With its long time frames and old-school reputation, real estate has never been the most tech-savvy of industries. A new Los Angeles-based investment fund called Fifth Wall wants to change that by investing in technologies for the built world in a very industry-specific manner.
The fund’s two principals, Brendan Wallace and Brad Greiwe, believe they have the right approach to not only foster and develop new tech, but help it succeed, despite the industry’s unique barriers. With a handful of large property owners controlling vast amounts of inventory, it can be hard for startup to get traction. There also isn’t a go-between, in their eyes, who has experience in both the tech and the real estate worlds.
Fifth Wall solves that problem by bringing some of the country’s largest property and real estate firms in as partners, offering new concepts both backing and a built-in testing ground. Their sales pitch to new companies is that they can quickly gain validation from established industry figures.
Fifth Wall’s limited partners—including CBRE, the largest brokerage and real estate service in the world, Hines, the largest developer of office buildings in the United States, and Equity Residential, the largest owner of apartments in the country—cover most sectors of the real estate industry and offer potential start-ups and entrepreneurs an opportunity to test out and develop their ideas with some of their largest potential customers.
Wallace, who has worked at Goldman Sachs and Blackstone and recently moved into tech investment, and Greiwe, who co-founded Blackstone’s Invitation Homes rental housing investment firm, see a massive opportunity to bring change and technological evolution to a growing industry. During a meeting with Curbed, they pointed to the fact that real estate, as 14 percent of the country’s GDP, is the largest industry, as well as asset class, by a wide margin, but hasn’t made significant investments in new technology.
The tech world, however, has made a lot of money off real estate, evidenced by companies such as Airbnb and WeWork. With the confluence of changing lifestyles, advancing technology, and the Internet of Things, it’s an ideal time to invest in technology that both makes physical space more efficient as well as makes real estate more profitable. Other incubators and startup spaces, such as MetaProp, a New York-based accelerator for real estate tech, see a similar opportunity.
The fund has already invested $60 million in a range of businesses, including portfolio management software company VTS, home selling platform Opendoor, storage provider Clutter, and title insurance startup States Title. According to the Wall Street Journal, the company is also in talks to buy Jared Kushner’s stake in WiredScore, another real estate tech firm.