Just two years after it closed its first fund, Fifth Wall Ventures has now raised $503 million for its second fund.
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The Los Angeles-based firm is focused on real estate technology, a sector that is growing via a variety of subsectors such as property tech, iBuying, and mortgage tech. Fifth Wall has invested in all of the above with portfolio companies such as Blend (mortgage tech), Opendoor (iBuying) and VTS (property tech).
I caught up with Brendan Wallace, co-founder and managing partner of three-year-old Fifth Wall, to hear more about the firm’s new fund and how things went with its first fund.
Besides its real estate focus, Wallace believes one of the characteristics that makes his firm unique is its consortium model for raising capital. The majority of Fifth Wall’s LPs are large owners, operators and developers of real estate in the U.S. In the first $212 million fund, eight strategic LPs included U.S.-based companies representing various subsectors including brokerage, retail, industrial, hospitality, multifamily and office.
With this second fund, 50 strategic LPs from 11 countries, including some in Asia and Europe, put up money, according to Wallace. LPs include brokerage CBRE, office developer Hines and homebuilder Lennar. (Separately, earlier this year, Fifth Wall also announced plans for a $200 million retail-focused fund).
“Large corporations in the real estate industry are increasingly looking to invest in tech and VC,” Wallace told Crunchbase News. “As such, investment in real estate technology has accelerated dramatically in recent years.”
Out of its first real estate-focused fund, Fifth Wall invested in 27 companies, deploying capital across the A, B and C stages. Wallace emphasized that while the majority of Fifth Wall’s investments are focused on the real estate industry, it’s also open to investing in technologies that can be strategic to it.
For example, Fifth Wall invested in a scooter company, Lime, out of its first fund after observing that real estate owners “were looking to partner with mobility companies.” The firm has since helped the startup partner with property owners to distribute its devices to consumer endpoints in a number of cities.
Fifth Wall is targeting about 25 companies out of its second fund with average entry investment check sizes of between $10 million and $25 million, Wallace said. As in the first fund, the firm will lead and co-lead deals as well as invest alongside other VC firms. (It paired with firms such as SoftBank, Google Ventures, Sequoia Capital and Foundation Capital in its first fund.)
“We’ve been part of a lot of syndicates since much of our deal flow comes to us from generalist VCs who want access to our strategic partners and investors,” Wallace told Crunchbase News. “This fund will put our total assets under management at $1 billion.”
One of the ways Fifth Wall measures its success lies in how much revenue it directly brings to companies in its portfolio.
“A year ago, we calculated that we’d brought $100 million in revenue to our companies,” Wallace said. “And I imagine it’s larger today.” Of its 33 staff members, nine are focused on working exclusively with investors and portfolio companies, he added.
Looking ahead, Wallace identified particular areas of interest as smart building technology, construction technology (which we’ve covered extensively) and real estate fintech. It’s also looking at the convergence of blockchain technology and real estate capital markets, and the last-mile delivery and logistics space, which it sees as having “huge synergies” with the real estate industry. For example, in June, Fifth Wall backed Brazilian unicorn Loggi, a shipping logistics platform, which raised $150 million a SoftBank-led Series E.
All this activity appears to signal an upward trajectory for the firm, at least in terms of its aim to become a real estate technology powerhouse.
Photo: Fifth Wall’s Brad Greiwe on the right, Brendan Wallace on the left. Photo courtesy of the company.