From 2018 to Today: Three Phases in the Explosive Growth of Built World Venture

When we hosted our first BuiltWorlds Venture Conference at DLA’s offices in Chicago in the spring of 2018, to our knowledge it was the first full conference dedicated to learning about the impact of venture capital investment in technology in the Built World. We wanted to meet the people forming pools of capital dedicated to investment in startups aimed at how we develop, design, build, operated and maintain our world’s building and infrastructure.  By 2018, it was apparent that there was a critical mass of investors focused on the sector, but a look back at the landscape in early 2018, compared to today, reveals just how significant this trend has become, and based on the amount of groups currently out raising fresh capital, it is clear that the impact on the Built World Industry will be profound.

 

Built Worlds Venture Phase I: Strategics Investors and “Proptech” Funds

In January of 2018, we published a report about venture investment in the Built World sectors, and we attempted to identify investor groups making active investment in the sector. A look at that report shows that, of the twenty seven investors we identified, only eight of the groups we identified were funds  with a primary focus on the Built World, and, of those, most were still either very early in the fund raising or mostly focused on commercial real estate-related investments. In spring of 2018, Brendan Wallace and Brad Greiwe raised the bar with the announcement of a $212 Million fund dedicated to investing in Built World startups.  Funded primarily by corporate strategics like CBRE, Macerich, and Lowe’s, it was the largest dedicated fund we had identified up to that time, and it tipped off a wave of new, larger dedicated funds, focused on the sector.

BuiltWorlds Venture Phase II: Large, Dedicated Funds Proliferate.

While Fifth Wall may have been the sector’s largest dedicated fund to-date in early 2018, as we learned from Roelof Opperman, a principal at the firm, they were very much still in the mode of strategic investment, and, indeed many of the funds announced in that 2018 and 2019 were largely funded by strategic investors.  Many others followed. Camber Creek, whose partner, Jake Fingert, also spoke at our first Venture Conference, announced a raise of a $30 million fund backed by real estate companies that manage more that 150 million square feet of commercial real estate and over 150,000 multi-family units.

In December of 2018, Building Ventures announced a $53 million fund dedicated to built environment investment. Investors included industry players such as Gilbane, DPR, KPFF, and Perkins+Will.  Then, in August of 2019, Brick & Mortar Ventures announced a $97 million fund, boasting its own roster of strategics – Ardex, Autodesk, CEMEX, Ferguson Ventures, FMI, Glodon, Haskell, Hilti, Obayashi, Sidewalk Labs, and United Rentals.  Combined with increasing direct strategic investment, these newly launched funds brought millions in additional investment to help launch hundreds of new industry startups.

Built World Venture Phase III: Enter Tiger, Insight, and Private Equity. Sector Funds Proliferate and Specialize, but Generalist Funds Pile In.

As we move from 2018 to today, we have seen many more sector funds, including larger funds from groups that previously raised funds and also additionally funds with specific focus. Just this past week, Camber Creek announced a new, $325 million fund,while Fifth Wall announced a new $159 million fund focused specifically on European Proptech, after announcing a $140 million climate action fund last year.  Similarly,  in November of last year, Navitas Capital, a proptech fund that launched in 2009, announced a it had raised $160 million for a new fund from AvalonBay Communities, BentallGreenOak, Equity Residential, Greystar, JLL Spark Global Ventures, and others.

As significant as the expansion of strategic investment and their associated funds have become,  two of the five most active early stage investors we catalogued in 2021 were multi-billion dollar generalist venture funds. In our Most Active 2021 Investors Report, we catalogued nine investments by Tiger Global, a firm with a reported $95 billion under management, and six investments by Insight Partners, a firm with a reported $30 billion under management.  Also, recently, Blackhorn Ventures, another of our top five most active investors of 2021, announced a strategic partnership with Riverstone Partners,  a firm with $43 billion of capital committed to transactions. Where these funds are moving aggressively into the sector, we can expect to see similarly agressive moves from others of the multibillion venture funds.

From the very first nine figure fund announced in 2018 to the proliferation of nine figure funds and the increased activity of multi-billion dollar generalist funds, the Built World sector can expect to see a continued proliferation of startups and also increased funding for companies in the growth stages, leading to more robust solutions. Real estate, construction, engineering, architecture, and owner organizations should expect their feeling of being disrupted by all of this technology fueled by all of this investment is just beginning.