Some of the biggest investment opportunities come from large markets that are completely and utterly broken… are about to undergo a growth spurt… and can’t seem to leverage technological advances.
The construction industry forces architects and owners to choose among 7,000 disconnected software tools and data services. The few dozen they end up using for a project can’t even work together. Each requires its own individual set of inputs to run and manage.
And things could get worse. The construction industry will be building thousands of bigger and smarter cities in the next three decades to accommodate a booming population. If things don’t change, it could get very ugly.
Fortunately, Cityzenith has a solution.
Cityzenith is a company that’s using breakthrough “digital twin” technology to address many of the problems that ail construction projects.
Digital twins are 3D virtual replicas of buildings, infrastructure and other physical assets that also contain data. For example, you can click on a building’s boiler room and see temperature settings, water pressure levels and energy outputs.
Digital twins are smart. They allow users to visualize exactly what one or dozens of buildings will look like. And they allow users to coax better performance from key operations, like maintenance, energy consumption, space utilization, traffic management and public safety.
It’s great technology. But to harness it the way Cityzenith founder and CEO Michael Jansen wants to – as a platform that can help ALL the major real estate user groups and that covers ALL the phases of a project from beginning to end – isn’t easy.
It took Cityzenith six years of intense development to get its product right. It officially launched its platform in 2018.
It was worth the wait.
Since July 2018, the company has secured projects with 11 major customers. These include one of India’s most prestigious projects: the development of Amaravati, a new $6.3 billion world-class smart city capital for the state of Andhra Pradesh.
For a new company to be entrusted with such a high-profile project is very unusual. That speaks to the strength of Cityzenith’s platform. And Cityzenith has already delivered on three of the five milestones it has promised to do during Phase 1.
The Amaravati project led to an even bigger catch: a contract to participate in one of the biggest smart city projects in the Middle East. This wildly ambitious project covers a 10,200-square-mile area. (Sorry, but we’re prevented from sharing more details on the project right now.)
Cityzenith has also landed two sizable contracts with Lendlease, one of the world’s most successful developers. Cityzenith will help Lendlease engineers and clients visualize and analyze data from Lendlease’s two megaprojects in the heart of London.
All this and more in the company’s first full year of operation. That’s one heck of an impressive start.
Looking forward, Cityzenith expects that its revenues will surge from $1 million (projected by the end of this year) to $7 million next year, assuming it raises the money it needs in this round and the next. Jansen expects the company to take on one to two new projects a month. And he plans to expand to bigger and bigger projects as the company progresses.
The Four M’s
Cityzenith passes my four major criteria (market, monetization, metrics and management) with flying colors…
- Its market is global, huge and growing rapidly. Cityzenith is already a global company with projects in the U.S., the U.K., Asia and the Middle East. The digital twin market is expected to grow from $1.82 billion in 2019 to $15.66 billion by 2023.
And the markets that digital twin technology addresses are also huge and global. Global infrastructure is expected to reach $4.4 trillion by 2022. And the global smart city market is surging at an 18.9% compound annual growth rate, which should take it to $237.6 billion by 2025.
- Its monetization model appeals to companies of all sizes. Cityzenith’s monetization model has annually recurring fees that increase as the number of people using the system increases. The model also includes per building and hourly fees to give users a wide array of options to match their needs. This versatile pricing model accommodates all kinds of customers while maintaining comfortable margins. And it makes Cityzenith’s great technology as accessible as possible.
Recurring revenue is the best kind of revenue. The company says all the customers that have had the chance to re-up have done so (though it’s admittedly a small sample size), which is exactly what it set out to achieve.
- It has one great metric, and that’s what matters most… for now. Cityzenith has a three- to four-year head start on the competition. Jansen told me that a particularly well-funded company could possibly make up that deficit in half the time. But that’s still a big cushion. It allows Cityzenith to grab dozens and perhaps hundreds of customers to give it a critical lead.
- Its management has an enviable record of success. Jansen has degrees from Cambridge and Yale. And he’s been a respected innovator in the global building industry for the past 25 years. In 2007, his previous company attracted $11 million from venture capital firm Sequoia Capital – a Silicon Valley heavyweight. That company grew to 500 employees in just four years and generated a 1,700% return for early investors. He knows the industry inside and out, having lived it from all angles as an architect, developer and technologist.
Cityzenith CEO Michael Jansen, on left, with one of his clients, Manuel Sanromà
Now Cityzenith has to execute. Seeing as the company has an experienced founder and team in place, I have every reason to believe it will.
Jansen knows what’s at stake. “The most important thing now is to execute on our current projects well,” he told me. “If we do that, we’ll get the next 100 projects. And then there’s nothing stopping us.”
How to Invest
Cityzenith is raising up to $1.07 million on Republic. If you don’t already have a Republic account, you can sign up for one here.
Once you verify your account and are logged in to Republic, go to the Cityzenith deal page.
Now click the blue “Invest in Cityzenith” button. Enter the amount you want to invest, starting as low as $100, and proceed through the required steps. Be sure your investment is confirmed, then you’re good to go.
This opportunity, like all early-stage investments, is risky. Early-stage investments often fail. Cityzenith might need to raise another round of funding in a year or two, if not sooner. If it executes well, this shouldn’t be a problem. But that’s a risk worth considering when investing in early-stage companies.
The investment you’re making is NOT liquid. Expect to hold your position for five to 10 years. An earlier exit is always possible but should not be expected.
All that said, I believe Cityzenith offers an attractive risk-reward ratio here.
Co-Founder, First Stage Investor