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Is it difficult to raise money? How long did it take? What milestones does my startup have to meet? What do investors have to understand about my company?

We interviewed founders and investors involved in successful VC rounds at very early stages of their startups. 👇

🇦🇹 Infrared City, developing a simulation platform for intelligent and resilient climate-aware design based on AI, raised $1 million in a pre-seed round led by xista science ventures, with participation from 2bX, Heartfelt, Antler, and P3A Ventures.

Here’s Angelos, co-founder and CEO at Infrared City:

What is Infrared City’s business case, in short, and what is the profile of your customers?

Infrared is an AI based SaaS framework for the Architecture Engineering and Construction (AEC) industry that aims to make climate simulations accessible to everyone. Environmental (climate) simulations are typically very complex, time-consuming, expensive and not integrated in design and planning.
Infrared uses AI to remove these barriers. The benefit of instant but also accurate access to simulation can benefit everyone in the AEC industry, from developers, architects, engineers, city planners, policy makers, municipalities to real estate analysts and platforms.
Infrared has already been integrated in high level architectural offices, other planning software as well as engineering offices.

How is your product different than other simulation SAAS providers?

Infrared is unique in two different ways. Firstly, it’s AI based technology revolutionises how simulation can be part of design. A simulation run that normally takes hours or days can be instantly available, changing radically the interaction of design with simulation.
Secondly, our business models is a Simulation-as-a-Service, meaning we are not trying to bring customers to a new design system. On the contrary we are building infrared to be fully and openly integrated in other design systems. That allows every user to integrate infrared’s climate simulation predictions in their workflows and design systems thus making the climate simulations accessible to all, no matter the diversity of their established design workflows

What does the AI behind the tech actually do in simple words? How much % is your data and how much is third party?

A typical wind comfort simulation for a new masterplan would take an expert up to 3 days to setup and run. Infrared can predict the same result, with 90% accuracy, in seconds. This speed and accuracy of our models is of course achieved with deep learning models that are trained with thousands of simulations results from hundreds of different cities.
Infrared’s models can already provide real-time simulation results for wind speed and wind comfort, solar radiation and sunlight availability. All simulation data used in the training of our models have been produced by us. We do use openly available data of 3D models from different cities as input for our simulation workflows, but all the simulation results used for the training have been produced by us

What did you accomplish so far since you have started?

Before the spin-off from the Austrian Institute of Technology, the MVP has been developed and used by a few pilot customers, such as large as well as small architecture firms, engineering practices, 3 different software platforms that have offered infrared as a sub-services as well as researchers, academics and students.
Infrared City has been used to run 50K+ simulations by 100+ users, used in 10+real world urban design projects, taught in 6+ high ranking universities and integrated in 4+ software solutions. We’ve received 5 awards, published 20+ publications, and done 100+ invited public demos and 100+ news articles.

What are your next milestones?

Infrared just spun off from the AIT and our goal is to put a lot of effort in development to release our first commercial release in about 6 months. We are eager to bring our AI-driven simulation solution to the market as soon as possible and to develop it further with new AI models, new integrations and a design recommendations systems which we are actively developing now.
One of our most important milestones though is to also build the infrared community, which will guide us on the development of infrared. Our aim is to listen to our users and develop together with them our software solutions as we believe that only with a community users you can be relevant to the complex and fragmented AEC software industry

How long did the fundraising process take?

The fundraising process has taken quite a few months already but it was also a longer process to establish the conditions of spinning off from AIT, as Infrared City was originally started within the City Intelligence Lab, that I was heading for the past 4 and a half years there.

From a scale 1 to 10 how difficult was it to raise the money?

I am not a serial entrepreneur so I can’t answer this question as accurately but I would personally say at least 8/10 difficult. Both the state of the market as well as the domain we are in is not the easiest to raise money in.
Also, we have been already looking for a relatively large (for our field) pre-seed round which made also more difficult. We have to mention that we’ve been quite fortunate to have along us investors that not only trusted us and our vision but also actively helped us shape our venture and business model to increase our impact and market potential

What did the investors backing the round understand about Infrared City and its market?

We have also been quite fortunate to have alongside our journey from the beginning investors that actually understood, in depth, our solution and the domain we are in.
It is honestly very difficult for a lot of investors to understand innovation in the AEC industry. After all, it’s one of the largest but least innovated and digitised industry.

What did the investors who passed didn’t understand – i.e. reasons for not joining the round?

As per above, I believe that it’s very often difficult to understand the potential of digital and AI solutions in this industry, mainly because of its fragmentation.
In most cases, what investors could not see – which though quite a few investors and of course the ones we’ve selected did see through – is the business potential of an AI-driven simulation solution in the field.
The most difficult part in our fragmented industry is to understand how simulation can be used and applied throughout the whole value chain of architecture, engineering and construction, from a land plot analysis, to a development feasibility study, to design and planning down to evaluation, retrofit and even real estate selling and buying. Providing a solution with a unified vision that cuts through the whole fragmented value chain is not easy to do, especially as these market segments are also very fragmented.
We do believe and this is perhaps my most important message, that infrared can contribute to the change of value of the assets of built environment and shift it more towards the impact that it has on our environment. Being able to evaluate the environmental impact of the built environment in an accessible and integrated way can radically change the value of it.

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