The Venture Capital Company Fueling Tech in CRE

The CRETech Los Angeles event held last week Downtown dove into the nuances of tech integration in the commercial real estate industry. The event opened with a discussion of technology with some of the leaders in real estate, and concluded with a discussion of Fifth Wall executives. Fifth Wall is a venture capital firm focused on funding real estate tech start-ups. The discussion at CRETech included Brad Greiwe, co-founder and managing partner; Brendan Wallace, co-founder and managing partner; Natalie Bruss, partner; K.C. Cleary; partner; and Vik Chawla, principal.

“What is really critical in a venture capital model like ours is to delicately orchestrate this tension between being corporate and yet independent,” said Wallace says about the firm’s model. “On the one hand, we must listen to our corporate LPs and internalize their acute understanding of their own technology pain points and absorb their deep domain expertise. Yet, Fifth Wall must simultaneously recognize that corporate venture capital almost always underperforms financially because they have been challenged in their ability to think outside the box and lack the venture capital investment acumen to structure great deals and find great entrepreneurs.”

The firm recently surpassed $100 million in revenue—a first for a real estate-focused venture firm. Wallace says that the firm’s “expansive” view of Built World technology and investing in disruptive technologies related to energy, mobility, logistics and fintech. “It is in these nonobvious Built World technologies that corporate venture capitalists have been so limited and where they’ve struggled to ‘see around the corner’ and to capitalize on how their business or industry will transform over the next decade: like Airbnb and hotels, co-working and office owners, Opendoor and homebuilders and clutter and self-storage or industrial,” Wallace explains. “Conversely it is in these nonobvious Built World technologies where Fifth Wall has excelled in investing and capitalizing early in disruptive technologies that are highly strategic to our corporate LPs but that, on their own, real estate corporate venture capitalists have failed to recognize early enough.”

Looking ahead, Fifth Wall is specifically interested in the digitization of capital markets in real estate and in innovation and technology in construction. Currently, the firm is investing in Harbor, Hippo and States Title. It is focused on maintaining the strategy of its first fund while growing the platform. “The innovation that is occurring in real estate technology is not just happening here in the US and our strategic partners don’t just own real estate here in the US, they have global portfolios with global needs,” explains Greiwe. “We need to have our fingers on the pulse of that innovation if we’re going to be true strategic partners.”

The platform has also evolved as Fifth Wall has worked with international institutional owners “As we’ve started working with the largest international owners and operators, we see these intellectual economies of scale in Fifth Wall’s consortium model,” Wallace says. “While there are some regional idiosyncrasies in owning and operating an office building in Singapore, London, Tokyo or Chicago, the technology pain points are nonetheless quite consistent and now Fifth Wall has a scale of distribution that exceeds any individual office owner investing on their own from a learning and distribution perspective.”