Venture Capital ‘Won’t Stop Flowing’ Into Real Estate: Fifth Wall

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Expect to see even more venture capital pouring into residential real estate, Fifth Wall Ventures co-founder Brad Greiwe told attendees at Inman Connect Las Vegas on Thursday.

“The residential space is going to see more venture capital infusion than any category,” Greiwe said. “The reason being is consumers in residential are most interested in engaging in technology and doing so in new and interesting ways.”

Fifth Wall Ventures, a venture capital firm that focuses on real estate technology, has invested in iBuyer startup Opendoor; digital notarizing startup Notarize;  Harbor,  a startup that helps consumers learn which cryptocurrencies are adhering to federal regulations and laws; insurance startup Hippo; rental marketplace Roofstock; Blend (the mortgage software startup backed by Peter Thiel), Pillow (a short-term rental management service), RadPad (a now-defunct rental search site), BuildZoom, Rentlytics and Honest Buildings, among other real estate startups.

Greiwe co-founded Invitation Homes, once the largest owner of single-family rentals in the country. Fifth Wall wants to serve as the “connective tissue” between “built-world incumbents” and startups and “play kingmaker to a certain extent,” Greiwe previously told Inman.

Providing a better customer experience digitally is going to be a baseline, Greiwe told conference attendees.

“We’ve seen successes and failures in this space — residential brokerage tech is probably the biggest graveyard in venture capital, let alone prop tech — but it doesn’t mean the capital won’t stop flowing,” he said.

“The market’s too big. Venture capitalists see the opportunity as too massive to ignore. But I think we’ve moved away from ‘let’s disrupt the model’ to ‘let’s start to enable.’”

Venture capitalists familiar with the real estate industry know that “having on boots on the ground is important and technology doesn’t solve all your problems,” he added.

Declaring the brokerage industry “over” is “a silly comment” parroted by venture capitalists for the last decade, according to Greiwe.

“We’re really looking to provide sort of usable pathways in which organizations and individuals can engage in traditional business models while doing so with better operational workflow efficiency and better ways to engage and monetize and deliver value to customers,” he said.

Startups that are currently “making a splash” are those that are trying to solve a specific customer problem, according to Greiwe. He pointed to Fifth Wall-backed firms such as as-is home sale platform Sundae, end-to-end homebuyer platform Flyhomes, second-home co-ownership company Pacaso and property services marketplace Lessen.

“There’s any number, but all of them are focused on delivering superior customer service,” he said.

He predicted the “next big wave” in residential real estate would be startups offering shared home equity.

“Solving home affordability is obviously on the tip of everyone’s tongue,” he said. “This is definitely not a technology problem, it’s a capital markets problem, but technology can help.”

He noted that there are 72 million millennials who are entering real estate with less buying power than their parents.

“It’s a challenge, but also a massive opportunity using the ecosystem as a creative force to provide better, superior options,” he said.

Email Andrea V. Brambila.

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