New York-Based Henry AI Has a New End-to-End Deal-Making Portal

In a world increasingly dominated by artificial intelligence, some platforms are busy gaining steam despite catering to one of the pickiest market segments. 

In June, Henry AI — an AI platform founded by Sammy Greenwall and Adam Pratt that automates back-office work for commercial real estate brokerages — sealed a $16.5 million Series A funding round led by FirstMark Capital. The Series A came only two years after the company’s inception, and happily coincided with Henry’s next iteration. 

“We needed to be a platform and not just a wedge product,” Greenwall said. “The vast majority of customers in the market know us as a deck-making tool and not as a deal-generation, end-to-end platform. So Adam and his team went through a crazy sprint over the space of 45 to 60 days to effectively build an entirely new platform from scratch.” 

That new platform, Henry Deal, represented a leveling up of Henry AI and was the catalyst for the Series A launch. Essentially, while Henry AI began with offering memorandums, underwriting and pitch decks, Henry Deal covers every stage from initial underwriting all the way through packaging and closing. The platform provides  full underwriting capabilities and a comps database. It can also build market reports, buyer lists, lender lists and even pitch a deal for you. 

Henry Deal was built in only 35 days or so, but Greenwall and Pratt didn’t want the market to know about it until it was piloted and deeply embedded with multiple enterprise organizations on the brokerage side.

“We’ve spent a very long period of time staying very focused on one product, refining it and improving it over time,” Pratt said. “I think one advantage we had is that we learned so much about our users’ workflows by onboarding decks and fixing things there that a lot of the same things are true. People really want their workflow to be bespoke. They want it to be uniquely the way that they design their outputs and the process by which they get there.” 

Adam Nelson is a managing director at FirstMark Capital. The firms were introduced via Ben Markowitz, co-founder of fintech startup Clerq — which is also backed by FirstMark — during Henry’s seed round. 

Initially, Nelson told the Henry founders, “Hey, I think you guys are amazing. I love the big, bold vision here and let’s stay in touch, but I think this is a really bad market, and I wish you guys luck,” Greenwall recalls. 

Nelson is a prolific investor in New York City, and FirstMark is one of the funds for Series A investing, “So that was a really, really important point for us,” Greenwall said. “We’re a New York City-based company. We want to make sure that we create an ethos around that brand, where everything that we do is leading into that idea.” 

So, when it was time to raise the Series A, less than 12 months from when the firm closed its seed round, Nelson remained one of the top people on the list of those they wanted to do it with, despite his initial hesitancy. 

Greenwall and Pratt spoke with Nelson many times over at the original Henry HQ — Greenwall’s apartment.

“The first time, I got out of the elevator and there’s this kitchen with like eight desks and a dog in it,” Nelson recalls. “What I subsequently found out was Adam was taking a nap because he had been coding all night in the loft above their kitchen, and we go to the conference room, and it’s a spare bedroom. I was like, ‘This is so awesome.’ ” 

Eventually, the Series A due-diligence process kicked off, and FirstMark was officially interested. 

“A couple things had started becoming really clear to me,” Nelson said of what changed. “The first is that what Sammy and Adam had built was really starting to resonate in the market and really get pulled by brokers, even without a big sales team. It was just Sammy on LinkedIn talking about what they were building, and it was resonating. I’d spent enough time in the real estate tech space to know that was pretty exceptional. But when you change the paradigm and start delivering outcomes and augmenting labor inputs and letting people get freed up to spend time doing the business development that actually drives the revenue, it completely changes the equation.” 

Not that it would be an easy road. 

“FirstMark doesn’t mess around; they do their diligence as they should,” Greenwall said. 

The Henry AI founders spoke with more than 50 funds through the process and ended up with multiple term sheets.

“One of the term sheets that we received was also from a really good fund, and they priced the deal about 20 percent higher than where FirstMark came in, but we decided to ultimately go with FirstMark for two reasons,” Greenwall said. “We wanted a New York City-based fund, and two is that we believed that Adam Nelson as a partner for us would end up as a better outcome for our company over the long term, and we’re building for 10 years from now, not for a couple of months or a couple of years from now.” 

That LinkedIn activity Nelson references can pay dividends. 

“Sammy sent a cold message to me directly on LinkedIn,” David Perlleshi, a managing director who leads investment sales for Franklin Street, said. “I usually don’t respond, but, for whatever reason, I responded. He wanted to jump on a walk-through of the new platform, saying, ‘Hey, we can make your OM, we can solve your OM process.’ I was very impressed by it and wanted to implement it immediately. I saw the benefits of it, in how we could streamline the entire process.” 

And streamline it did. “We’re such a high-volume team, it would take us one to two days to produce a full offering memorandum,” Perlleshi said. “With Henry, it literally helped our production quadruple overnight.” 

Further, with the expanded offerings of Henry Deal — Franklin Street was one of the pilot customers — Perlleshi’s analyst is still employed and has doubled his output. 

Customization has been key. 

“A small $1 million facility is going to be packaged differently than a $20 million facility, and then a land deal is being packaged completely different than a lease-up deal, and so on and so forth,” Perlleshi said. “They’ve been able to do a wonderful job with us as far as giving us that customization that’s required, and being able to just switch things up really just quickly and seamlessly.” 

Before AI, software was really deterministic and programmatic, uncustomizable for that person’s workflow. “It was useless,” Greenwall said. “We learned with our decks, and with the rest of our products, that in order to sell the customer something they want, you need two things.” 

First, you need to sell the outcome. “That means I’m not giving you a tool that helps you build decks faster. I’m giving you a deck. I’m not giving you a tool that makes your analysts do underwriting 20 percent more productively. I’m giving you a final underwriting model that you can send to a customer. That wasn’t possible before AI,” Pratt said. 

Second is understanding the preferences of each individual customer. 

“With AI, you’re able to build a custom experience and workflow for each customer,” Pratt said. “If you give everyone the same one-trick pony, which is how traditional software is built, no one’s paying for it.” 

On that note, the No. 1 thing with the Henry team is “you never hear no,” Perlleshi said. “You never hear, ‘That can’t be done.’ It’s always like, ‘Let us work on it. We’ll get back to you. We’ll figure out a solution,’ and they always do. As brokers, we’re not allowed to say no. We have to figure out alternative solutions to try and get something done, and the Henry team understands that. They put themselves in the broker’s seat and understand that there are nuances to relationships, to marketing, and no two deals are the same.” 

One of the big value propositions of Henry Deal is taking all of Henry’s customers’ existing data and putting it into an organized box where they can then leverage that data to make actionable and impactful decisions for their business.

For example, if a commercial real estate broker is selling multifamily apartments in Brooklyn, someone on that team might be building 60 decks a month on Henry, and each underwriting model might have four comparable sales properties or rental properties. That’s a lot of data.

The numbers speak for themselves. Every existing customer that has tried Henry Deal, so far, has bought into the new product. “They’re now paying us significantly more money, around 30 to 40 percent higher than what they were paying before,” Greenwall said. “Of our net new customers that we brought on since Henry Deal, over 80 percent of them are converting from pilot to paid customer, and those contracts are two times bigger than our old contracts”. 

All of the investors who participated in Henry’s seed round also participated in the Series A, either at the pro rata or super pro rata level. Those investors include Y Combinator, Coalition Operators, Pioneer Fund, RXR Arden Digital Ventures and StoryHouse Ventures. The new investors were Thomson Reuters Ventures and Karman Ventures.

And, it’s just the beginning. 

“Adam and I love being in the office every day with our team, and making our customers happy,” Greenwall said. “We just signed our largest contract ever, and I was out in the HQ for this new customer, and I was just sitting in their conference room, and I was like, ‘Wow, our company’s 2 years old, and I’m sitting with the largest office producer in this massive state so, holy crap, that’s pretty cool.’”

Cathy Cunningham can be reached at ccunningham@commercialobserver.com.