Valcre Closes $13 Million Series A Round

Proptech appraisal platform's CEO says his business has a built-in resilience to recession

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Unworried by historically high interest rates and the threat of a 2023 recession, proptech appraisal platform Valcre has closed a $12.7 million Series A round, the company announced Tuesday. The round was led by Avenue Growth Partners with participation from Second Century Ventures.

The funding will be used to hire more employees and increase product innovation, according to Lucas Rotter, co-founder and CEO of San Diego-based Valcre, which operates in the U.S., Canada and Australia.

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“The commercial real estate market rates are going up and lots of changes are going on,” said Rotter. “There’s a lot of capital sitting on the sidelines. But, I think, for really strong businesses that already are running in a capital-efficient manner, there’s still money to be invested in those businesses.

“We want to grow our business in the coming years and part of that necessitates bringing on some additional capital to drive sales and marketing, to build out some other strategic initiatives and products for our current commercial real estate appraisers as well as their appraisal businesses.”

In the past 12 months, Valcre’s products have been used to facilitate more than 50,000 commercial real estate appraisals, with customers valuing faster turnaround on valuations, as well as the ability to complete a great variety of appraisals, according to the company’s funding announcement. Since the height of the pandemic, Valcre says its recurring revenue has increased nearly 300 percent.

While not saying that Valcre’s business was recession-proof, Rotter did agree that the appraisal business has a built-in resilience.

“There’s a lot of demand for valuation,” he said. “We just went through a big boom market where rates were incredibly low and a lot of transactions were occurring. That necessitated deals to happen and technology to help those deals happen a lot faster in order to aggregate the data and pull it together from different sources, including help with report writing, crunching numbers, and collaboration across teams as they’re writing those appraisal reports.

Rotter says he sees that demand for appraisals continuing. “What they do is so critical to holding the market together. Not only on the transactions, but in the much broader market of financial reporting, divorces or estate work in eminent domain.”

Broker transaction deals that require an appraiser account for only about 25 percent of the market, Rotter said.

“The rest of the market is still going to continue regardless of the markets going up or down,” he said. “And, actually, when markets go down, that causes appraisers to be busy with a new type of work — special servicing and working with [buildings in] receivership to assess properties on a quarterly basis to ensure that they’re staying above their debt coverage ratio and can actually afford to pay their mortgages, based on the revenue that’s being generated from those assets.”

“Valcre accelerates workflow efficiency across every segment of the commercial real estate appraisal industry, from solopreneurs to many of the biggest names in real estate services,” said Ryan Russell, co-founding partner at Avenue Growth Partners. “We are proud to support Valcre’s vision to empower commercial real estate appraisal professionals globally.”

Founded in 2016, Valcre clients include Avison Young, Kidder Mathews, Kroll, Apprise by Walker & Dunlop, RSM and CohnReznickPhilip Russo can be reached at prusso@commercialobserver.com.