Insights on technology and real estate.

I have a fairly strong intuition about what you might be thinking: “An accelerator program? How novel. Join the club.”
In part, you’re right. VCs and their companion accelerators these days are dime a dozen. And Fifth Wall is not, in fact, a dime-a-dozen kind of VC. So allow me to explain.

‘The best way to predict the future is to create it.” -Abraham Lincoln

That statement perhaps best encapsulates Fifth Wall’s very unique investment model: Fifth Wall invests only when we can act as “Kingmaker” for an early stage Built World technology company. How do we do this?

Fifth Wall is backed by the largest, ‘must have’ customers for Built World technology companies across every major real estate category (brokerage: CBRE; homebuilding: Lennar; office: Hines; hotels: Host Hotels; industrial: Prologis; retail: Macerich; apartments/multifamily: Equity Residential; and home improvement: Lowe’s Home Improvement). And Fifth Wall has deep relationships with every major owner and operator of real estate in the US.

For an early stage Built World technology company, adoption by or a partnership with Fifth Wall’s strategic LPs can mean tens or perhaps hundreds of millions of dollars of revenue, and can anoint that company as the category leader in its space. A Fifth Wall investment comes alongside a major commercial partnership with one of our strategic LPs to accelerate our portfolio company’s growth, which often times doubles or triples the revenue of our portfolio company or gives them significant strategic advantages over their competition. This accounts for much of the success of Fifth Wall’s portfolio companies, like VTS, Opendoor, b8ta, Notarize, and Clutter.

Essentially, Fifth Wall in many ways avoids the speculative nature that plagues so much venture capital investing: where VCs must routinely speculate at IF a technology will be adopted by the market, Fifth Wall, instead pre-wires its portfolio companies’ success and growth through significant commercial partnerships and contracts.

So why launch an accelerator program?
To date, Fifth Wall has primarily invested in more mature companies — Series A, B, C, and D. In large part, this is because commercial partnerships and contracts with Fortune 500 real estate firms — as much game-changing potential as they provide — require an enormous amount of work in order to hardwire the success of our portfolio companies. Fifth Wall must frequently and proactively interface with strategic LPs to deeply understand expressed and intrinsic needs, while also evaluating the entire universe of compelling technological solutions, promising startups, and supporting VCs that attempt to provide for these needs. This is a highly delicate and complex process, requiring months (rather than weeks) to develop our investments and partnerships. For questions of scale and size of opportunity, this process tends to favor more established companies with more developed products, management teams, reference customers, pricing models, and go-to-market strategies. As a result, Fifth Wall has not been able to be as responsive to faster-moving early stage companies where there is both intrinsically less to evaluate, and characteristically more expeditious financing timelines.

In our efforts thus far, Fifth Wall realized that it was missing a lot of truly exceptional seed and earlier stage companies in our space simply because we lacked the speed. Fifth Wall has come across a wealth of opportunities where we felt we had the capacity to jumpstart a company’s growth in the same ways we could for larger portfolio companies; and yet, many of these were too early, or moving too quickly, for us to consider a near-term investment. We needed something more programmatic and frictionless to support these earlier stage companies.

We’re launching the Fifth Wall Accelerator Program to address exactly this need. We will methodically and more quickly invest in, accelerate, and support early stage, high potential startups within the framework of the pioneering Fifth Wall model. We recognized that our access to major real estate owners and operators was an invaluable asset for earlier stage companies that were still refining their product, strategy, and pricing. Moreover, we saw an opportunity to positively influence these startups while the ‘clay was still wet,’ so to speak, by serving as a conduit between them and their future buyers and would-be customers. This industry-specific access and deep domain expertise were advantages that even a top-tier generalist VC or elite generalist accelerator like Y Combinator could not offer.

Concurrently, Fifth Wall noticed that many of top generalist VC funds were regularly soliciting our advice on investment opportunities and seeking to better understand the potential interest of Fifth Wall’s real estate investors in the Built World technology companies those firms were evaluating. In many cases, this had led to Fifth Wall being invited into these same deals as a strategic co-investment partner, including alongside Sequoia, Bessemer, NEA, GV, Khosla, Norwest, Thrive, and Foundation Capital. These and other elite VCs saw Fifth Wall’s deep capabilities as a Built World technology domain expert, and recognized our ability to act as “kingmaker” for their portfolio companies. For our Accelerator Program, Fifth Wall will more systematically leverage these VC relationships by hosting a “demo day” in which Fifth Wall’s top VC relationships, in addition to major real estate investors, will be invited to participate in financing rounds — in many cases alongside Fifth Wall.

The Accelerator Program Details
For our inaugural cohort of seven startups, we’re focused on early stage Built World technology companies with a $20M of valuation or less, that have obvious potential strategic value for one our strategic real estate LP’s. In exchange for Fifth Wall’s industry expertise, our time, network, and a Fifth Wall fund investment, startups in the Accelerator Program agree to a predetermined initial investment of $250K to $500K and a “right to invest” structure tied to future adoption by Fifth Wall’s real estate relationships.

The program will last for twelve months, with two distinct stages and five key offerings. During the first six months, Accelerator participants will benefit from the following:

-Assignment of a dedicated Fifth Wall team member: after acceptance into the Program, Fifth Wall will assign a dedicated resource to help support the growth of Accelerator companies. We will establish a cadence of weekly or biweekly calls and check-ins, and Fifth Wall can also join the Board of Directors as an observer.

-Opening Fifth Wall’s real estate network: the dedicated team member will support the company in gaining access to our vast real estate network through personal introductions, phone calls, and in-person events.

-Fifth Wall LP & real estate events: Fifth Wall will host on-site events for a number of our real estate relationships and strategic LPs, and Accelerator Program companies will be invited to present, build relationships, and gather feedback at these events throughout the year.

Thereafter, for months 6–12, Fifth Wall will help bring the company to the investor marketplace through three key programs:
March 2018 “Super Day” at the Fifth Wall office: we will invite our extensive network of VCs, angel investors, strategic real estate LP’s, and real estate relationships for an on-site pitch event here at the Fifth Wall offices in Venice, California.

Press announcement: we will announce our first class of Accelerator Program companies with a significant press launch.
Individualized introductions to Fifth Wall’s VC relationships: since our goal, and the startups’ goal, is to not only to catalyze revenue generation but also to secure next-round funding, we will provide introductions to our large network of generalist VC relationships, helping them prepare to raise attractive knock-on financing rounds.
At Fifth Wall, we committed to do things differently. Early on, we decided that not only our investment thesis, focused heavily on an asset class too often overlooked by the venture capital community, would be singular; in fact, our very model, from deal structure to anchor management to our broader value proposition, is decidedly unique in an increasingly undifferentiated funding landscape. With the creation of our Accelerator Program, we’re continuing to redefine industry standards and common wisdom for early stage investment and growth acceleration. In doing so, we are incredibly excited to introduce you to the next crop of real estate technology’s best and brightest.

If you are interested in applying, please share your materials with accelerator@fifthwall.vc, including:

-Most recent company presentation and financial model as appropriate.

-Current cap table and most recent term sheet and financing documents.

-Include a description of how and where Fifth Wall and our strategic LPs can accelerate the growth of your business. Please be as specific as possible and highlight the value of any partnerships, commercial agreements, data sharing, etc. with Fifth Wall’s strategic LPs.

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