DEAL DETAILS
Startup: Cityzenith
Security type: Common stock
Valuation: $27.4 million
Price per share: $1.15
Minimum investment: $500.25
Where to invest: StartEngine
Deadline: July 1, 2021
The building industry is probably facing its biggest challenge of the 21st century. It needs to build thousands of smart cities in the next three decades to accommodate a booming population.
If it can’t, our world will look very different mid-century. Our cities will be overcrowded and overflowing… tenement mini-cities will multiply within the city limits of major urban areas… urban crime and health will significantly worsen.
We’re looking at a truly dystopian future. But there is another side to this.
It’s also a once-in-a-lifetime opportunity for companies in the building industry to expand operations and profits like never before.
Unfortunately, these companies operate in an extremely disorganized and inefficient industry. They’re forced to work with dozens of modeling and data management tools that draw only a limited amount of data from disparate sources. And on top of that, the tools and datasets don’t talk or work with each other particularly well.
It’s a big mess.
Yet, these companies — completely dependent on siloed, ie “stupid” and non-communicative tools — are being asked to design and build the world’s first generation of ultra-smart buildings and cities.
It’s like asking your local home remodeling company to build the world’s tallest high-rise.
Michael Jansen, the founder and CEO of Cityzenith, experienced the industry’s overwhelming dysfunction first-hand. Before Cityzenith, he founded and ran Satellier. It provided building information modeling (BIM) and computer-aided design (CAD) services to architecture firms around the world. He grew the company to 500 employees in four years and made his early angel investors a 1,700% return (his VC investors included Sequoia Capital – one of the biggest VC firms in Silicon Valley).
While his company was successful, Michael grew increasingly exasperated with the industry’s growing unwieldiness. The never-ending stream of new modeling tools that couldn’t be integrated into the toolbox the company used meant that for every third client, Satellier had to master new tools.
Michael understood the industry could do better… had to do better to serve its future clients. So, he founded Cityzenith. And, with the help of his executive team (which included the creator of Google Earth himself), he developed one of the world’s first digital twin technology platforms. He purposely built an open and interoperable platform that could integrate data from everywhere along with any software tools it needs.
Digital Twins
So, what’s a Digital Twin?
It’s a digital 3D virtual replica of a physical asset — a building, a campus, a city or any infrastructure that has a physical footprint and generates data. It has amazing versatility, from solar farms to transportation systems to tourist attractions to entire smart cities.
And the real kicker? It works in real time across a wide variety of data points at a massive scale.
Imagine you’re watching a movie streaming on your TV. You can pause it, stop it, record it and adjust the volume with your remote. But suppose you could also switch to any of three dozen languages with one command. Or split your screen into two, four or eight sections. Or immediately find a scene based on a few words (“here’s to you, kid”) or choose another ending. Let’s assume all those capabilities exist, but you need a different remote for each one. Cityzenith’s platform represents that single remote, that lets you control and adjust thousands of functions. But it does it with real assets. In a smart city, almost everything can have a digital twin, down to your toaster.
This is the future, where real-time data flows from sensors, meters and systems. Everything is tracked, from electricity usage to air quality. A building manager will be able to click on a building’s boiler room and see temperature settings, water pressure levels and energy outputs. And then adjust those controls in real time.
Smart is better. You can visualize what one or five dozen buildings will look like. You can also coax better performance from key operations — maintenance, energy consumption, space utilization, traffic management and public safety. The list goes on.
It took Cityzenith six years of intense development to get its product right. It launched its platform in 2018. And it’s the best platform in the market today for aggregating and analyzing the information needed to design, build and run building projects.
Early Wins
Michael never doubted Cityzenith would be in high demand the minute it hit the streets.
But sometimes, even knowledgeable founders get this wrong. Many times they’re just too damn early.
From what we know now, Cityzenith got in early, learned a lot fast and matured at just the right time. Since July 2018, the company has secured projects with 13 major customers. They include one of India’s most prestigious projects: the development of Amaravati, a $6.3 billion world-class smart city capital for the state of Andhra Pradesh.
The Amaravati contract led to an even bigger project in the United States — a $1 million master contract to help make Orlando’s ultra-modern sports and entertainment district come to life. Phase 1 of this sizable digital twin will be rolled out in the fall of 2020.
The project’s developer, Orlando SED DevCo, describes it as “a highly programmed and amenitized development where residents, visitors and tenants experience the first bundled entertainment, ticketing, hospitality, housing, transportation, food & beverage, wellness, and utilities platform of its kind anywhere in the United States.”
Cityzenith has also landed contracts with Cushman Wakefield and CBRE, two of the world’s most successful property management firms.
All this in the company’s first full year of operation!
In early July, the company announced the launch of the second iteration of its Digital Twin technology, SmartWorldPro2. It will be deployed for the first time on the project in Orlando.
And it packs a lot more functionality than the earlier version. Its online “virtual 3D tour” is more like a video game experience than a traditional property tour. Visitors can point and click on life-like 3D elements to see sporting event times, retail offers, parking availability and even the view from their hotel rooms or event seats.
But the size and scope of those projects pale against Cityzenith’s latest project win. It just signed a LOI to undertake a massive 10-year multi-city Smart Grid project to help New Mexico replace its current coal-dependent energy plans with solar farms. The project has been nominated for a Marketplace Champion award at TM Forum.
A Booming Market
The digital twin global market is projected to go from $3.8 billion in 2020 to $35.8 billion in 2025, according to Markets & Markets. That’s a 45.4% annual compound clip. That kind of growth is rare. And it’s happening in a soft global economy. Which means this growth trend has strong drivers and staying power. Gartner agrees. It reports that for three years running, the adoption of digital twin technology has been ranked among the top 10 new technology trends in the world.
Cityzenith is not just part of that trend. By spurring demand with an open, versatile and interoperable platform, it’s becoming one of the driving forces and biggest beneficiaries. The latest global infrastructure market report named Cityzenith as one of the early market leaders alongside Siemens, GE, and Black & Veatch.
Now Cityzenith has to execute at an even higher level moving forward. The company is tackling bigger and more sophisticated projects that demand precise decision-making and an unwavering attention to detail.
This is where most of the risk is right now. Which is a good thing. We know the technology works. We know the product is attractive to customers and better than what Cityzenith’s peers offer. We see the company’s fast-growing brand awareness and reputation.
And — I should be clear here — we also see a high level of execution. The company has won several major industry awards, including the “Realcomm Digie Award”, “World Smart Cities Award”, “Chicago Innovation Award” and Manufacturing Tech Insights “Top 10 Digital Twin Solution Provider of 2020” Award.
But it’s going to get harder from here. And any drop-off or slip ups could undo all the amazing progress Cityzenith has made over the past couple of years.
The good news is that Michael fully understands what’s at stake. He’s acquiring powerful new partners, like Epic Games. Epic’s video game engine is ideal for the thousands of data points the digital twin technology handles in its projects. Already a premier AWS partner, he’s also building a new relationship with Microsoft to deploy SmartWorldPro on Azure, Microsoft’s core cloud platform. There’s a very big reason for this move — to satisfy a new contract with a major US government agency. (I wish I could tell you who this is, but I can’t!)
Michael says he should have five-to-eight channel partners by the end of the year. On the project operations side of the business, he says, “for these next dozen projects, including the Orlando and New Mexico one, our execution needs to be perfect. And it will.”
From some founders, those words wouldn’t mean that much. But from Michael it does. Michael is a man of his word. When he says something is going to happen, he will do everything in his power to make it so.
Michael’s been in the global building industry for 25 years and counting. He’s been a respected innovator and successful entrepreneur. He’s worn many hats through his wide-ranging career: architect, developer, technologist, founder and CEO. He knows the industry inside and out.
So when he says that Cityzenith should bring dozens of projects next year and hundreds the year after, it strikes me as an entirely reasonable and doable expectation.
Revenues would surge. And valuation would climb in tandem. Investors would realize huge gains. But not unbelievably huge. Because this scenario is quite believable.
It’s one of the best investment opportunities I’ve seen in a long time. And it’s available to any investor, regardless of wealth or income. Here’s what you need to do now.
How to Invest
Cityzenith is raising up to $20 million on StartEngine. If you don’t already have a StartEngine account, you can sign up for one here. Once you’re logged in to StartEngine, go to the Cityzenith deal page. Now click the green “Invest Now” button. Enter the amount you want to invest, starting as low as $500.25, and proceed through the required steps. Be sure your investment is confirmed, then you’re good to go.
Risks
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 three 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.