With app, commercial real estate startup plans to enhance landlord-tenant relations
Can a Boston startup break down the walls that separate landlords and the people who work in their office towers every day?
HqO chief executive Chase Garbarino sure hopes so. And he has a new round of investors, including several prominent Boston businesspeople, who are betting on it.
HqO just completed a $6 million funding round, bringing the 35-person startup’s total venture funding to nearly $19 million. Among those on board: Bain Capital cochair Steve Pagliuca, Morningside Group CEO Gerald Chan, and Red Sox executives Mike Gordon and Sam Kennedy.
The list also includes Goodwin, the law firm, and New England Development, the Boston real estate firm led by Stephen Karp.
They’re buying into the idea that commercial real estate remains one of the last big sectors of the economy that’s ripe for disruption, and that HqO will bring them in on the ground floor.
Landlords can use the HqO app to let tenants know about nearby transit connections — the timing of shuttle buses, trains, and the like — or allow them to pay for parking passes.
Workers can book exercise classes, order lunch, or get discounts at nearby merchants.
HqO eventually wants to take the place of key cards, unlocking doors and gates with phones instead. Perhaps most importantly, HqO can foster a sense of community among varied tenants who share a roof but may not otherwise have a reason to know each other.
Garbarino and two other former Streetwise Media colleagues formed the business that would become HqO with money from a local VC firm, Accomplice, and other investors nearly four years ago. But the HqO app didn’t come together until last year, after several of the city’s landlords mentioned they wanted what’s known as “tenant experience software.”
HqO now serves 24 office properties, totaling 20 million square feet, from Jamestown’s Innovation & Design Building in Boston to Blackstone’s Willis Tower in Chicago.
Pagliuca signed on after connecting through Dan Koh, Mayor Martin J. Walsh’s former chief of staff, who is now a partner at HqO. (Koh and Pagliuca got to know each other during the city’s ill-fated Olympics bid in 2015.) Pagliuca is investing through his family office, led by his wife, Judy Pagliuca, and not Bain Capital.
Pagliuca, who is also a Celtics co-owner, views the evolution of Internet-related businesses as being just in the third inning — to use an analogy from a different sport. He sees connecting landlords and tenants via smartphones as a natural next step.
HqO isn’t the only company in this space. But it happens to be the one that caught Mihir Shah’s eye. Shah, cochief executive of the real estate giant JLL’s venture arm, says his team considered 15 to 20 similar companies before investing in HqO last September. HqO had the best stats for continued tenant use and was one of the few that could produce that data quickly.
In a world where startups with billion-dollar valuations roam freely, $19 million might not seem like much. But Shah says HqO has raised more money than any other firm that focuses on tenant experience software — a sign that it has obtained a leadership position and is here to stay.
The latest funding round gives Garbarino some added credibility, not to mention capital, so he can double his staff this year. Landlords increasingly want to offer experiences, not just cubicles, for their tenants; Garbarino says HqO is poised to capitalize on that trend.
Just don’t ask Garbarino about an exit strategy. He has no plans to sell. He wants nothing less than for HqO to become an anchor company in Boston’s tech scene.
Can he pull it off? Much will depend on how he succeeds with that other goal, of using technology to build communities. He wants to break down walls — the ones that separate tenants from landlords, and from each other.