The US-based venture capital firm has announced its second fund of $503m (£403m), claiming to be the largest proptech investment fund to date.
Fifth Wall’s Fund II more than doubles the size of the company’s first, which closed in May 2017 at $212m and was targeted at the US only.
This time round, Fifth Wall has turned global raising the pot from more than 50 corporate strategic investors in 11 countries, bringing the firm’s total assets under management to over $1bn.
Investors participating in Fund II include REIT Gecina in France, MERLIN Properties in Spain, British Land and SEGRO in the UK, Kenedix and Mitsubishi Estate in Japan, Keppel Corporation in Singapore. In the US, CBRE, Cushman + Wakefield, Hines, Marriott International, Starwood Capital, and more are investing.
Brendan Wallace, co-founder and managing partner at Fifth Wall, said the firm had become “central” to the convergence of real estate and technology and has fostered “a level of strategic collaboration that has never before characterized.”
He added: “For our entrepreneurs, Fifth Wall efficiently opens distribution channels for their products to more than 50 corporate strategic investors globally and we have dedicated a team to support the success of those partnerships and integrations.”
In an interview with Crunchbase, Wallace revealed Fifth Wall is targeting around 25 companies for its second fund with an average entry investment cheque size of between $10m and $25m.
Brett White, CEO of Cushman + Wakefield said with Fifth Wall as a partner he “can help put Cushman + Wakefield’s clients at the centre of some of the most innovative technology solutions in our industry.”
Méka Brunel, CEO of Gecina, said the firm partnered with Fifth Wall to help it “anticipate what’s ahead” and connect with “ideal partners and technologies so we can deliver the best solutions for our customers.”
According to Fifth Wall, Fund II is now the largest active venture capital fund in the Los Angeles area with over $1bn capital under management. The firm has grown from eight employees at the time of its initial fund close in May 2017 to more than 30 employees today.
Some of Fifth Wall’s investments include instant home purchasing platform Opendoor, e-scooter firm Lime, smart home insurance provider Hippo, asset management platform VTS, and workspace platform Industrious.
Sally Jones, head of strategy at British Land, which is investing $20m, said: “We want our customers to have fantastic experiences in our places, and embracing technology helps us deliver that. The right partnerships will help us grow our expertise in proptech, which is why we’re delighted to invest in Fifth Wall, both for their strategic perspective and for access to the best new technologies.”
Charlie Wade, managing director UK, VTS: “Fifth Wall is one of the most progressive and dynamic VC companies and their ability to raise such a significant fund is not only a mark of their success but also of the traction proptech is gaining. It is not only exciting to see so many UK companies engaging with Fifth Wall and advocating for a tech-enabled future for real estate but it is also necessary. Proptech is at a turning point in the UK and it will be the investment coming out of funds such as this which will help support the success of those startups and scale-ups which are adding real value to the real estate industry.”
William Newton, president and EMEA managing director of connectivity rating scheme WiredScore, an investment of Fifth Wall’s, said the announcement of the new fund is “extremely exciting news for the real estate industry.”
He added: “Whilst the size of the fund itself is notable, we have been particularly impressed with the scope of its network of real estate investors. As proptech continues to grow as a sector and have a profound and positive impact on the future of real estate it is hugely important that companies such as Fifth Wall and investors in the fund are there to support the growth of innovative solutions, not just with rhetoric but with capital commitments and thus providing the opportunities for success.”
Founder and CEO of digital office broker SquareFoot, Jonathan Wasserstrum, believes it’s “great news for the industry”, adding “relative to the size of the real estate industry, there is still a small amount of venture funding, especially when compared to analogous industries, such as FinTech. FinTech as an asset class is smaller than real estate is, but has multiples more funding behind it.”
Wasserstrum said the industry does need more VC money, “especially for later-stage companies. The establishment of this new fund will ensure that they can make later-stage bets. We’ve seen an increasing number in seed investors focused on property, but there’s still a relative dearth of them at the later stages. We in the commercial real estate industry are still in the earliest innings when it comes to technology adoption and adapting. Startups are beginning to tackle those problems, we’re just getting started.”
Fifth Wall was established in 2016 by Brendan Wallace and Brad Greiwe. Before founding the venture capital firm, Wallace was a founding investor of Latin America’s largest ridesharing service, Cabify, and Greiwe was cofounder of home leasing operator, Invitation Homes.