New York Angels Backed ProSentry is Changing How Buildings Monitor for Leaks

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This month on the New York Angels edition of the Angel Nest, we meet a great business inspired by a disaster. When founder John Rusk’s home flooded with water, he decided there had to be a better way to protect property. So he invented an early warning system and started ProSentry.

Welcome back, I’m David Hemingway. I’m a five-time founder and a member of the New York Angels, where we fund and mentor great young companies. New York Angel member Tom Hirschfeld discovered ProSentry and their wireless water leak detector.

Just as they were about to focus on raising money from investors. Those were early days. And while ProSentry is still a young company, since 2024, they’ve alerted buildings to over 6,000 water leak events.

And they’ve done it so quickly that not one has resulted in an insurance claim. ProSentry collaborates with Chubb Insurance on water leak detection initiatives and now operates in six states and is growing quickly. We’ll also talk with Seth Masters later on.

He’s vice chair of New York Angels and spent more than a quarter century at Alliance Bernstein. He became interested in startups when he saw them disrupting his industry. He’s since invested in 40 different companies.

But first, it’s a pleasure to welcome John Rusk from ProSentry and New York Angel Tom Hirschfeld to learn more of the story of this amazing business. Gentlemen, thank you both for being here today.

Thank you very much, David.

Thanks, David.

John, tell us why you started ProSentry. You know, you walk through life and you’re kind of just living your life and then something happens and the light goes on and you can remember where exactly you were sitting.

So, I have a house upstate and it had a massive water leak. Chubb Insurance then gave me a $5,000 credit to an AI-controlled valve that would turn off the water in the event of a water leak. And I went on the website of this company and saw that they had wireless water leak detectors.

And I still remember that moment of going, Huh, I’ve never heard of such a thing. This works really good for my single family house. But if I could outfit the apartment houses that my construction company has been working in for 40 years and do it in a way that we could notify the building super in a way that he would appreciate it and could respond quickly, there could be an amazing business there.

And it was such a good idea that I had to set aside time and energy to pursue it. And then there’s that kind of weird thing with the universe where you say, Huh, I’m thinking of this idea. So, the next thing you know, you’re sitting at a Stephen Sondheim gala that Chubb had sponsored.

And I was sitting next to the senior vice president at Chubb who was in charge of the war on water. And we spent the next two hours not listening to Mr. Sondheim and his wonderful over of work and discussing water leaks in New York City. And that’s what kind of launched ProSentry.

Now, I love the fact that part of your operating model is to actually pick up the phone and call people that are affected by leaks. Now, I live in a New York City co-op, and it’s 100 years old. And I love the fact that it’s a solid building.

But from all the water leaks, it’s entirely possible that we’ll all drown someday because it seems like every week there’s another leak. So, you picked up what seems to be a perfect market. And I’m curious about the old school method of actually calling people up and telling them there’s a leak in the building.

So, I really appreciate you saying that. And it is the big differentiator between us and other water leak detection systems. And it comes from the fact that I have been, for the last 40 years, working in your building’s basements.

And my partner, Nadav Schnall, came from First Service Residential, which is the largest property management company in North America. And he worked in the luxury buildings in New York City. We both understand the concerns of the people who live in the building.

The last thing that a resident manager or a handyman wants is another piece of tech in their pocket that is supposed to alert them and they’re supposed to keep their eye on it. And their fear, and it’s right, is that leaks don’t happen so often. Maybe once every two months, three months.

What if they don’t have their alert working on their phone? What if they don’t have the app open? They miss the alert and suddenly there’s this massive leak in a co-op or condo shareholder’s apartment, and now they’re held personally responsible. They don’t like that. So what we realized is that it is much better, and these buildings always have a front desk person.

And so if we can just call the front desk, and for smaller buildings, call that offsite resident manager. If we call them with a live person, when that live person reaches out to the building super, it’s a very different experience. Because if I get a text alert on my phone or an app alert, I’m going to go, eh, it’s probably a false alarm.

I’m going to go back to sleep. But when somebody calls and says there’s a water leak at the dishwasher in apartment 21J, I’m going to make a verbal contract to say, oh my goodness, let me go check on that now. And we know that happens because as you mentioned at the top of the hour, 6,000 water leaks, not a single one became an insurance claim.

And that’s because these maintenance people really did run up and stop the overflowing toilet or the leaking sink or whatever it was when it had just started. That’s just amazing. And it’s no wonder that you’re friendly with Chubb Insurance.

Yeah, exactly. Tom Hirschfeld, you were the co-lead for the New York Angel investment in ProSentry, and you’re now a board member. Of course, there are a lot of alarms on the market that alert people to disaster.

I’m curious what you saw in ProSentry that really made you want to get involved. I’d say there were three main things, David. First of all was that John and Nadav make an incredible team.

They’re not tech heads who don’t know the buildings that they’re selling to. They come from that industry. And so their connections and their reputation made a big difference to us.

Second, it’s hard to get people to pay for prevention. But if people can save money by getting either discounts on their apartment-specific insurance, or if they can get huge discounts or better pricing on insurance at the building level, both of which are true in this case, then it pays for itself and then some. And then the third thing is that ProSentry always impressed us as being about more than just water.

The ProSentry platform has all kinds of other capabilities that can be sold to buildings once water has been installed. Once the water leak detection systems have been installed, the LoRaWAN wireless network is already in place. And other things, such as thermostats for radiator valves or water valve shutoff or gas leak detectors or many other types of devices have already been configured for this network and buildings can and have been upsold.

Now, this sounds like a device that was almost engineered for New York City. Tom, from an investor’s perspective, does that concern you that it was a limited market? Certainly, New York is the place in North America for apartment buildings, for sure. If there’s one city that is known for apartment buildings, it’s New York.

But it turns out that there are lots of apartment buildings elsewhere in North America and that the management companies, such as First Service Residential, who manage a lot in New York, also happen to manage a lot in Chicago and Florida and Texas. And San Francisco and Toronto. And so this is how we’re not surprised to see now the company is doing business in six states with many more to come.

And, John, it sounds like you’re growing the company and for that you wanted to raise some capital. And that was fairly new for you, right? That whole experience? The whole idea of a business that is not making money from day one is very anathema to my very being. The thought that we would take in less money than we were spending as a guy who’s run a construction company for 40 years is not comfortable with us.

But we realized that to scale this large, we would need capital. But we also recognized that we needed expertise. And so that was part of the attraction of having investors, expanding that network.

And then we just kind of really lucked into getting the New York Angels involved. It sounds like it was a little more than luck, though. It was, you know, we were chasing investment.

We had started looking for a safe round to raise money and had learned a lot during that process. And one of the people that we met almost a year before who had turned us down for a number of very interesting and specific reasons. We corrected those reasons over the course of the next nine or 10 months.

We reconnected to him and it turns out that he was a New York Angel. And this is for those of us who know the New York Angels. This is Steve Tomaras, who was the first New York Angel to meet with and mentor ProSentry.

Yeah. Is this the first experience you’ve had with an outsider being on your board? And how has that worked? This is the first experience of me having a board and it has exceeded my expectations of how well it could go. In a good way.

In a good way. Yeah, there’s the potential pain has not really existed. Although, obviously, there’s always discomfort as you think about bad news and how best to communicate it.

But all in all, it’s really been a terrific experience. Tell us what your expansion plans are. Tell us about some of these other products that Tom referenced.

Happily. You correctly know that the kind of center of multi-tenant is in New York City. As we think about it, there’s a ton of apartment houses in New York City.

The rest of the country has a lot of lower rise, oftentimes four-story high multi-tenant buildings. That’s great for LoRaWAN because, again, the signal that Tom talked about, LoRaWAN, Long Range Wide Area Network. It’s similar to Wi-Fi, but Wi-Fi uses a lot of energy to transmit a lot of data a short distance.

LoRaWAN is built almost the opposite direction to send just a tiny packet of data, about a tenth the size of a text, a very long distance through steel and brick, using very little energy. So that’s why our devices typically have a 10-year battery life, which is incredible. So when you’re thinking about outfitting any building, the fact that these have a 10-year battery life is incredible because if you’re thinking of making a building-wide system, if I’m going to replace the batteries every year or two years, it’s just not going to work.

Whereas with a 10-year, okay, that’s acceptable if it’s going to keep working. Also because they don’t chirp because for any of us who’ve ever been in a relationship, one or both of us in the middle of the night are going to hear that thing chirping, and we are going to crush that device rather than figuring out how to take off the battery door and take out the battery. We’re just going to smash it.

I know a friend actually took a baseball bat and went at his ceiling until he managed to get off that smoke detector. It’s a little extreme. Yeah, our devices don’t do that.

So the expansion plan is throughout North America, first and foremost. So we’re already into two hotels, and we’re going, like we’re in a 1,000-room casino in Atlantic City. So far, we’re in six states.

So we are heading towards a multi-tenant building close to you. We are in conversations with extended-stay hotels because we really have wonderful devices to help them really lower costs and de-risk their properties. And as Tom mentioned, if it’s driven by a reduction in insurance, then it makes a very smooth path across the country.

Tom, this strikes me as a great evolving story and a great story about the best kind of angel investing, where you target one market and then you find out that it’s actually a much bigger market than you had even hoped. Yeah. You know, there’s a saying that fortune favors the prepared mind.

And so at New York Angels, we’re always looking for companies that have multiple ways of succeeding because any one way may not work out. But if there are multiple paths to success, then you might get lucky. Now, you’ve had a lifetime of investing.

I’m curious how you feel about working with companies pro-century size and being on the board and actually being involved in helping to create the success of the company. I find it to be extremely fun and meaningful work, David. I mean, I try to get involved in companies that are really doing good things for people and society.

And pro-century definitely is in that category. And to be able to get involved at this stage when there are still so many moving parts and so many unknowns to be explored, shall we say, is exciting. And I feel as if someone with my kind of experience can add real value to companies that have great potential to do good things in the world.

Yeah, I love the story of a company that derives its revenue by preventing expensive repairs, since we’ve all had a lot of expensive repairs. Seems like the perfect investment, right? Because clients spend less and then yet they get a better result. One of our interesting employees who recently joined us, I had met at a cooperator has a big show and I went over to one of the big mold remediation companies.

And I was chatting with the gentleman there and we agreed that, you know, potentially his clients who had mold issues, now they’ve had leaks and now in the future, maybe they would refer to pro-century. So I invited him out for lunch. We had lunch.

Shortly thereafter, our recruiter let us know that a gentleman was interested in joining our company and kind of like the biblical Saul who gets hit on the head of his donkey and knocked off. His name’s Paul and he recognized that, in fact, the future is not mold remediation. It’s the company that’s going to stop it before it ever happens.

So he’s come over to our side, accepted a job offer with us to really start, stop the things before they became big problems and became $250,000 mold remediation projects, because he could see that the future is going to be in stopping those things before they ever started. Yeah, makes so much more sense. John Rusk, founder of ProCentury and Tom Hirschfeld, his lead New York Angel investor and now board member.

Thank you so much both for joining us today. Thank you very much, David. Great to be here, David.

Now we’re delighted to welcome Seth Masters to the Angel Nest. Seth is the vice chair of New York Angels and he’s here to talk about how our group funds the most exciting startups and why he chose to join New York Angels. And Seth is an expert investor.

He spent 27 years at Alliance Bernstein, including as their chief investment officer of private wealth management. He’s been a New York Angel since 2017, where he has already invested an astounding 70 rounds in 40 companies. Welcome, Seth.

Glad to be with you. So you spent so much of your career investing in public markets. I’m curious, what made you decide to get into angel investing in general and join New York Angels in particular? Well, what I’ve been noticing starting about 10 or 12 years ago was that more and more companies, and this also applied to financial services where I was working, were outsourcing their R&D to startups.

And to me, that was very interesting. And I also felt like there were some really interesting aspects of the startup world that were different from what I was familiar with in the public markets where you have tons of information. And obviously in the startup world, you have almost no information.

So I was very curious about learning more about the startup world. And as I did that, I realized that there were some really interesting opportunities there. And one of them was to be part of an angel group, which ultimately led me to New York Angels.

That’s interesting. It actually stemmed from the prospect of your own industry potentially being disrupted. Exactly.

And of course, that is the job of startups. So we do have tremendous deal flow at New York Angels. There’s no question about it.

I’m always curious how investors choose to get involved in the companies that they actually decide to invest in. I wish I knew because if I did, I could help choose the ideal set of companies for us to screen every month. I think the fact is a lot of the relationship that angels have to startups that they invest in is really a gut feel.

And the reason for that is that the team is the most important single element in having a successful company. Almost every company that I’ve ever invested in has pivoted multiple times. So the story that they tell when you first meet them is almost never the story that leads to success.

What really matters is do you have a team that’s able to figure out what that right approach ultimately is as they learn from their mistakes? You bring up a really good point, Seth. I’ve always thought that angel investing is not as much about money as it is about the fun of getting involved with these young companies and this new technology and really just learning so much every day. Well, yeah, that’s been my experience.

Obviously, it’s not just gut feelings as well. There’s a lot of reality that you have to acknowledge whenever you have a good idea. There’s always a lot of competition.

There’s always a lot of barriers to entry, and there’s also the need for a good strategy. So certainly as an angel investor, we are looking for that, but we also often can help a company that’s trying to deal with that, especially if there are members of New York Angels who have relevant experiences. And in fact, in many cases, have been entrepreneurs themselves and can add value as not just investors, but also as advisors.

That’s the amazing thing, right? It’s the broad base of experience. I think that New York Angels brings to every diligent session that we attend. Well, we try.

And I think that’s really the job of the leads who are trying to navigate the discussion with any startup company that comes to New York Angels is to figure out what are the right questions and exactly what are the things that are going to lead to enough New York Angels being interested in a deal so that it’s worth doing a deeper dive and ultimately perhaps investing. Let’s see if we can be helpful to some of the founders out there. What is it that piques your interest in a company? What can they do to get you interested? First of all, they have to have identified a real problem and figured out some way to solve that problem in a space which is big enough that it could be a good business.

And by the way, that third thing is very important. It has to be a big enough space. And sometimes it’s really frustrating because we’ll see a company that does have a real solution to a real problem.

And unfortunately, it’s just never going to be a great investment because there just isn’t enough demand for that particular problem to be solved. Incidentally, I think there are some occasions and I’ve done it too where we will make an investment just because we think it’s the right thing for the world. And that’s OK, too.

But that’s definitely, in my view, an exception. And it’s only when I have almost a feeling that that’s semi-charitable because we want that thing to exist, even if it may not be a very high return investment. And we often want to support the ecosystem, which we spend a lot of time doing.

That’s absolutely critical for us. Without an ecosystem, New York Angels is meaningless. So we need to make sure that there are all of the other partners out there who are healthy and working together with us so that we can benefit from our mutual interest in the startup world.

It’s a very interesting aspect of what New York Angels tries to do is to basically work with other groups, both investors and many of the incubators and accelerators and other types of support that startups need when they’re beginning their journey. Seth Masters, a multifaceted investor who has invested an amazing 70 rounds already in what is a fairly young angel career. Vice Chair of New York Angels, thanks so much for joining us.

My pleasure. Great to see you, David. You can learn more about joining our group or applying for funding for your startup at newyorkangels.com. And you can also find contact information for our guests today or reach me with your comments or questions at theangelnest.com. A reminder that we don’t make or recommend investments at the Angel Nest.

And this program is for informational purposes only. We produce the Angel Nest with help from Rob Higley. Today, it’s Kathleen Conte at the controls of CDM Studios here in the famous Art Deco Film Center building just west of Times Square in New York.

I’m David Hemingway. Thanks for listening. So long until next time.