Series: VC Unfiltered
Show Notes
Summary: VC Unfiltered kicks off in 2026 with Matt McDonnell of StellifiVC.
Special mentions
Company: Old Three Hundred (OTH Capital), Geyser Group, Resi Desk, Helix Intel, Dextall.
People: Paolo Boero, Nick Yarnell.
Other: The Build Up
Transcript
(Disclaimer: Please be advised that this transcript may contain unintentionally confusing, inaccurate, and/or amusing transcription errors.)
[00:00:00]
Matt Knight: Hey guys, fun episode today. Have Matt McDonald with Stellifi Outta Texas. Has an interesting background story and a bit of a unique angle, I would say on PropTech vc. So enjoy this time with Matt and we’ll probably do another one coming up after a few things he and I have going on.
Matt Knight: All right, Matt, thanks for being here, man. Appreciate you taking some time. I think it’d be a wise idea if we started off with your background because it’s pretty unique in our world, in my opinion.
Matt McDonnell: Yeah. Thanks. Thanks for having me. Yeah, so I think the quick story for me I, after college I spent about 10 years living and working on sailboats for a number of [00:01:00] organizations doing character development and leadership training programs.
So worked with everybody from vets coming back from Iraq and Afghanistan to adjudicated youth to school teachers that were retiring and thinking about what their next chapter was gonna be. And so, turns out that was a really great training for early stage life with the variety of different sorts of people that you encounter.
And so, once I had been doing that for a few years, I really wanted to sharpen my education a little bit. So, got a second degree in finance and then went to law school thinking I wanted to be a lawyer, and was disabused to that notion pretty quickly in the first few weeks of law school.
And so I decided that the right path for me was, was entrepreneurship. I was. Pretty excited about it at that point. And did a tour as a, the COO of a tech company that was venture backed. And then from that business when when we exited that decided to start a family office with one of my investors.[00:02:00]
And so really got a great experience there. Primarily allocating to early stage direct venture. And real estate as an lp and then a couple of other alternative areas that we were interested in. And, over time realized that we probably had the ability to to, start doing our own real estate developments and didn’t want to pay double fees and double promotes.
And so we bootstrapped a business first using only internal capital and then starting to syndicate to high net worth investors. And then. Ultimately using institutional equity sources. The asset classes that we spent a lot of time on were central Texas focused primarily. But we built multifamily did a fair amount of office.
We have some town home projects and a hotel. And really I think being geographically focused allowed us to be a little bit more asset class agnostic. Generally do ground up development. And as that business matured and, reached a point of stability the real estate [00:03:00] market was also slowing down.
And so that was an opportunity for me to start working with two friends of mine that I’ve known for about 20 years. Paolo Boero and Nick Yarnell who we had been angel investing together and doing some real estate deals as well. So Paulo and Nick own a company called Old 300, which is a value add multifamily company.
They do a little bit of investment as well. They’re out deploying Fund four right now and have a, sizable portfolio of real estate assets. But what really brought us together was that we were all working pretty aggressively to deploy. Technology in our own portfolios. And we’re sort of shocked, starting in kind of the mid 20 teens how little real estate had been penetrated by technology solutions.
And so we felt like, wherever we looked, we saw some interesting opportunities. And so Stellifi was really founded, I think, to, help us not just get educated on sourcing for [00:04:00] our own, products. But we also realized that because we had some real experience deploying these pieces of technology in our various portfolios, that the real friction point for a lot of PropTech is getting the attention of the owner and the operator and the go to market strategy.
And so when we started Stellifi. We decided that we were looking for founders that had a deep personal experience with the pain that they were solving from being in the real estate industry. So generally we, we haven’t invested in folks that are, new to the real estate industry, even if they’re experienced technologists.
And then we also. Realize that you really need a toehold in this industry. Right? And so we’re generally looking for businesses that have solving one problem that is part of the existing value chain in commercial real estate, which we define as anything from the moment a property’s identified to the disposition and everything in between, including construction and operations.
And really the secret sauce for any of those businesses is you have to do something in [00:05:00] that value chain better, faster, cheaper and have a net positive impact on the financial performance of of your customers. And so that’s really how we, we got into this business in the first place.
Matt Knight: So before we dig too deep into Stellifi. Can you tell us about the status of old 300 and the portfolio and geography and all of that right now?
Matt McDonnell: Yeah. So, old 300 has a larger geographic purview than my company, the Geiser Group. So Geiser Group is the development company that, that I started focused here in central Texas.
Old 300 has the footprint throughout the Sunbelt. Generally buying at this point early two thousands or later vintage class, a multifamily and, doing taking a value add approach. And old 300 is a vertically integrated business. So they self perform property management and all of the other function, asset management and any other function you need to operate those those real assets.
Matt Knight: Got it. And what’s the [00:06:00] relationship between you guy, like your fund, old 300? How do you guys firewall that and throw pilots to them? How does that work?
Matt McDonnell: Yeah, it is a great question. So I think that because, we’re both, I characterize this as predominantly in multifamily and, so I think we have different insights into different parts of the value chain.
So, a lot of the development and construction tech and, maybe even some of the architectural and civil engineering oriented products are things that I’ve had a lot more really frustrations with. I think you could also say experiences. And so when we look at a company, we can say, okay, well if it fits in one of those buckets.
Then it’s probably something that you know, that Matt is interested in deploying on his portfolio of development projects. Whereas a lot of the more operational software that you’d see at, an op tech or a conference like that steal, or, excuse me, all 300 has. Several thousand units that that they’re able to deploy it [00:07:00] on at any given time.
I think that’s really been the delineation in terms of deploying and doing pilots with those assets or with those products. A lot of times we’re able to, depending on what the product is. we’re often in a customer seat before we move into into an investment seat.
And so a number of the investments in our portfolio were identified not as, Hey, we’re looking to make this investment, but this is a real problem that we see from our experience. Let’s go out and let’s find the solutions that are available to solve our own problems. And sometimes those companies turn into into portfolio companies.
Matt Knight: Sure. And speaking of portfolio companies, tell us about what you’ve done so far, how big the portfolio is. I know you mentioned not backing outsiders, which one of my friends calls carpetbaggers, but tell me kind of the strike zone and what you’ve built so far and what that looks like stage in geography wise.
Matt McDonnell: Yeah, so there are 13 companies in the [00:08:00] portfolio. The, thing that I mentioned earlier that they need to solve a real problem in the existing value chain. That has a positive economic impact on the customer. That’s definitely a core. Core belief. And then in terms of where we’ve invested, if you look at our portfolio, largely speaking we have a lot of multifamily oriented opportunities.
Call that about 50% of the portfolio. Is what I think you would think of as operational technology. And then the remainder is split between InsureTech and construction tech.
Matt Knight: How often are you guys leading co-investing following? Do you care about that traction you want? Anything else that sort of narrows down your strike zone for me?
Matt McDonnell: Yeah. so the strike zone should be I think like a lot of folks, it’s never too early to meet a company. In order for us to not necessarily say that there’s product market fit, but to have, sufficient traction, we’re generally looking to get involved at [00:09:00] somewhere between 500,000 and a million and a half of ARR.
We have the ability to invest in the pre-seed but we also we’re generally are down the fairway approach is to lead a seed round. We’re the PropTech VC that, the founder. Thinks that our perspective and network is is valuable. We like to own, on a fully diluted basis, somewhere between eight and 12% of the business.
And generally speaking, we’ll make an initial investment and then reserve plenty for follow on either to participate in the a round or if a company needs some additional support in the bridge. We also like to take a board seat when we’re the lead. And then you asked about follow on.
And so I think one of the other things that, that we have done in our portfolio is oftentimes a generalist will look at a company, they’ll be excited about it, right? The fundamentals look good. They’d like a PropTech investor to participate with them, for one reason or another, whether it’s domain expertise, [00:10:00] go to market or, the pilots that, that we’re able to assist with.
And so we will oftentimes, we don’t have to lead and we can participate that way as well. And one of the things that, you know, that I think we’ve learned from those types of investments is that it’s really not the value of piloting and having us as users of the product, whether it’s through geyer, through old 300.
Is more about product work than it is just about pure dollars and cents and building the a ARR mean, that’s obviously helpful to add those customers. But I think, oftentimes what we’re uncovering when we start to use a project are either features that we can work with the company to to incorporate into the roadmap or to help prioritize more accurately or.
Oftentimes just identifying points of friction as we go through the deployment ourselves and helping to really narrow that that timeline and that level of effort that is expected of customers in order to really [00:11:00] see the value of a product. As opposed to, having a, an arduous setup process, right?
And then, and or maybe not not capturing all of the value right away that that the product could deliver. And so I think those product oriented insight. Have really become something that we’ve realized is valuable to founders and to the portfolio companies. And so that’s true whether or not we’re, we’re the lead which we are in most cases.
But we also have the ability to just participate along with another good investor that in a deal that we would’ve been excited to lead anyway.
Matt Knight: Any other, any good success stories so far? Anything that’s really working well?
Matt McDonnell: Yeah, there, there’s a number of them. We continue to pinch ourselves.
I think a couple to highlight so, there’s a business in our portfolio called resi desks which started with the idea that there’s this enormous customer data set out there, or there’s this enormous customer segment that there’s not a data set for, which is renters. And so, they built [00:12:00] an initial version of their product, that’s an SMS interface human in the loop AI that allows for more seamless tenant communications. And then those communications, whether it’s, from the first point that you meet the tenant on leasing. All the way through, them giving notice to, to move out eventually, and any issues that they run into in between gets put into a database that produces a both actionable insights.
So, for example, property A, b, C in Tampa, Florida. Continues to have pest control complaints, right? And so it can highlight those issues and you can be a lot more proactive about addressing them. But it also obviously lowers operational costs and streamlines the communication. So I think the, generally speaking, you get a better tenant experience.
Property management has a more efficient experience and some of those problems that you might anticipate you can get out ahead of earlier. And then another one that, that I think is worth highlighting [00:13:00] is we have the ability in our portfolio to do a little bit of a, I don’t want to call it a venture studio model, but we will one at a time build a company in a little bit more of a hands-on way.
If we are really passionate about a project and or problem. And so prop up is an operational software that started off with turnover management, but is really now a platform for property management to do anything that they need with reporting, rolling up all the way to the LP and ownership level.
So you know, you can do inspections. You can order parts for facility management if you need new light bulbs on turnover. But it really gives the owner and operator real visibility into, to what’s going on at the project level. And so, and then two others that I think are also worth highlighting quickly.
One is a company called Helix Intel which provides the, what they call a predict and prevent engine. And so they look at large building facilities. [00:14:00] So imagine a, a boiler system in a school, right? Or something like that. And what they’ve realized is that they can provide this data ultimately to reinsurers who are hungry for insight into upcoming expenses and the risk of claims for their primary insurers.
So they sell to large say, all of the schools in New York State as an example. And so that data is very economically valuable to the reinsurer who will then require the primary insurer that they’re backstopping to deploy this technology. So that. They have their insight.
And then we also will do a more construction oriented products. And so I think a good example is Dextall which provides prefabricated paneling for high rise construction and, can effectively lower your costs, but also provides the software and design tools. So that when you get a number of containers with the building facade on it [00:15:00] or in it, that constructability is not gonna be an issue.
It’s designed to the product specifications. And so Dextall’s had a, that’s been a real success story in terms of their pipeline growth over the last couple of years. And we think this year is development. Begins to to pick up across the market in the US that they’ll continue to outperform their projections.
Matt Knight: Got it. I know we’re low on time, so what’s what’s coming up and how do people learn more about it?
Matt McDonnell: Yeah, so I think what’s coming up for us is we have a few more deals that we’d like to do out of this portfolio or out of this fund. We’ll start raising fund two, at some point and call it the next 12 months.
We’re very focused on supporting, a handful of companies in the portfolio that haven’t yet closed an institutional a round. But we really think about it as, we’re your hands-on partner until. You get to that point and you have other people now in the boardroom, in addition to us, that can help with the next stage of problems that [00:16:00] are less about product market fit and more about growth and getting to that B round.
So we’re, you can learn more about us. We have a newsletter that that we’ve received positive feedback on called the Buildup which is a blend of both what we’re seeing in the real estate market but also. How PropTech is intersecting and we’re, we will continue to be very interested in in that.
And so you can find the buildup on Substack. And then obviously, we have information on our website StellifiVC.com that you can learn more about the portfolio companies and then even some of the companies outside of Fund one that, that we have invested in over the years leading up to leading up to that first fund.
Matt Knight: Perfect. And if people want to reach out to you, is LinkedIn the best way to do it? Or if they have deals or investors to send to you? What do you recommend?
Matt McDonnell: Yeah, I think LinkedIn’s great. And then we also have a form on our website that, you can submit an opportunity through and it has just a few short questions to help us understand, what the pitch is without asking founders [00:17:00] to create a bunch of work for themselves or, spend hours on the phone.
So either one of those paths is is great.
Matt Knight: Perfect. Thanks for doing this, man. I appreciate it.
Matt McDonnell: No, thank you. It’s been great and appreciate everything you do for the ecosystem. It’s it takes a more than a village and you’re a huge part of it. So appreciate your work.
