Ontario Construction Report staff writer
There are magic moments in business start-ups when you know you have something special, and then need to make crucial decisions about what to do next.
Kitchener-based partners Kevin Klages and Alex Likholyot faced that dilemma last fall when U.S. investors made a sizeable and superficially appealing offer to buy into the business to expand it through the U.S.
“We turned them down,” Klages said.
Instead, Klages says Planitar: Interactive Property Guides, will seek local angel capital to fund the costs of expanding the concept from Kitchener/Waterloo/Cambridge to the GTA and southern (and central) Ontario. “We’ll prove the technology works on a larger scale, and keep control of the business longer, before we take it further into other markets.”
The concept: Integrating 360 degree camera views with laser technology to create comprehensive visual images and floor plans (with accuracy within 2.5 per cent tolerance) for residential and commercial buildings.
Klages, whose current day job is at a construction cost consulting practice, says he met Likholyot about two years ago after discovering how much it would cost to have floor plans developed for a home he planned to purchase and renovate. “I was quoted about $2,000 for the work,” he said.
He said he recalled seeing floor plans with a local Realtor, and through him, received an introduction to Likholyot, who had developed the camera and laser system combination and convinced a few local Kitchener Realtors to try it out.
Likholyot, a physicist and research scientist focusing in optics and measurements, had developed the concept, but had no idea of how to bring it to market. Klages, working in business development (he recently resigned as president of the Ontario chapter of the Society for Marketing Professional Services (SMPS) to focus on the new business), said: “I immediately recognized the benefits of the technology” and set out to work with Likholyot to develop and refine the concept.
He says the partners were ready to launch it full-scale in southwestern Ontario last fall.
While the concept has many applications, the partners zeroed in on Realtors, who could use the interactive plans and visuals to enhance their listings.
Within a few months”65 real estate agents were using it on a regular basis.”
“We’re at 275 (sales) in the local market in the last six months.”
The service currently costs $159. Klages says a photographer visits the property, and sets up the 360 degree camera on a tripod, taking images of each of the rooms, halls and exteriors. Then the data files are uploaded and a drafter assembles the data to generate the matching floor plans. The images are posted on the Internet for Realtors to use in their listings.
The technology could be used for other applications, of course, such as for contractors and renovators preparing estimates, since the images and data will be sufficient for many decision-making calculations. (He says the BOMA tolerance is 4.5 per cent.)
Klages said he and his partner went to a local business incubator, Communitech, for advice and discovered support with an independent board of advisors, who have made recommendations on the best way to grow the business.
They then received the U.S. offer. “They were presenting more money than I had ever seen,” Klages said. “We have a great board of directors” who suggested another strategy. “We’re sitting on a very disruptive technology – don’t lose site of it, don’t go for a quick buck, instead, look for the long term play.”
They concluded that the idea has merit, but it would be unwise to sell too many shares too early, especially before the concept has been tested in a larger market. Instead, the company decided to seek out some Ontario-based funding.
“We’ll use the money to invest in our equipment, marketing and working capital to hit the markets in Toronto and southern Ontario,” he said. “We need 19 photographers, 20 to 30 pieces of equipment, drafters, to put all the infrastructure to handle the business.”
The investment funds would also allow Klages and Likholyot enough money to quit their current well-paying day-jobs and focus full-time attention on the new business.
Meanwhile, the process of launching and expanding the business has proven to be exhilarating. “We figure within the GTA area market, there will be a $5 million annualized revenue, and $800,000 net profit within two years,” Klages said.
“In three years, we’ll have a $20 million company” and that is just in the Canadian market. If you multiply by the US potential, the business could reach $200 million, he said.
This seems a bit heady, but Klages said “we have been told by our advisory team that ‘you are too modest’.”
You can view the technology at www.planitar.com.