A growing Boston-based startup offers a way for operators to outsource the cumbersome task of managing liens with its artificial intelligence-enabled software platform.
The company, AI Lean, recently obtained $1.9 million in venture funding to expand its customer success team and invest in product innovation. Launchpad Funding Group led the latest funding round.
“We execute the lien process when a unit goes delinquent, up to the auction date. We manage the letters, folders and stamping, and making sure all the documents are stored in a vault,” said Alistair Schneider, CEO and co-founder of AI Lean.
Automating the lien management process
The company’s software product integrates with facility management software to identify delinquencies. When triggered, the software automatically initiates the lien sale and auditing process on behalf of the storage operator. The processes are customizable according to the needs of the operator and in accordance with state and local law.
For now the service is partly automated and partly manual. When a delinquency occurs, the AI Lean team jumps into action. The 15-member team handles all of the manual processes, like printing notices and stuffing envelopes, for example. There are many more manual processes, and Schneider said their goal is to automate as many of them as possible as time goes on.
“These are the processes we try to eliminate everyday,” said Schneider.
In other words, artificial intelligence plays a small role currently—with human intelligence handling all of the things that the software isn’t capable of yet. The end goal is to reverse that paradigm, with artificial intelligence performing the bulk of lien-related tasks, and humans stepping in only when needed.
As the AI Lean software development team develops new workflows for automating the lien process, the company will be able to scale the number of clients it serves without having to scale hiring people to do the manual tasks.
Data is the future
Schneider says artificial intelligence is a central component of the company’s future.
“For us, it is the vision,” Schneider said, “We are at the height of automation. All industries are getting automated, so we have a vision of participating in that revolution.”
One way that might play out is in the field of data analytics. Using data from the lien sales process and facility data from the management software integration, Schneider said the company could potentially provide insights on prospective tenants. For example, the company is working on a pilot project with a client to use AI to calculate the risk that a prospective tenant will default or not using geographic data and past rental history.
“Hyper-excited” for self-storage
Schneider is no stranger to launching companies. He is the CEO and cofounder of Innouvo, a Boston-based venture studio that launched in 2017. Schneider is a native of France, starting his career in finance in Strasbourg. Since moving to the United States, Schneider has spent 10 years in Boston, and some time in Silicon Valley as well.
AI Lean was developed out of Innouvo, and the venture studio contributed to the recent funding round, along with Launchpad Venture Group, Beacon Angels and investors of the Innouvo Capital Network. The initial concept was to find a business application for digital certified mail.
“For this tech we found no market after knocking on several doors. Then we knocked on the door of self-storage,” Schneider said.
Schneider said they realized the real potential after attending their first trade show.
“At our first trade show we got hyper excited. It’s an industry when you do not know about it you do not see what is going on. But when you look into it you find it is a hyper-dynamic industry, with lots of entrepreneurs, innovation and technology.”
Setting the right pace
The company’s timing couldn’t be better, quietly launching in the wake of the COVID-19 emergency as eviction moratoriums in many places brought auctions to a halt, and other operators suspended evictions as a matter of policy. As operators began to resume auctions, AI Lean was ready with a time-saving solution.
The company is currently working with a small number of clients, including one publicly-traded REIT. One other client is California-based Crescendo Self Storage Management, which implemented AI Lean at its Shield Storage brand in five states.
“To most people, managing liens doesn’t seem like the most important work, but it can be a giant landmine,” said Marshall Calvert, director of lien law operations for Crescendo Self Storage Management. “Now I don’t have to worry about it at all. I can pay attention to marketing and other things.”
Schneider said the business really started taking off this past fall when it doubled the number of locations it was serving.
“We had a big increase in locations being added from our bigger accounts. We have a pipeline now that we are implementing,” Schneider said.
The company plans to primarily target facility operators with 30 or more locations, but for now the company is being selective about taking on new clients and has a waitlist. It is also only working with a limited number of facility management software companies, including SiteLink and storEDGE.
“We don’t want to do things too quickly and blow up the operation. We’re being wise and doing this step by step,” Schneider said.
Removing obstacles to unmanned operations
When AI Lean is ready to expand more rapidly, the company could potentially contribute to an acceleration in the number of fully unmanned facilities in operation. That’s because administering liens remains one of the more time-intensive tasks performed by self-storage managers. Without an alternative currently, many smaller operators have no choice but to retain staff to perform this function, Schneider said.
Schneider also points to AI Lean as a solution for operators struggling to find help amid the Great Resignation. A record number of workers, 4.53 million, quit their jobs in March of 2022. Hampered by inflation and rising costs of their own, many facility owners are having trouble filling positions at wages they are willing to pay.
AI Lean offers an affordable alternative, with the base service costing $175 per month per facility, as well as a one-time $250 implementation fee per facility. There is also a small fee for each notice that has to be mailed to a tenant.
Delinquencies rising?
Schneider said the prime reason for most delinquencies is that people just forget.
“We are not there to auction peoples’ belongings. We are there to communicate with tenants, help them pay, and avoid auctions in the first place,” he said.
Based on their data, Schneider said the rate of delinquencies on storage units don’t appear to be changing significantly at the moment. But Schneider said economic data from other sources points to an increasing likelihood that an economic downturn could take place soon.
“This could create higher demand for us, and that we are organizing for that internally,” Schneider said. “Recessions create more envelopes.”
