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Real estate tech startups have another accelerator to set their sights on — this one overseen by a venture capital firm that spoon-feeds business to its portfolio companies.
Fifth Wall Ventures (Fifth Wall), a VC that’s raised $212 million to pour into real estate tech, has launched a program to foster “early stage, high potential” real estate startups.
The accelerator is at least the fourth to launch in the last few years, highlighting a growing investor appetite for real estate tech.
Fifth Wall’s strategy is to raise cash from giant real estate companies and only invest the money in startups that can partner with or sell products to those investors.
The idea is to give its investors the latest and greatest technology (in addition to a potential future payout), while lining up its portfolio companies with powerful customers that can provide “institutional credibility” and double or triple their revenue in a short time.
Fifth Wall investors include commercial brokerage CBRE, apartment owner Equity Residential, Lowe’s and homebuilder Lennar Corporation.
The VC has backed firms including Opendoor, VTS, b8ta, Notarize, and Clutter.
Fifth Wall Ventures
“[W]here VCs must routinely speculate at if a technology will be adopted by the market, Fifth Wall, instead pre-wires its portfolio companies’ success and growth through significant commercial partnerships and contracts,” Fifth Wall Co-Founder Brendan Wallace wrote in a blog post.
Fifth Wall investments in startups have thus far come “alongside a major commercial partnership” with one of its investors, but its startup accelerator will accept seven startups that have “obvious potential strategic value” for at least one of its investors.
Fifth Wall Ventures
To enroll in the program, startups will hand over equity to Fifth Wall in exchange for between $250,000 to $500,000. They’ll also have to give Fifth Wall the right to make additional investments if the VC delivers partnerships to the startup with its investors.
The program, which will last 12 months, offers benefits to enrollees that include:
- A dedicated Fifth Wall team member who will provide ongoing support and assistance
- Access to Fifth Wall’s network of industry players
- Various events where enrollees can present to and build relationships with Fifth Wall’s investors and industry contacts
- A “Super Day” where enrollees can pitch Fifth Wall investors and a range of other VCs and angel investors
- Introductions to large “generalist” VCs that can help enrollees tee up “knock-on financing rounds”
As investors have turned their eyes toward real estate tech, at least four real estate startup accelerators have popped up in the last three years, including Moderne Ventures, MetaProp NYC and AREA.
Others include NAR REeach, which is run by the venture arm of the National Association of Realtors (NAR), and Elmspring.
Global financing for real estate companies reached $2.7 billion in 2016, up from less than $500 million in 2013, and is pacing to hit $3 billion in 2017, according to venture capital database CB Insights.
