The Canadian proptech investment firm announced the first close of Greensoil PropTech Ventures Fund II this week, securing about half of its $100m target.
With a mandate to invest entirely in proptech, GPSV II raised capital from PSP Investments, one of Canada’s largest pension investment managers, and Starlight Investments, which has more than $20bn of real estate assets under management.
It will target early- to mid-stage venture capital opportunities in North America, Europe and Israel.
Greensoil said it would use its network of limited partners within property to find and invest in technologies “compelling to customers in the real estate sector”. In most cases it will pilot prospective portfolio company solutions with its limited partners before making an investment.
GSPV II is Greensoil’s second proptech fund. The first – the Greensoil Building Innovation Fund – dated back to 2015 and was one of the early funds focused on the nascent proptech sector.
Alan Greenberg, co-founder and chairman of Greensoil, said: “As leading industry experts, we have been profitably bringing innovation and sustainability to the built environment for decades.
“Our diverse experience as real estate owners, developers and venture investors gives us an advantage unmatched by generalist VC firms. This unique vantage point will allow us to lead the industry’s adoption of the next generation of technologies – what we call PropTech 2.0.”
David Harris Kolada, managing partner of Greensoil and fund manager of GSPV II, said: “From its origins of largely hardware-focused technologies to reduce facility operating costs, proptech is exploding into a myriad of technologies, leveraging the cloud, machine learning and SaaS business models to provide real estate-specific use cases.
“With our new fund, we will be financing opportunities resulting from the digital disruption of the entire real estate value chain.”
Is it time for Canadian proptech to shine?
Proptech has a growing market in Canada, but more than half of all Canadian proptech startups are at an early fundraising stage. There are some exceptions: short-term rent startup Sonder was recently valued at $1.3bn while smart thermostat maker Ecobee has raised about $146m and has received backing from Amazon.
On the whole, however, it is a young market. More than two-thirds of Canadian startups were launched in the last seven years, and they will now be looking for capital from funds such as GSPV II to take them beyond the pre-seed and seed stages of their growth.
A report by KPMG last year found that every Canadian real estate company it surveyed had someone responsible for leading digital transformation and innovation, but that only 36% of them had a digital strategy in place. By contrast, 58% of property companies globally reporting having a digital strategy.
In the report, Canada’s Proptech Journey, Saqib Jawed, partner and proptech lead at KPMG Canada, said: “It is clear from the survey that Canadian real estate companies, much like the rest of the world, are awakening to the digital era, albeit a bit slowly.”
Meanwhile, PwC’s Emerging Trends in Real Estate 2021 report said: “After years of talking about how Canada’s real estate industry was on the cusp of adopting property technology (proptech), digitisation has truly accelerated during the Covid-19 pandemic.”
However, it said that pressure on costs due to the pandemic will mean companies will be focusing on necessity rather than simply finding the next proptech unicorn.