IVCA Profile: Co-Founder Thomas Bretz, Executive Director Colleen O’Toole of Elmspring, an Accelerator for Real Estate and Venture Partners at ‘1871’
April 15, 2015

“1871,” the tech and business development center at the Merchandise Mart in Chicago, continues to advance innovation and new enterprise success. Throughout 2015, the IVCA will be profiling the incubators and accelerators in residence at 1871. This week, the accelerator is Elmspring, which focuses on early-stage technology and start-up companies in and around the real estate industry, with a three month program of educational and networking opportunities for the companies they mentor.
 
Elmsping was founded by Thomas Bretz and Adam Freeman, long-time business partners and real estate entrepreneurs. The partners began the accelerator with the goal of discovering and driving new technologies, to enhance and change traditional ways of doing business in the real estate sector. The IVCA spoke to Co-Founder and CEO Thomas Bretz and Executive Director Colleen O’Toole of Elmspring, about the accelerator’s background and operations.
 
IVCA: What is the origin of Elmspring, and what did the founders want to do within this accelerator that would be unique?
 
Thomas Bretz: My partner Adam Freeman and I ran one of the largest residential real estate brokerage companies in the country. We began to get a host of budding entrepreneurs though our door, asking for capital and access to our realtor network. Through those conversations, Adam and I started to realize that there might be a business plan within that angle. We reached out to Kim Kleeman [Content Strategist] and Colleen O’Toole [Executive Director], and we started circling around an accelerator model, which began the only seed stage accelerator model for real estate in the country.
 
IVCA: You focus on real estate technology. Give an example of the type of technology that has been developed that has most changed the industry in the last 20 years of the tech generation?
 
Bretz: The four technology names that come to mind are Zillow, Redfin, Trulia and Airbnb. Zillow and Trulia are regeneration business models that use information for consumers to generate leads. Those were just new ways to approach a business model.
 
IVCA: Are your start-ups more oriented toward products that improve existing real estate technology or are there brand new technologies that can be added to the industry?
 
Colleen O’Toole: We see ideas on both sides of the spectrum, because of the way we are organized. There are companies who are interested in offering solutions to our existing partners. That being said, we also invest in companies that are deeply disruptive in terms of what they will bring to market. So we’re not afraid of those start-ups, either.
 
IVCA: Since your accelerator is based in the real estate industry, how do you anticipate that industry will continue to change most profoundly in the next ten years, and how is your accelerator addressing that change?
 
Bretz: Luckily for us, real estate is well behind the times, in terms of technology. [laughs]  What many other fields were doing ten years ago in their use of technology, commercial real estate is still yet to do. We have the added advantage to see where other industries have gone, with social media, mobile applications and big data applications. We look at those other industries, and see what we can apply to real estate.
 
IVCA: When you accept applicants into your accelerator program, what is the most common type of mentorship you are finding they need, and how does the entrepreneur get to the next level by getting over that hurdle?
 
O’Toole: The type of mentorship we see requested over and over again is the mentor who has ‘seen it and done it.’ The person who has been in the trenches, built their own company and either sold it or continues to run it. There is a lot of camaraderie that comes from those conversations, and the mentors are there to provide the context regarding issues that the companies are concerned with – and most of the time it’s really just ‘don’t worry too much about it’ and ‘learn how to change.’ It’s very helpful, and those are the mentors I see having the best relationships.
 
IVCA: Regarding your mentorship program, how have you organized the information that they provide to maximize the experience for your start-up candidates?
 
O’Toole: We just create a hybrid model, because what we’ve found is that every mentor is different. We created some different ways for mentors to participate in our network. One is leading workshops, great for folks on the consulting or academic side. The other is hosting office hours, that is a big hit for people seeking specific experts. And the one we get a lot of buzz around is our panels, where seasoned entrepreneurs come in and talk about their experiences, on certain topics.
 
We make suggestions inside our mentor network, based on needs that we see in each of the companies we invest in, who we think they should be talking to, but for the most part it’s up to the mentor on how they want to engage.
 
IVCA: Among your start-ups in development, which one has been most surprising, either from the source it came from or the idea as it has developed?
 
Bretz: That’s an easy one. We have a company called HerbFront, and they are the intermediary real estate solution for the legalized marijuana industry, and the selection of real estate for that industry. These are a handful of individuals who have Masters degrees in Public Policy, Zoning, Administration, etc., essentially a bunch of mapping geeks.
 
They are developing some very interesting proprietary software. When you put certain assumptions into the program, it will highlight real estate that fits the criteria. For marijuana production, there are many regulations, so when you input that information there are only a few areas within a region that can be used. They were developing this for something else, and then found themselves within another emerging industry. This emerging industry is flourishing more than smart phones right now.
 
IVCA: You provide support in marketing, legal and business dynamics for your applicants. What of those three elements have you found to be most important once the start-up moves from accelerator stage to an actual working company or product?
 
Bretz: It depends on the company. Some of these organizations have strong marketing or sales people, but for example they don’t know anything about legal aspects of setting up a business. And some are exactly the opposite. In general, I would say that identifying your customer is most important. When starting a company, there is the ‘great idea.’ When putting it into the market, there is push back in a variety of ways, so that is when you start identifying certain needs. That is where we do a good job. We try to figure out with them what that push back means. How do you try to modify the business model? Does it need an overhaul or a tweak?
 
IVCA: What would you tell the membership of the IVCA about Elmspring that you think makes you most desirable to investors as an accelerator?
 
Bretz: We are investors, and we look at these companies through the eyes of ‘are they investment worthy’? There are lots of little ideas that we encounter that we pass on, because they don’t have – what we consider – the things that are critical for us to invest, which applies to the IVCA as well. The CEO of a potential company must have the qualities that makes a CEO great – grit, tenacity, creativity and passion. Also, to make it work, it has to be a big idea with big potential.
 
O’Toole: I will add that what makes our companies desirable to investors is the research we put into creating customer valuation for them, and within our programs that process is built in. We have operating partners, who have opportunities for products that come out of these ideas, and our participating companies can either create the products for those operating partners or with them. It generates a market readiness on a whole other level.
 
For more information about Elmspring, click on elmspringchicago.com