Brandon Sedloff, Juniper Square
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WHITE BOARD WORKSHOP
The Juniper Square platform manages over one trillion dollars in assets for its clients and you are going to be hearing from Brandon Sedloff, the company's Senior Vice President of Sales and Managing Director.
Here at GowerCrowd, we build digital marketing platforms for real estate sponsors who want to raise money online, but what we don't do is handle the money once a prospect has converted to being an investor. That is the realm of companies like Juniper Square.
There are two phases to raising real estate capital. The first phase is in finding prospects and nurturing them so that they become active investors through content marketing.
Once someone invests, they move into phase two which is the realm of Juniper Square. They securely store legal documents, calculate distributions, provide investors with an investment dashboard so they can see how their investments are performing, and more.
Hear Brandon discuss how a company that manages a trillion dollars of assets keeps its edge in this episode.
What You're Going to Learn
- An All-In-One Investment Management Software to Streamline Real Estate Syndications
- How Many Investors A Sponsor Needs Before They Should Use A Specialty Software Tool to Scale
- An Investor Portal Allows Access to Portfolio Performance with Security
- Investors’ Ability to Access Performance of Multiple Investments Through A Portal
- Major Trends Reveal What Information Real Estate Investors Want Most
- Data Is Foundational for CRE Sponsors
- Using Digital Technology in the Real Estate Investment Industry as A Competitive Advantage
- The Best Real Estate Sponsors in Industry Communicate Often and Frequently with Investors
- Real Estate Developers Need a Digital Strategy to Share Important Information on Projects
- Covid Has Been a Significant Driver of Technology Adoption By Real Estate Investment Firms
- And much more!
Listen To or Watch the Full Podcast Here
An All-In-One Investment Management Software to Streamline Real Estate Syndications
ADAM GOWER: Brandon, thanks so much for being on my podcast today. Really good to meet you and to find out more about Juniper Square. I'm going to kick off, with probably, we've been chatting for a few minutes and I'll kick off with probably the broadest possible question. Tell me, and I want to contextualize this in the real estate syndication industry, What does Juniper Square do?
BRANDON SEDLOFF: Yeah, thanks Adam. First off, it's great to be with you and thanks to all of your listeners. Juniper Square is an All-In-One investment management software that was built to streamline fundraising and ultimately help improve the timeliness and the accuracy of investor reporting and that enables investors and managers to have real-time access to data to help investment managers scale their business. There's a few different components to our software as you think about, kind of, what the scope of this is. There's a CRM or client relationship management tool to help investment managers better manage capital relationships. There's tools that help automate parts of the fundraising process that obviously helps investment managers to raise more capital with less work, something I know you know a lot about. There's investor reporting capabilities that produce customized statements, transaction notices and reports that can be shared with investors and then there's partnership accounting, which really is designed to replace spreadsheets and automate a lot of the back office work that investment managers have to do, especially groups that syndicate with high numbers of investors. And then lastly, we think of ourselves as, kind of, the digital extension of the manager's brand. So, we are the portal through which investors access information about their investments with a manager.
How Many Investors A Sponsor Needs Before They Should Use A Specialty Software Tool to Scale
ADAM GOWER: Alright so actually let me ask you this, what would...this actually comes up quite a lot. What is a kind of critical mass for a sponsor or for a developer to have in terms of the number of investors that makes it worthwhile working with somebody like you on the back end, do you figure?
BRANDON SEDLOFF: It really depends. We have customers that have, who are just getting started, who have only a handful of investors. Maybe it's the partners in the firm or a handful of friends and family. They do it on the side and they realize there's something special here and they think they can do it at scale. All the way through, we have customers that have over 5000 investor positions or more. And so, you know, the way to think about it is, really twofold. Investment managers have a decision. You can get away with using spreadsheets to a certain level but typically what we find is that the market today, the investors, are demanding more transparency, more accessibility, and investor portals are becoming the norm. And so, we actually see a lot of smaller managers starting to adopt this category of software and adopt Juniper Square well before they have the real need from a friction perspective. So, you know, I would say if you've got 10 or more investors, you would get significant benefit out of a software like Juniper Square.
An Investor Portal Allows Access to Portfolio Performance with Security
ADAM GOWER: Right now, you're using this term investor portfolio, and funnily enough, I had a.. somebody reached out to me yesterday who was talking about building an investor portal, in fact, talking about, working with Juniper Square and I had to clarify what they meant about that because, this is what you and I chatted about a little bit before we started. What we do here at Gowercrowd is we create this digital presence online that establishes a relationship with a prospect and encourages them, in fact, predisposes them to invest. But, at the point of investment, we don't handle any of the money. We don't handle any of the transactional stuff. That's what you do. So, what is an investor portal? Just help me understand or help our listeners to understand what that...how you define that term.
BRANDON SEDLOFF: Yeah, yeah. You're absolutely right. There's a lot of different ways to describe an investor portal and it can get very confusing but our definition of investor portal is really clear. It's a place where you can go to securely access information about your investment. So, oftentimes, you know, many groups, if they're just getting started, they don't even have an investor portal. You ask them how they communicate with their investors? They say, we send emails. Well, we all know that emails are not really the most secure way to send highly confidential information and there's lots of limitations in terms of what you can share, how you can share it, etc. And so, the industry is moving to secure cloud-based portals and the portal.. the most important thing to think about a portal, is you can go license Dropbox or Box.com and that's a great place to stick documents, right, many use Google Drive, etc. But the thing that the industry is looking for, when we talk about an investor portal, is they're looking for a place to go and not only access the information about their investment, but to get the context behind their investment. So, think about if you log onto to your Charles Schwab or your Fidelity account and you look at how your public equity investments are performing - you don't go on and say, let me click through and find my underlying documents, maybe you do once a year when it's tax season. But generally, you don't go to the document area and try to like read through every line. You want to see: is my portfolio up today or down today? And, which parts of my portfolio are up and which parts are down and then why? It's that context that is really important to an investor because, you know, as many of your listeners and your customers would know, investors care a lot about understanding how their investment is doing. It builds trust. It builds credibility and to be able to share that information securely is really, really important, especially in this day and age.
ADAM GOWER: Interesting. Alright. So investor portal, this is the perspective, is through the eyes of the investor. So, the portal is the way that the investor understands how their investments are doing with an individual sponsor, that they've made with an individual sponsor.
Investors’ Ability to Access Performance of Multiple Investments Through A Portal
ADAM GOWER: If somebody invests with multiple sponsors who all use the Juniper Square platform, can they see those consolidated on one dashboard?
BRANDON SEDLOFF: Yeah, it's a great question. I think there's two parts to the answer. So we have.. so, the short answer is today, if you are a syndicator, the answer is no. So, as an investor, you would need to log into several different portals in order to access your performance for each manager. But, there is a broader trend in the industry where there's this consolidation, where large investors: think of institutional investors like public pension plans and sovereign wealth funds. They increasingly are demanding kind of one place to see all of their investments, because not only do they want to access the information, but they want to be able to compare and contrast investment by investment. So technically speaking, this isn't a technical challenge. This is more of a "market maturation challenge" where we're seeing the institutional side of the market mature a little bit in advance of the non-institutional side. The other reason why the institutional side isn't matured a bit faster is because if you are a pension plan and you have several billion US dollars to allocate to real estate, you're doing that across dozens and dozens of investment managers. Whereas, if you're an individual or even a sophisticated family office, you probably don't have that level of exposure in terms of the volume or the quantity. But, it's a great question and the industry is definitely moving in that direction.
Major Trends Reveal What Information Real Estate Investors Want Most
ADAM GOWER: So, Juniper Square was formed Post Jobs Act, right, of 2012. So, during...you are as old as crowdfunding, right? as real estate crowdfunding. You've been there for awhile, haven't you, Brandon? You've been at Juniper Square for much of that time. So, let me ask this. What trends have you seen, in terms of growth, not just for Juniper Square, but for the industry in general, for commercial real estate sponsors adopting these kinds of technologies? And we'll get to digital marketing, in a minute. What trends have you seen, over your time, at Juniper Square? And then also, let's talk a little about, what trends you've started to see during COVID, because we've got six months of that history as well, haven't we?
BRANDON SEDLOFF: Yes, a lot of trends. So, my background is in real estate. I joined Juniper Square in 2016 as the first commercial-facing sales, business development hire when there was four or five of us at the company, at that time. So, I've seen a lot in terms of Juniper Square and I can speak to that in terms of how our product has matured and developed. But, in terms of industry trends, there's a few broad ones that we've seen. The first is this, increasing, you know, when you think about the power and the dynamics between an investor and investment manager, over the years, that power has shifted back and forth. The pendulum of power has shifted back and forth from investor to manager to investor to manager. And where we are right now, and one of the reasons what we're doing is so important, is because it's the investor today that has the power in the relationship. That doesn't mean the investment manager is powerless, but the power has shifted to the investor. The investor...if you are a high net worth investor and you want to invest in real estate, you have options.
BRANDON SEDLOFF: There's lots of different groups that are very good at what they do, who syndicate deals. And so, the way that you can start to weed out the groups that you want to invest with, from those that you don't, is to look at performance. And the way that you look at performance, is you look at it in a consistent kind of apples-to-apples manner. And when you do that, one big trend that you see is that it's really hard for your typical GP to, not only produce a track record, but to actually know what their performance is. And so, this push for more transparency and more accurate and timely reporting from the investor, is a major trend that we've seen since we started the company and we continue to see, even in this COVID environment. Because, anytime there's a crisis, what do people want to know? They want information. Even if it's, my investments aren't doing so well. That is ten times better than saying nothing.
ADAM GOWER: And silence. Exactly right.
BRANDON SEDLOFF: Silence is the worst. Silence is the worst. Right? So, this is one major, major trend that we've seen.
Data Is Foundational for CRE Sponsors
ADAM GOWER: I'm going to paraphrase because I can't quote you. I can't remember exactly what you said but you implied that sponsors don't really know what their track record is. Let me just... let's just extract that a little bit. The way that it would have been done in the past is based on memory and in-person, you would communicate something. You know what your deals did. You might write them down. If you were going to meet with an investor, a new prospect for the first time. You'd certainly have a pitch lined up, right? I mean, you've got a story. In fact, everybody puts together, operator, deal memos to explain their track record. So, tell me more about what you mean. What is that distinction that you're making between not really knowing what your track record is and what you can do now with somebody like Juniper Square?
BRANDON SEDLOFF: Yeah, I mean, I think if you think about, kind of, the dynamics that are going on, you know, the commercial real estate sponsors are realizing that data is foundational to their business. This is a major new shift. Back in the day, it was relationships. Today, it's data. That data is very powerful. And so, whether that data is used for getting a global view or a national or regional view of their investors, their investments, or even how those two things relate, it is no longer possible to manage all that data on spreadsheets. So, in the pre-Juniper Square world, the way that a sponsor would do this or a manager would do this, is all the data would live in spreadsheets and so, it's really hard because you might have a tab for contributions, and a tab for distributions, and a tab for performance, and it might be over five or ten assets and across different accounts and it gets really complicated. So, if you're meeting with Bob and Susie, who are high net-worth investors of yours, who have been in four or five deals, it could take hours, at best, days or weeks at worst to produce a consolidated view of Bob and Susie's exposure for them so you can tell them that, you know, how much capital, you know, what percent, what your returns have been, what the IRR is, how much capital they put in, how much capital they've gotten back, etc. So, you know, and as you said, investors are demanding more transparency and access to the data from their deal sponsor, from their manager and it's... the big trend is, it's not surprising because they already have access to this type of information for other public equity investments, as we talked about, like if you go in your Charles Schwab, your Fidelity account. So, this is the transparency and accessibility that Juniper Square helps to enable for the investors and the investment managers.
Using Digital Technology in the Real Estate Investment Industry as A Competitive Advantage
ADAM GOWER: Alright so now, let me ask you this. So, what are the biggest...so what you're talking about is a transition from manual, from what I call analog to digital.
BRANDON SEDLOFF: Yep.
ADAM GOWER: You're talking about the migration from data - from manually gathering that data to automatically assembling it and using tech to do that. So, as a salesperson, who spends his life talking to developers who are old crones like me, most of them. I've got no doubt, who have got no idea how to use the simplest of technologies, which maybe is, even their phone. Not that those are simple. What are the biggest challenges that you have in selling this idea to sponsors because it's probably very similar to my challenge: selling digital marketing to sponsors. What are the challenges you come across?
BRANDON SEDLOFF: Well, first off. I think you have to give yourself far more credit. Here we are hosting a podcast and you were telling me earlier about your new high-speed onternet. So you are, ahead of the curve. So, give credit where credit is due. You know, I think the real estate industry has been slow to adopt technology. I think we all realize that. And up until very recently, whether you think this is version 2.0, 4.0 or 10.0 on, kind of, tech and real estate. Up until recently, there was no real catalyst or no real impetus for change. Well the good news is, you know, real estate is catching up with the rest of the world and adoption is happening and it's happening at a rate that is still behind other sectors, but at a much faster rate than has happened in the past. So, part of this is just like the systemic challenges that exist in our industry, especially for developers as many of your listeners will appreciate. Businesses were built by kicking the tires, walking the dirt, shaking hands, back of napkin analysis, you know, trusted relationships. Well, the reality is, all of those things still exist but now you have this new thing, data, which is really powerful. And it turns out that it can be a competitive advantage, if you can use it or it can be a competitive disadvantage if you don't use it. So, the biggest challenge that we have, to get people to change, obviously, doing nothing is the number one reason you don't buy software. It's status quo is OK. But, it's really ensuring that our customer, our prospect at the time, understands that, we are the best at what we do. The same way that we understand that, they are the best at what they do.
BRANDON SEDLOFF: So, I would never go to a developer and suggest that we can be a better developer or do better site selection or get better entitlements than they can. And they also can get benefit and satisfaction from understanding that we are a software company and we've been doing this longer than any other software company hyper-focused on this space. And so, it's that same trust, it's that same relationship, it's that same partnership that is really important to make sure that we instill, in each one of our customers because ultimately, you know, people don't like doing things that they know very little about. And there is a massive information asymmetry. We know 100 times more about software than our customers do. So, at some point, what we really encourage our customers to do is not necessarily underwrite the technology because they don't know how. They have to underwrite the company. They have to underwrite the team and they have to underwrite the outcomes. And the best way to do that, is not by talking to a salesperson. Yes, you have to learn from myself and my team and I would argue we have the most honest, genuine, qualified team in the business. But, you also need to talk to your peers. And so, we have over 800 customers and over a trillion dollars of real estate being managed on our software today. So, the best way for a developer to see if they can get comfortable with software is, talk to other developers who are using that software.
The Best Real Estate Sponsors in Industry Communicate Often and Frequently with Investors
ADAM GOWER: It's this understanding that what normally takes, when it comes to meeting a prospect or a new investor and actually navigating them through the relationship. Something that takes multiple meetings of senior people to educate and develop that relationship, you can basically automate, use tech, use digital marketing, use content to develop that relationship all the way through so that when you do have that first contact, that first contact is a high quality contact. You're not telling them about what you did 20 years ago. That relationship has already been developed so your entire team...it's very interesting that you say that, is elevated to a higher level implementation of their skills. They're not dealing with the minutia as much, right, as they were before. So, what do you see, kind of, moving to this marketing and the way that sponsors communicate? What do you see, if you've got 800 customers, a trillion dollars on your platform? Heck of a number. What do you see are characteristics of best in industry sponsors, in terms of the way they communicate?
BRANDON SEDLOFF: Yeah. Often and frequently. Those are the two things. Groups that communicate often and frequently with their investors and have no, and don't discriminate based on the size of their investors, are the ones that tend to outperform the market. Because when it comes down to it, everybody knows performance is going to go up and performance is going to go down. It's all about understanding how your investment is performing.
Real Estate Developers Need a Digital Strategy to Share Important Information on Projects
ADAM GOWER: OK. So, what do you mean when, often, I think you said often and frequently right, to communicate often and frequently? What does that mean? Just describe, what does that communication look like?
BRANDON SEDLOFF: So in a, to use your terminology in an analog world, where we're offline. In order to get communication out to dozens of investors or hundreds of investors, you need an army of people. You need to gather information, you need to merge information. You've got to take it from spreadsheets into different tools for marketing. You know this is as a digital marketer. There's a lot of work involved. And so, what ends up happening, when you don't have tools that enable you to be successful, is you tend not to do it because it takes time and it's hard. You're not good at it. People like to do things that they're good at. So what do they do? They choose to communicate less frequently with their investors because producing the communication, in and of itself, is hard. How do you know who to share an investor report with? Well, you might have one investor, seems pretty simple, but that investor might have a spouse, might have, you know, a lawyer, might have an accountant, might have a child and a stepchild, all of whom need access to information. It becomes really hard. So people tend to say, well, guess what, we're going to do, that's too hard so we're just going to communicate as minimally as possible. Well, that's gone. That no longer works. So the best sponsors are the ones who adopted tools and solutions, whether it's Juniper Square or others that allow them to have this frequent communication with a low frictional cost. It doesn't need to be a lot of work to send a note out to several hundred investors or several hundred prospects about what's going on.
BRANDON SEDLOFF: And so, how do you do that? You do that, as you know, through a narrative. Having a digital strategy is really important to our customers because it's all about their brand. It's all about their identity. So, for example, one thing that we've done, inside of our application, is created the ability for developers and others to share videos because developers have assets that start with holes in the ground and they exist like that for a long time. Not really sexy until the project starts coming up. But how cool is it to have a drone video or a time lapse video of how that development is evolving and to be able to show that to your investors so that they're not calling you every day saying, "Hey, Adam, what's going on with 111 West Main? It's been a hole in the ground forever." But instead, they can look at it, and see how things are going. The ability to have high res photos in the data room and in the portal that you can share with your investors. So instead of saying, "Hey, Adam, can you send me a screenshot of your rehab that you just did on this multifamily complex?" You can go in and see the beautiful multi-family complex with the new paving, and the new facade, and the new awnings and the updated pool. That's really important to managers because context matters.
Covid Has Been a Significant Driver of Technology Adoption By Real Estate Investment Firms
ADAM GOWER: Once you tell your story, digitize it and get it out there on your website and on social media, you don't have to do that again. It's like, it's totally automated. That what's your talking about with your institutional investors. They want to go through that to decide whether or not they're even going to talk to you. If you've not got it, it's harder to make the decision to even talk to you.
BRANDON SEDLOFF: That's right.
ADAM GOWER: So, let me ask you this. We also talked about trends. And what I wanted to ask was, is what you've seen in the last six months. I don't think we really touched on that. Have you seen an increase, with remote working increasing, an awareness of automation, digital automation and tech increasing? Have you noticed an increase in demand for Juniper Square and for digital services or what have you seen, in terms of trends? I should ask.
BRANDON SEDLOFF: Yeah. I mean, COVID has been a significant driver of technology adoption. We're all, you know, we're all living in a remote, distributed world now. And so, it's accelerated the need for industry-specific technology like Juniper Square. We've brought on, I think, something like, more than 80 new clients since the start of COVID, which was in March, just to give you some perspective. So, we feel very fortunate that, you know, we're in an industry that can help our colleagues in real estate, private equity and real estate investing solve this problem. But, COVID has absolutely, been a major driver. And, one of the things its done is it's taken this from a, fairly, you know, let's just say this is a medium to low priority and it's made it the top priority because now you have teams working out of systems in different places. We got to get everybody on the same system so that when your investor calls your investor logs in, they get the actual information. So, that's been really interesting for us to see. And we actually see, from an industry perspective, we see capital raising accelerate. So, a lot of folks are having a lot of success right now in terms of raising capital. And I'm sure, you know, I'd be curious to know, Adam, what you guys are seeing in your business, because this is an interesting trend and I think what it shows is a flight to quality in a time of distress like we're in right now.
ADAM GOWER: Yeah, I think there's a few things going on. One is, there's like you say, a flight to quality, a flight to stability and predictability is very important.
BRANDON SEDLOFF: Yup.
ADAM GOWER: But also, there is a lot of pent-up demand for opportunistic investments as well, which is where a lot of the money is backing up, I think, at the moment, particularly.
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