Investors can look forward to even more real estate technology coming their way, thanks to a massive contribution to venture capital firm Fifth Wall
A group of 50 large property owners worldwide contributed $503 million to Fifth Wall, a venture capital firm that focuses on real estate technology.
The property owners, who hail from the United States, Europe, and Asia, will provide a market for the start-ups and their products in which the firm invests.
According to Fifth Wall, its real estate venture capital fund is the largest proptech investment pool raised to date and its investor base is the largest consortium of property owners ever assembled. (The term ‘proptech’ is fairly hazy, but speaks to the digital transformation taking place in the real estate industry, and it encompasses all of the companies that are using technology to revamp and revitalize the space.)
While individual homeowners have been interested in making changes to their homes in order to become more energy efficient and save money, property owners and investors have been slow to adopt technologies that use any number of features, such as sensors, to reduce energy consumption and/or increase efficiency. Fifth Wall is seeking to fill a void as functions such as data collection are increasingly being computerized.
Fifth Wall, founded in 2017, invests in companies that will benefit its group of property owners, which include Gecina SA in France, Spain’s Merlin Properties and British Land Co Plc in Europe, and Mitsubishi Estate in Japan, said Brendan Wallace, a managing partner at the VC fund told Reuters. He added that Fifth Wall targeted the largest homebuilders, brokerages, office and retail building owners in Europe, Asia and the United States.
When it comes to owning property, it’s not just about being profitable through buying and selling property; it’s also about being smarter when managing the properties, which will allow investors to generate more profits while holding onto their assets.
Stuart Miller, executive chairman at Lennar Corp, told analysts in June that the use of Fifth Wall portfolio companies Opendoor, a direct home buyer, title insurer States Title, and digital mortgage platform Blend has cut expenses and increased operating margins.
“What we’ve been seeing is 10 basis points here, 20 basis points there over the last quarter, year,” Miller said, according to call transcripts. “Technology has made us better at what we’re doing.”
The $503 million raised has more than doubled the size of its first fund, which closed in May 2017 at $212 million. With a third, retail-oriented fund, Fifth Wall now oversees more than $1 billion, the company said.
Fifth Wall said it has delivered more than $340 million in revenue to companies with its portfolio, an increase from over $100 million in May 2018.
Venture capital funding for real estate technology has surged in recent years, rising to $8.1 billion in 2018 and $4.8 billion in the first quarter of this year, according to Keefe, Bruyette & Woods, citing various sources.