Real estate-focused venture capital firm Fifth Wall has closed what it’s calling the largest real estate venture fund raised to date—having secured $503 million in commitments that it plans to invest in real estate technology, or “proptech,” companies.
The new fund is more than double the size of the three-year-old venture capital firm’s first fund, which closed at $212 million in 2017. But interest in the burgeoning proptech market has only grown since then, and Fifth Wall raised capital for “Fund II” from more than 50 limited partners (LPs) in 11 countries—most of whom are institutional commercial real estate owners, operators and investors seeking to increase their exposure to potentially game-changing technologies.
“I think you’re seeing it categorically in the real estate industry—more owners are looking to identify technology-enabled real estate concepts that could grow their business,” Fifth Wall co-founder and managing partner Brendan Wallace told Fortune. “The largest real estate landlords on earth are recognizing, ‘We need to be aware of the disruption in our business.’”
That realization lends itself to Fifth Wall’s admittedly “unique” model—in which the firm’s LPs, in many cases, end up becoming targeted customers and end-users of the companies they’re investing in. Approximately $100 million of the revenues generated by Fifth Wall’s existing portfolio of companies last year came from the firm’s own LPs, according to Wallace.
The venture firm’s “consortium” of real estate LPs is an advantage that “helps us de-risk,” Wallace noted, with Fifth Wall “typically investing with the benefit of information from corporations.” In turn, the venture firm guides the proptech forays of an industry that is notoriously reluctant to change and stuck in its ways of doing business. Read more