There is no doubt that big money is going to be made in commercial real estate tech.
Those that are paying attention are able to clearly witness the profound changes taking place in the real estate sector from a tech perspective and the amount of innovation that the industry is currently undergoing as a consequence of this shift is staggering. While we haven’t reached the tipping point just yet, there is obviously no turning back. The opportunities are just too great. After all, it was just a matter of time until the industry woke up to the extraordinary benefits of embracing technology. Once the residential sector led the way and proved it (Zillow, Trulia, apartments.com, etc.), the commercial sector was bound to catch up.
So, who is out in front? Which investors will reap the highest rewards? It’s hard to tell, of course, but there are clearly some groups making the most aggressive and early bets.
I recently had the pleasure of connecting with the principals of Pavonis Group Led by Mark Kingston and Demitrios Louziotis, former leaders of Argus Software and Jeff Finn, formerly of NAI Global, Pavonis is investing in several startups with the goal of forming a true real estate tech operating company. They clearly see the light at the end of the tunnel, and they’re not alone. Here are some of the other big backers in the world of CRE tech.
Thrive Capital: With a proven investment track record that includes companies like Warby Parker, Kick Starter and Instagram, Thrive Capital has shown great interest in branching out into real estate technology. Along with being a lead investor for Hightower, CRE tech companies like Honest Buildings, 42Floors, and Urban Compass have been recipients of financing from Thrive.
Jonah Goodhart: Jonah Goodhart made a name for himself in the tech industry as the founder of Moat, a search engine for, of all things, advertisements. Goodhart is trying his hand in the world of real estate technology at the moment, providing financing to CRE tech notables like CompStak.
Mohr Davidow Ventures: Mohr Davidow Ventures has been investing in technology-based startups for the past 30 years and counts Honest Buildings, Storefront and BuildDirect as real estate-related members of its portfolio.
Ben Ling: Ben Ling knows the tech sector better than most after holding senior leadership positions with companies like Google, YouTube and Facebook. He has made a point to address the CRE side of the business as of late with investments in View The Space, CompStak and Lovely.
DMGI – DMG Information (DMGI) is a $2.2 billion portfolio comprised of high-growth, innovative media businesses. One of their investments is in Cougar Software, a company that provides financial modeling tools that work with real estate planning, budgeting and forecasting. Another DMGI investment is BUILDERadius, which supplies software and data services to organizations involved with building safety and building code enforcement.
Chris Dixon – Chris Dixon knows all of the ins-and-outs for investing in tech startups. In addition to being a Contributing Writer for TechCrunch, he has co-founded two websites (SiteAdvisor and Hunch) that were acquired by McAfee and eBay, respectively. There is no shortage of real estate tech-related endeavors in Chris’ portfolio either. He’s an investor in both 42Floors and MyVR.
Silicon Badia - Silicon Badia has a worldwide reach, investing in different technology companies in places like Jordan and the Middle East as well as in the United States. Their global search for the latest and greatest technology companies has not ignored the CRE tech scene, either. Silicon Badia is an investor in Storefront, Honest Buildings and CompStak.
500 Startups - 500 Startups provides seed funding and incubator programs to early-stage startups. They are also one of the biggest backers of real estate tech companies out there right now, counting CompStak, 42Floors, View The Space, Flyer, RealtyShares and Happy Inspector among their investments on the commercial side. 500 Startups has also invested in companies on the residential (Lovely, Reesio) and construction (Builk, SupplyHog) sides of the business as well.
Founder Collective: Founder Collective is a seed-stage venture capital fund that focuses on peer-to-peer investing. Founder Collective has a remarkable history of past investments in companies like Uber and SeatGeek, and they will look to continue this trend by contributing funds to 42Floors and CompStak.
Brandon Shorenstein - Brandon Shorenstein is the Vice President for Capital Transactions at Shorenstein Co., one of the nation’s oldest and most well-respected real estate firms. Before that, he was an Investment Banking Analyst at Goldman Sachs. Shorenstein has seen fit to make investments in real estate tech companies like 42Floors and Hightower. As the saying goes, where there’s smoke, there’s fire. Drawing investors affiliated with industry mainstays like Shorenstein is indicative of the heat surrounding real estate tech investing right now.
At The News Funnel, we have raised approximately $2 million, mostly from real estate executives from across the country. While it wasn’t easy, and we are continuing to raise money, I am very encouraged by the response I continue to get on my journey raising capital. Clearly, there is an awakening taking place right now and every day more and more capital is being invested in the CRE tech space. I am convinced that those investing in this early stage that do will look back at this period and see it as one of the great investment cycles in our industry. And it will be tech, not just bricks and mortars, where the money will be made.
For more information about real estate tech fundraisers, read this FunnelCast post: Largest Real Estate Tech Fundraisers of 2013