is to solve numerous problems of real estate lenders and investors with one digital product. What were the issues? How did TrueRate address them?

The problem

With years of experience owning and operating a national portfolio, and the expertise of over 300 specialists, Olive Tree Ventures can easily spot the main problems occuring when it comes to the financial process of buying and selling commercial real estate assets on the U.S. market. The founders themselves have faced these problems regularly, so they know the pain.

Let’s describe the major ones.

1. Demanding and unpredictable financial process

Investors (like enterprises, developers or businesses) and lenders (like banks, insurance companies, commercial funds, capital companies, private funders, etc.) need to exchange a large amount of financial and business information before they decide to close the deal. Back and forth communication takes a lot of time and effort. That’s a pain, especially if - in the end - the transaction doesn’t happen. Moreover, after a negative outcome like that, an investor needs to start the whole process once again, hoping for better results. The level of unpredictability in these matters is relatively high, leading to lost resources and missed opportunities. This challenge is inextricably tied up with the other major issue: the shifting timelines that make real estate transactions so difficult.

2. Shifting timelines

Each transaction has a different timeline with different milestones based on the chosen lending partner. Without transparency of process or timelines, it is hard for companies to create financial plans and allocate resources. They often have to change their initial plans due to shifting timelines and this disturbs their business processes. The expertise and experience of the team has mapped out each possible permutation of the timeline and identified all variables upfront. The transparency simplifies the timelines and reduces complexity during this high pressure time period for CRE owner-operators.

3. Uncertainty

The U.S. real estate market is very complex. There are various types of properties, various brokers, lending partners, different ways of loan execution, financing, and so on. With all this variety it’s not easy for an investor to grasp the entire marketplace in which their transaction is taking place, or which financing offer is optimal for their unique business plan out of all the available offers.

The TrueRate team decided to address all of the above issues with their own digital product.

The solution

The product idea

The TrueRate team’s goal was to make things easier for property owners who are buying, financing and selling large commercial assets multiple times a year, and who hold a high-value portfolio. The idea was to build a web platform that automates repeatable processes, makes them more transparent, and increases operational efficiency. This online deal marketplace (a debt and equity placement marketplace) was intended to connect borrowing parties (property owners) with lenders and help them process large transactions ($10M+).

We wanted to create a platform for CRE owners and operators with all their capital markets needs in one place, where they would have access to all the moving pieces, requirements and reporting. From the submission of KYC (Know Your Customer) documents to quote term comparison through due diligence and execution of transaction, TrueRate Capital Markets Portal facilitates an efficient and effective extension of existing capital markets teams. Akshay Gandhi - Partner, Olive Tree Ventures.

Why Boldare?

At first, the TrueRate team did not look for external product development. They evaluated all the off the shelf market solutions, but saw the need for a proprietary platform. Before they dedicated resources to growing a development team, they looked to validate their concept with a digital development firm and build an MVP.

We prepared a proposal and sent it out to a few potential development companies that had enough experience and expertise to help us build TrueRate. Eventually we chose Boldare because we were impressed with how Boldare approached the whole process. Each conversation was fruitful for us and we knew that together we could create a remarkable product that meets our business goals and brings true value to the final users.

Product development kick-off and validation phase

Immediately after the initial contact, Boldare organized a number of planning workshops. During those events, we learned that the TrueRate team already had a handful of valuable insights, assumptions, and resources that were just enough to start work on an MVP. At the same time, we suggested validating other hypotheses with the target audience using a prototype.

TrueRate stakeholders wanted a significant number of lenders to see the technology as soon as possible. They wanted to deliver something with enough functionalities to prove the concept to borrowers, to assure them the product will be helpful and will positively impact each of their transactions.

In order to meet these expectations, we proposed to work simultaneously on two products at the same time:

• An MVP of a web app based on the research and data gathered so far by the TrueRate team.
• A high fidelity wireframe that we used as a prototype to validate TrueRate stakeholders’ assumptions with potential users.

While the development team started working on the MVP, within the first week we provided the TrueRate team with a prototype that was presented to lenders and offered them a walk-through experience. They got insightful feedback and exchanged thoughts about the most important business points that were later implemented into the MVP by the Boldare development team.

Building the MVP

As with most of our product development process, we started the collaboration with a series of product discovery workshops which helped both teams clarify the process, list the most valuable resources, and decide how to best utilize them.

After the workshops, we agreed to develop the platform using a back-end integration between different data sources and the bank’s API and use microservices architecture.

The first step in building the MVP was the creation of a product backlog. Then, iterative development of the platform started. Despite the difference in time zone, both the Boldare and TrueRate teams found the cooperation seamless thanks to a set of scrum events and communication on a daily basis conducted mainly via Slack. Thanks to that, decisions were made quickly and with no barriers or distractions. Each sprint had clear business objectives and product goals.

The tech stack of the web app was Python, Django, the Django REST framework and Celery. We also suggested and conducted the migration from Azure Cloud to Google Cloud Platform.

After the third sprint of MVP product development, a simple version of the app with basic functionalities was ready. At this stage, the development process stopped for about a month and the product team focused on testing and feedback analysis. They wanted to make sure they would implement the right product improvements and eliminate unwanted issues. There were 28 experienced lender partners that took part in testing TrueRate. With the information they shared, the Boldare team could go back and develop the product further in the last week-long sprint.

Results

The TrueRate team needed Boldare to create a useful debt placement marketplace that meets all the specific needs of real estate firms and investors. The result is an MVP that is simple to use - the target audience doesn’t have to learn a new, complex tool or technology. It also has plenty of useful features that make the whole transaction process faster and more transparent for all parties involved. Borrowers can easily:

• display multiple financing offers that meet their specific requirements,
• select the type of assets they are interested in financing,
• compare terms and choose an option that fits their financial needs,
• display all possible financing options,
• access TrueRate’s network of lenders,
• invite new lenders into the network (i.e. if they have a trustworthy firm that they have previously partnered with).

After personal user information, requirements and parameters are inserted, TrueRate displays a quote proposal with all the necessary metrics and data. At this stage, the user can sign up for a deal. TrueRate has the functionality to operate multiple processes on the run, so users can investigate them simultaneously. Eventually, after they select the right property and the parties for their investment, TrueRate enables them to process all the paperwork, including signing the term sheet, due diligence and execution of the transaction.

Beyond the MVP

When the development of the MVP was finished, we helped the TrueRate team with their future plans. They wanted to build an internal team to develop the MVP further, so we offered our help in recruiting the right person for their Senior Tech Lead role at TrueRate, and that person would help build the team from there. We offered our help in recruiting the right person for the position of Senior Tech Lead at TrueRate Services. Our specialists took part in individual job interviews, so the TrueRate team could get immediate feedback on which candidates were suitable for the role, and which ones were not. Eventually, together we chose the professional best-suited to TrueRate’s needs and goals.

After securing the necessary resources, the TrueRate app was further developed by the in-house development team.

Summary

Within one month, between October and November 2020, we provided a prototype and an MVP of a web application that enabled TrueRate users to access a commercial real estate financing marketplace. Today TrueRate offers bridge lending, agency lending, and other institutional debt and equity sources, including life insurance companies.

During the second half of 2021, the portal traffic increased over 60%, month over month, and closed over $100 M in loans in that time period.

TrueRate is the fruit of an incredible partnership and cooperation between the TrueRate team and Boldare. We are proud we could be a part of such an amazing project. We hope this case study provided you with some interesting insights. Don’t hesitate to contact us if you have any questions about our portfolio or services.