California-based VC firm Fifth Wall closed what it says is the largest real estate venture capital fund ever, as investors bet on soaring demand for so-called proptech, or technology such as robotic security guards used in the real estate industry.
Fifth Wall pulled together 50 investors from around the world to raise $503 million, and the company had to turn away some investors. The pool is more than double the $212 million Fifth Wall raised in its first fund in 2017.
Commercial Realtors are seeking not just more property, but technology that makes their jobs easier, Fifth Wall co-founder Brendan Wallace told Karma in an interview.
“They’re looking to identify new technologies that can help them accelerate the commercialization of the space they already have, rather than simply buying additional space or adding new assets to their portfolio,” said Wallace.
Global proptech startups raised a record $9.9 billion in the first three month of this year, compared with $1.4 billion in the first quarter of 2018, according to a CREtech report. The momentum carried on as April, May and June all saw investments that passed $1 billion.
- The three-year-old VC firm is looking to invest in real estate financial services, energy efficiency, mobile and logistics, as well as construction technology, according to Wallace.
- Commercial real estate has a reputation for being slow to adopt new technology, but Wallace thinks that is going to change because “real estate financial markets have become more liquid and more transparent.”
- Karma Takeaway: Investors’ appetite for proptech has grown substantially as real estate owners globally seek to use technology to optimize their businesses.