Our Investment in Megalytics

West Loop Ventures has made its maiden investment.  We lead the post-seed round investment in Megalytics.  Megalytics enables timely, effective investment and management decisions through an automated platform that integrates large and disparate data sources and proprietary algorithms and scoring models to help standardize due diligence and risk assessment processes.

We were introduced to Donna Salvatore and Hank Mendoza by a friend of the fund.  He said we had to meet them.  Both of them have previous startup experience. We emailed Donna hopped on a phone call and were smitten.  She’s created a tremendous business with huge upside that is revolutionizing the way asset managers assess risk in the commercial real estate market.  Donna has always been a leader.  She has charisma.  It doesn’t hurt that she’s a Cub fan and a leader in the Economic Club of Chicago.

A friend of mine had worked with Hank in the past.  He said Hank was a tremendous executor and a great guy.  Over the time we have gotten to know him, we have found that to be true.

Megalytics went through the Elmspring Accelerator at 1871 in Chicago.

Donna, Hank and the team they have assembled know how to win.  Their team is experienced and understands the industry they are targeting.  They are deeply networked in the industry.  All they have to do now is execute.

The round is a $1M.  Original angel investors were aggressive and also invested a lot of capital in the round. Many of them are from the industry.  That’s always a good sign to me when original angels re-up on a round if given the opportunity.  They almost invested their full pro-rata.  We look forward to working with them to make Megalytics a huge company. Most if not all of the current investors came from the commercial real estate business.  WLV will take a seat on the new Megalytics board.  Kathleen Swan of Quarles and Brady represented us in this deal.

Megalytics is based in Chicago but has clients all over the United States.  Their technology can be adapted to international clients as well.  They are hiring.  If you are a sales person with CRE experience and a CRE network, they would love to meet you.  They are also looking to hire a CTO.

If you are a CRE commercial asset manager, you need to try Megalytics.  Your life will be made easier.  They have processed millions of dollars worth of transactions.  Virtually everyone we spoke with loves their product and are using it more and more.  CRE asset managers that are using technology to get ahead of their competitors were telling associates about them.  Megalytics added new customers during the diligence process.   Firms that were using them noticed appreciably better cash flow and speed in the deal process.

Today, asset managers are running scared.  When someone signs a ten-year lease, will they be able to fulfill the terms?  CRE asset managers look at retail clients and wonder if they will have an ability to pay.  Major retail operations are going out of business every day and that increases the risk.  Despite the stock market rally, there seems to be more uncertainty and risk today than ever.

Megalytics team understands the nuances of the commercial real estate business.  They were operators.  They know it backward and forward and can help clients manage their risk.  They parse, sift and analyze the data effectively so commercial asset managers can derive insights into their customers they previously didn’t see.

Megalytics is also speedy.  They can turn around a project in a day and a half.  Current processes take two to three weeks.  That means commissions get paid faster and deals get done faster.  CRE brokers get their commissions for the entire lease upfront.  Speed is important to them.

The venture world buzzes about diversity these days.  I’d like to point out that our maiden investment “walks the walk” on diversity.  It’s not the reason we invested but it’s nice to have.  We invested because of the team.  We invested because of the culture they created.  We invested because they had a great idea that they executed on. We welcome all entrepreneurs of any stripe that are competitive, charismatic, and can execute.  By the way, our attorney was also female.

Without delving deeply into our investment thesis, we think the entire backbone of financial services is going to be revolutionized in the next ten years.  We see a need for more transparency. Markets are big, but they can be a lot bigger, more efficient and more democratic.  We know that even though a company website might look nice, people that manage the back office processes live in sheer terror and there aren’t easy solutions to the problems that confront them.  Megalytics fits into that vision.

Megalytics is a perfect investment and fulfills our thesis. If you are reading this and know someone in Commercial Real Estate, tell them about Megalytics.  They’ll thank you.

  • awaldstein

    Congrats!

  • Congratulations.