Insights on technology and real estate.

Fifth Wall Ventures continues to invest in micro-mobility company Lime, which just raised $335 million in Series C funding.

For Fifth Wall, the investment in a dockless scooter company might seem outside its mission to invest in tech for “the built world.” However, Roelof Opperman, a principal of the VC firm, told Commercial Observer, the firm realized it was an “innovation amenity” many of their commercial real estate partners were interested in adding to their properties.

“We asked them what they thought about bike sharing and they told us they loved bike sharing, they loved the environmental aspect to it, the amenity aspect to it,” he said.

Opperman said Fifth Wall has already signed Lime contracts with two major real estate partners, one being a major retail outlet in a high-density market, to offer the scooters, smart bikes and electric-assist bikes at their properties, with another soon-to-be inked deal in the works. He would not disclose who the partners were at this time. The VC is backed by major property owners such as Hines, mall-operator Macerich, Prologis and Rudin Management Company.

While declining to disclose how much Fifth Wall invested in Lime this round, he said they chose the scooter provider because of their dockless model and market dominance. Fifth Wall led Lime’s Series B round extension in February. The bikesharing turned multi-modal company raised an initial $50 million in Series B round, with an additional $70 million coming in during the round extension. Since Lime was founded 18 months ago, the San Mateo, California-based company has raised $467 million and is currently in 60 markets.

“It’s been exciting to see a new infrastructure element join a city that real estate owners have been able to be a part of,” Opperman said. “With ride-sharing it impacted their properties and they had to adjust to it versus getting to take part in it. There’s a few moments in time where you have a real sea change in infrastructure and, generally, real estate owners have to adjust to it as opposed to being a part of it. That’s what’s so exciting for our real estate partners because they feel like they are part of a change. That’s not only better from an efficiently standpoint for people, it’s also better from an environmental standpoint, it’s better for a community standpoint.”

Lime’s recent round was led by Alphabet Inc.’s venture arm GV and included Uber Technologies, the firms announced today. (New investors in the electric-scooter rental company are IVP, Atomico and Fidelity Management and Research Company. Existing investors, meanwhile, include Andreessen Horowitz, Coatue and GIC, Singapore Sovereign Wealth Fund.)

Uber’s partnership with Lime follows recent news from its competitor Lyft, which purchased Motivate, the largest bikeshare operator in North America earlier this month.

The deal with Uber, values the scooter business at $1.1 billion, according to Bloomberg. While details of the partnership are still being finalized, Uber plans to promote Lime in its mobile application and slap its logo on the scooters, executives from the two companies said.

Brendan sits down with Michael Beckerman, CEO of CREtech, the largest platform devoted to commercial real estate technology. They cover the early beginnings of the real estate tech industry, exciting trends that they're seeing in the space, themes they believe will have a significant impact on the industry and much more...

For more information on Michael, his blog and to join the CREtech Movement, please visit www.cretech.com

Haven’t heard of Fifth Wall Ventures yet? You’ve almost certainly heard of one of their investments. The Los Angeles-based venture capital firm, which launched in 2016 and is backed with funding from real estate giants such as the homebuilder Lennar, commercial investment firm CBRE and apartment investment firm Equity Residential, recently established a fund specifically dedicated to investing in real estate technology.

“During the last two years, we’ve really seen the renaissance of real estate tech reach functional adolescence,” said Brad Greiwe, Fifth Wall’s co-founder and managing partner, told Inman, in an interview coinciding with Fifth Wall’s two-year-anniversary celebration last week.

Since its launch, Fifth Wall quickly filled a previously underserved niche in real estate investment — startups that use technology to change something about the homebuying or property management process but need financial and professional backing to get off their feet. Some of Fifth Wall’s most high-profile investments include the iBuyer startup Opendoor, the digital notarizing startup Notarize and Harbor, a company that aims to show consumers which new cryptocurrencies (particularly those that claim to have backings in real estate) comply with federal regulations.

“There are so many incredible venture firms out there that really focus on providing capital and advice. In our conversations with entrepreneurs, they wanted more,” Fifth Wall partner Natalie Bruss told Inman, adding that they hope to also try to introduce startups they invest in to partners and help them make their brand known.

https://webassets.inman.com/wp-content/uploads/2018/06/Screen-Shot-2018-06-01-at-1.14.07-PM.png
Photo Courtesy Fifth Wall.

Over the last 12 months, Fifth Wall has generated over $100 million in revenue and acquired 2,456 new customers through its business deals. Cumulatively, the startups that Fifth Wall has invested in have penetrated 27% of all new US sold homes and 20% of all U.S. multifamily units.

“In ten or fifteen years, there really isn’t going to be a discernible difference between a real estate company and a technology company,” Greiwe said. “You have to have skillsets in both or you’re going to be losing your competition.”

At this point, Fifth Wall has 36 commercial real estate company partnership and has invested in 25 real estate tech startups, 20 of which have been publicly announced. Now that the firm has gotten its footing as the country’s major real estate tech investor, its partners plan to continue growing its base of startups and seeking out companies that use real estate tech (in particular, energy efficiency, blockchain and real estate capital markets) in innovative ways, according to Greiwe.

“The plan for the coming year is to raise additional capital, continue to perfect and articulate our unique model and continue to expand the scope and scale of how we interact with a growing base of strategic investors,” he said.

These are the real estate startups that Fifth Wall has publicly invested in since launching:

Harbor (founded in 2017, startup aims to alert customers about cryptocurrencies that don’t comply with federal regulations)
LimeBike (founded in 2017, bike-sharing company)
Lyric (founded in 2018, short-term rental startup)
Industrious (founded in 2013, co-working space startup)
Enertiv (founded in 2009, energy use monitoring startup)
Notarize (founded in 2015, company trying to digitize the closings process)
Hippo (founded in 2015, home insurance startup)
Clutter (founded in 2013, storage startup)
ClassPass (founded in 2013, fitness studio membership company)
Eden (founded in 2015, office management company)
Appear Here (founded in 2013, short-term rental startup)
Foxtrot (founded in 2013, corner store curation startup)
b8ta (founded in 2015, software-powered retailer)
Ethos Lending (founded in 2013, loan process technology startup)
States Title (founded in 2016, mortgage data and analytics company)
Blend (founded in 2012, mortgage technology provider)
Opendoor (founded in 2014, iBuyer)
Wiredscore (founded in 2012, office space provider)
VTS (founded in 2012, asset management and leasing platform)
Blueprint Power (founded in 2017, energy management startup)

In this week's episode Brad sits down with Erin Collard, the CFO and Founder of Blend, to discuss digital lending and the future of the mortgage business, including Blend's transformational partnership with Lennar the largest homebuilder in the US).

We're excited to release the audio from the Real Estate as a Service panel, which took place during our Future of the Built World event in April and examined disruptive platforms that are reimagining the meaning of real estate as a “service” rather than an “asset”. The panel was moderated by Cory Weinberg, a reporter from The Information who covers Airbnb, Facebook and the business of technology companies.

Panelists included:

Ryan Simonetti, CEO and Co-founder of Convene
Jamie Hodari, CEO and Co-founder of Industrious
Joe Fraiman, Co-Founder and President of Lyric
Ari Mir, Co-founder and CEO of Clutter

As mentioned in our most recent Fifth Wall Newsletter, we are excited to share some of the key insights coming off of our first annual Fifth Wall LP Conference + Salon on the Future of the Built World, held earlier this month at our Venice headquarters. Leaders from our our Anchor LP’s CBRE, Equity Residential, Host, Hines, Lennar, Macerich, Rialto and Prologis, as well as Financial LP’s joined for an engaging two days and covered a lot of ground, including an update on Fund I deployment and key learnings, as well as opportunities to continue the cross-collaboration and synergy that so many of our investors have commented is a key value differentiator for Fifth Wall.
To close the conference, we opened up the room to additional friends of Fifth Wall and convened some of our most dynamic Portfolio Company founders as well as counterparts from Sidewalk Labs, AirMap and the City of Los Angeles for an electric series of panel conversations on the future of the Built World, in which we analyzed everything from the future of smart cities to the ways blockchain is poised to transform the Commercial Real Estate industry. (Thanks to those who joined us from as far as the Middle East and China to take part in the salon — if you would like to be included in future events like these, please reach out to us!)

Our three panels were helmed by moderators Steve Levine (Axios, subscribe to his Future of Work newsletter here), Cory Weinberg (The Information, subscribe here) and Jonathan Shieber (TechCrunch, follow him on Twitter here) who artfully steered each conversation into 45 minutes of thought-provoking, highly-engaging discourse. Special thanks to each of them keeping the energy in the room vibrant from start to finish.

We kicked everything off with the Future of Cities panel, which examined smart cities and the future of housing, energy, mobility, social services and shared public spaces through the lens of those engineering them and whose companies are powering the technology making these innovations possible. Panelists included:

Johanna Greenbaum, Director of Planning and Development at Sidewalk Labs
Toby Sun, Co-founder and CEO of LimeBike
Ben Marcus, Co-founder and Chairman of AirMap
Sari Ladin-Sienne, Chief Data Officer, City of Los Angeles
Claire Woo, Co-founder of Blueprint Power

Visions on the future of our cities showcased a possible future where smart cities can be sustainable and resource conscious, with a real opportunity for increased accessibility and participation from people of all socioeconomic backgrounds. With the rapid pace of technology development, smart cities are not only finding ways to bring innovative technologies to their locales, but are also exploring governance in inventive ways and rethinking their role in providing certain services like transportation, for example, by enabling private enterprises to provide those services themselves.

Claire Woo spoke about the Future of Cities from the perspective of energy and how that relates to buildings. Claire believes buildings will become power plants, complete with smart energy management systems, flexible loads, onsite generation and energy storage. This will allow owners to sell power to their neighbors as part of a much, much larger transformation of the electric grid — something Blueprint Power is already working toward through its mission to “accelerate the transformation of buildings into intelligent power nodes, allowing them to participate in transactive energy marketplaces.”

If buildings will become power plants, cities will become more like airports, according to Ben Marcus, whose company AirMap builds digital low altitude airspace management infrastructure. Marcus believes that in 50 years we’ll all commute to work in flying cars, presenting an interesting real estate opportunity: the de-urbanization of cities. People will be able to live much further from where they work and get there much more quickly. In the meantime (next five years), people will benefit from drones in their daily lives, for everything from deliveries to helping insurance companies inspect rooftops after storms.

Ben also stressed the importance of cities themselves evolving in terms of governance in order to keep up with the rapid pace of technology development. AirMap will help in that effort by connecting aerospace authorities with the drone ecosystem to unlock safe, efficient, and scalable drone operations in the cities of the future.
While infrastructure of airspace is a relatively new idea, Toby Sun from LimeBike tackled the issue of infrastructure within cities and how smart cities of the future will be powered by smart sensors and devices. In the next five years, we’ll see gradual progress toward more eco-friendly, smarter cities through the adoption of new smart devices, sensors and data, but will not see truly transformational change for another 50 years. Data collected from these devices, among other technologies, will drive decision making when it comes to city planning, help to identify problems and overall make cities more responsive.

Sari Ladin-Sienne says Los Angeles is already using data to make better decisions that proactively respond to challenges — the Los Angeles Bureau of Sanitation reduced dirty streets by over 80% (300 miles of dirty streets originally, now there are less than 100 miles), and the Great Streets Initiative is re-imagining the city’s neighborhood centers. Since entering office in 2013, Mayor Garcetti has invested in data as a core tool for communication, collaboration, and innovation. Garcetti’s data program leverages its data sharing platforms — the first-of-its-kind GeoHub and the Open Data Portal — to tackle multifaceted issues like gentrification or homelessness. Aside from being more proactive and responsive, smart cities will be much more inclusive than today’s modern city, especially in terms of civic engagement. While some already receive information about what is going on in and around their city via personal assistants such Alexa, the connection will be completely seamless in 50 years. Like Claire, Sari sees future cities as an inclusive place that includes network and connectivity for vulnerable communities. In five years, Sari envisions a multi-modal system that is far more effective than what’s in place today. And in 50 years, procurement will be solved, and regulations will provide significantly more flexibility for both private enterprises as well as citizens.

Johanna from Sidewalk Labs gave a picture of what modern engineering looks like now to better account for the many future possible technologies in cities. As she works on the Toronto initiative she sees changes already as residents change their behavior and more people are giving up cars. Like the others, the timeline of full implementation and realization of plans takes time, but the the city has an eye on the future. When asked about whether buildings in the Toronto Plan include support for flying cars, she noted that since buildings have long life cycles , it’s important to maintain flexibility — that way they can support flying cars when/if they do become the norm. Sometimes, over engineering can add long term value to real estate assets.

A deeper question is if there is a fundamental tension in these future cities between efficiency/technology and the human desire (and need) for interpersonal interaction and connection. Demographically, this generation is interested in being closer together and the panelists seemed to agree that urban technology shouldn’t just mean being more connected to our devices. And cities are already addressing this — the UK appointed a “Minister of Loneliness” to address the growing problem of loneliness as a huge, huge problem for modern cities. How do we balance efficiency with social interaction?

Takeaway: Cities are changing and morphing on the topics of accessibility, connectivity, and sustainability, slowly, but surely. Are they truly “smart” now? No. Are they getting “smarter” by the month? Yes.

Real Estate-as-a-Service
A look at disruptive platforms are reimagining the meaning of real estate as a “service” rather than an “asset”

Moderated by Cory Weinberg from The Information.

Panelists:
Ryan Simonetti, CEO and Co-founder of Convene
Jamie Hodari, CEO and Co-founder of Industrious
Joe Fraiman, Co-Founder and President of Lyric
Ari Mir, Co-founder and CEO of Clutter

There is a massive trend of companies outsourcing their workplaces and Jamie Hodari discussed how Industrious capitalizes on this trend with coworking spaces. Business looks very different for different geographies in this space, which can prove challenging. For instance, operating space in St. Louis compared to San Francisco or New York are two completely different scenarios. “Subscription for real estate” is Jamie’s long term dream, but not a current reality — their product is currently not perfect because it can’t serve every size tenant, and it will be that way for years. As a platform, it’s unfortunate to have to tell a tenant to go somewhere else once they’ve reached a certain stage. Referring to owning physical real estate, Jamie doesn’t believe it would be great for their business. They are experts at delivering the best work experience and owning the underlying real estate asset doesn’t bolster their moat from his perspective. The dream is 10,000 square foot smaller locations in more places, however 20,000–22,000 square feet is a starting point to include the space and amenities needed to successfully serve tenants.

Ari Mir spoke about Clutter’s on demand physical storage platform operating in seven markets, with aggressive expansion plans. They provide a full inventory management system online for customers to track their belongings. Owning its own industrial warehouses is something that Clutter is willing to consider long-term, but not a current goal for the time being. With the continued growth of e-commerce, Clutter plans to leverage physical real estate for their own supply chain as well as for others. A retail footprint within the cities they operate in will likely be part of their business, both for the brand equity value as well as serving as a node in the supply chain.

A new category of accommodations, Creative Suites, will combine the spaciousness of an apartment, the amenities of a 4-star hotel, the productivity of your favorite work space, and the creative surroundings of an artistic studio. Lyric is in 10 markets now, and Joe Fraiman noted they plan to double that to 20. For landlords, Lyric mass leases blocks of rooms (entire floors), and handles end-to-end operations of those units. One thing they’ve improved upon by necessity was business development with large organizations. Early in the business, they learned quickly that success meant selling to each stakeholder separately. It took a long time to understand the deal structure and parties needed. The transformational opportunity for Lyric is to lead the movement to a new middle ground of accommodations.

Like others on the various panel, a core part of Convene’s strategy is to address where technology and humans converge, and how we can make that better. Convene runs a workplace hospitality platform blending meeting spaces and workplaces — in each location, square footage is generally one third workspace, one third amenities, and one third event space. Ryan Simonetti, spoke about their focus on large (40,000 square foot and above) class A real estate assets in dense urban markets. While not being in every market is certainly a downside in terms of network and scale, there is immense power in focus. The future of work is flexibility, agility (for workforce as well as the company), and human experience, according to Ryan. Rather than own real estate, Ryan would rather influence design upfront as the anchor lead-in. Convene will open 24 locations next year, with many deployments being as an anchor tenant that a redevelopment is built around. He concluded by asking: How do you deliver an empathetic workplace and what does an operating system for a building from a human experience look like? Those are the core questions Convene is solving.

Takeaway: With the continued rise of workplace, storage, and event space outsourcing, Real Estate as a Service is an evolving and fast-growing category of Built World companies with enormous potential. While the panelists were split on the importance of owning the underlying assets, they agreed upon the importance of the customer experience and creative flexibility. It’s a certainty that several category kings will emerge from the real estate-as-a-service theme, and we’re thrilled to back such strong players in the space.

FinTech & The Built World Economy
A look at how fintech has disrupted almost every sector of the real estate industry, where it falls short and how it’s expected to evolve. This panel also looked at how blockchain technology is poised to transform the commercial real estate environment.

Moderated by Jonathan Shieber from TechCrunch.

Max Simkoff, Founder and CEO of States Title
Erin Collard, CFO and Founder of Blend
Assaf Wand, Co-founder and CEO of Hippo
Josh Stein, President and General Counsel, Harbor

Blend is building an amazing SaaS tech-enabled mortgage business, and part of Fifth Wall’s investment was brokering a deal with Blend for Lennar (the largest homebuilder in the U.S.). Regulatory risk isn’t a bad thing for Erin Collard’s business, as it acts as a moat to competition in mortgage (not unlike how the challenges obtaining MLS data act as a moat to those who have spent the money and time to aggregate hundreds of MLS’). There is a major area of opportunity in strengthening the realtor and loan officer relationship, especially in markets where homes sell in a couple days. If that relationship is not rock solid, there’s little chance a buyer will be able to win a bidding war and close on a property.

The insurance industry has historically been focused on improving efficiency, but refocusing on the customer is the way to transform the experience. Assaf Wand from tech-enabled home insurance broker Hippo outlined the opportunity for home insurance to be much more proactive — monitoring roofs with drones, cleaning gutters, changing water filters, monitoring for leaks, etc — in order to provide more value to the homeowner, and de-risk Hippo’s business in the process.

Harbor is on a mission to bring the liquidity of public markets to private securities. Real estate happens to be the world’s largest class of private securities. Making trades faster, cheaper, and easier (using Harbor’s blockchain technology) will lead to more liquidity, while remaining compliant with rules and regulations specific to each investment. On the topic of regulation, a mistake made by cryptocurrency players such as Bitcoin was viewing regulatory hurdles as an impediment. Instead, Josh Stein thinks they should (and Harbor does) view the SEC (and other regulatory bodies) as a large and important client. He’s bullish on Harbor’s ability to enable unbundling of ownership interests, and rebundle them. While Harbor is certainly focused on real estate for its early adoption, they are also thinking about hedge funds as another long term category.

While it’s true municipalities across the U.S. are experimenting with blockchain for various uses like reimagining land registries (and there are numerous startups trying to help them do so), Max drilled down to the exact issue when he mentioned the need to sell into 3,000 county recording offices being a huge (massive) barrier.

Takeaway: Fintech continues penetrating into real estate as a result of financing being a requirement to every transaction. One opportunity playing out is the strengthening of the realtor and loan officer relationship from lead all the way to closing. Regulatory hurdles do slow innovation in the sector, though act as a moat for those companies who have spent the capital to overcome them. We’re excited to support companies tackling huge challenges across the entire financial spectrum, from buying and selling (Harbor) to titles (States Title) to insurance (Hippo) to mortgage (Blend).