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Unblocking Blockchain

You have most likely heard of Bitcoin—the digital currency that has been changing the game in certain industries, mostly finance, since 2009.  The blockchain technology behind it, though, has far more potential uses than retail transactions or asset transfers. If you recall, blockchain is a ledger, or an accounting, of transactions that cannot be modified without it being flagged. You see, the transactions are shared with multiple computers (and users), so changes to the record must be approved by the entire network, thus, making them unlikely to occur. (We can thank the specialized encryption called “cryptographic hashing” for this protective measure.)

 

Blockchain word with icons as vector illustration

 

The real estate industry has recently taken notice of the inherent capabilities of blockchain technology and with good reason. Property transactions, involving mortgage documents and title transfers, are not protected from fraudulent activities, require third parties and are, generally, slow and sometimes inefficient. While hard-copy documents are not stored in a blockchain, the technology still has the ability to record, time-stamp, encrypt and solidify transactions in a way that has never been done before.

The Cook County Recorder’s Office has been willing to give blockchain a chance. In a pilot project with tech startup Velox.re announced this past October, the office began using blockchain technology with property title and other record transfers. The Chicago-based office is the first U.S. government agency to test blockchain technology in their operations. The project’s results and reflections will be shared at a conference in March of this year.

We know that blockchain technology is still the new kid on the scene in terms of real estate uses, but its functions and potential lead us to believe it will soon be the leader of the pack in terms of real estate disruption.

 

If you have a blockchain start up concept or company needing funding, we’d love to invite you to apply you our upcoming class. Check out more info here.

Calling All Startups! elmspring 2017 Accepting Applications

We are excited to announce that we have officially begun the application and selection process for our next session of the elmspring accelerator, elmspring 2017. The chosen startups will begin the session this summer after an official launch on June 26th.

elmspring 2017 pic

For those that may not be familiar with us, we are an accelerator for startups with game-changing ideas geared toward real estate and related industries. We were founded in 2013 by real estate entrepreneurs and are proud to be the first seed-stage technology accelerator in the country to focus solely on real estate. Our intensive program is four months in duration, and it offers seed capital, access to elmspring’s network of mentors and strategic partners, office space at 1871 Chicago and other professional resources to participants. The program culminates with a Rush event where the startups meet and demonstrate their products for serious investors.

Prior our last Rush event held in October, elmspring 2016 startups closed on $3.3 million in funding. After the Rush event, four companies have received term sheets of $1M or more. Most recently, ParqEx, a private parking marketplace enabling non-commercial parking owners to rent their underutilized parking spots, closed on $1.2 million in funding and announced adding another market in Milwaukee soon. The efforts of last session’s startups also helped us garner a 2016 Chicago Real Estate Housing Innovation Award from the Home Builders Association of Greater Chicago.

We welcome marketable and truly innovative ideas related to real estate. The following are some of the areas we have special interest in:

  • Housing
  • Brokerage (commercial and residential)
  • Smart Home Automation
  • Multifamily
  • Hospitality
  • College Housing
  • Place and Space Making
  • Smart Office
  • Planning
  • Construction
  • Elder Care Housing Solutions
  • Block Chain solutions

If you are an interested startup, visit our Home page for a direct link to the application. And if you know of a qualified startup who might benefit from taking part in elmspring 2017, please pass the word or share this blog. You may also contact us with any questions at info@elmspringaccelerator.com.

 

We look forward to the next session of innovation!

Insights from the Executive Director:

 

Bob GillespieA Lesson About Sharing –The Shared Economy

Working at an accelerator providing capital and resources to startup businesses, I have the opportunity to consider a large number of companies and their business models.  In our process of reviewing companies, there are noticeable patterns that develop in the startup community. Not too long ago marketplace apps, like GrubHub, an app connecting the consumer to their favorite brick-and-mortar eateries, became a trend and are still now popular.  Now we have noticed more and more “shared economy” companies, such as Uber and Airbnb.  These “shared economy” companies use a web based platform for peer-to-peer consumption and transactions.

 

Sharing Pitfalls

Shared economy companies may be red hot in the market right now, but many struggle to overcome fundamental difficulties.  Each “shared economy” company is attempting to use an unregulated workforce to run their business and make a profit.  For example, “shared economy” delivery companies use drivers, similarly to Uber, to deliver food or drinks.  While such companies have grown and received venture capital investments, the profit margins are very small.  The part time work force must be compensated for driving on top of paying for the food.  This leaves little for the companies to profit on while keeping prices low.  After all, there are only so many people with expendable income to pay for such conveniences. Upping the price point solved some issues but drove away more customers.  In many cases, the venture capital disappeared along with them.

Another difficulty faced by “shared economy” companies is the lack of committed work force.  The unregulated and part time work force is often unreliable for companies.  At times the tasks asked of employees go unfulfilled especially for companies that use their platform to provide work like laundry service, cleanings, or maintenance.   Problems materialize when service providers take too much time and money to perform the tasks.  This coupled with an unpredictable task schedule make matters more difficult.  Without the consistent work force needed for any successful “shared economy” company, many just can’t make money.

Trends for Success

Relying on the delivery of above-par service from a part-time and unregulated workforce seems to pose too many challenges to be profitable. In saying so, you might assume that we doubt the validity of shared-economy companies and would not consider them for elmspring. That isn’t the case. If a startup is based on the shared economy principles it must fit the model perfectly and overcome the fundamental difficulties of the shared economy.  The “shared economy” model isn’t for every business especially if the trend is a detriment to their bottom line. A startup might have to consider devising new rules, adapting regulatory measures, and consider their workers’ long-term job satisfaction and benefits—just as the most successful shared economy businesses have had to do to survive. Jumping on the bandwagon and building a shared- economy business might seem like a sure thing in the moment, but moments are fleeting. And true business success for the long term must always take precedence over trends.

 

Stay tuned for the next blog in Bob’s series, you can check out the previous one here!