Real estate is largely bought, built, managed and sold using the same tools that were used 25 years ago, but gradually that is changing – thanks to the technology interventions and success of startups like WeWork, Zillow, AirBnB and Redfin. So much so that the real estate technology is the force currently having the largest impact on this sector. The amount of money invested in proptech per year since 2011 has increased from $60 million to over $12 billion and the real estate venture capital firms like Camber Creek that invests in enterprise technology for the real estate industry is betting big on this sector. It has about $50 million under management and 18 companies in its portfolio.
In an exclusive interview with TechObserver.in's Sanjay Singh, Jake Fingert, who before joining Camber Creek last year as partner, had an illustrious three-year stint as the White House senior policy adviser for infrastructure to the Obama Administration said, “We have seen a surge of interest from new entrants into the space including real estate companies, generalist venture capitalist and family offices. The increased activity is helpful in growing the ecosystem but it simultaneously creates a lot of noise.”
How do you look at the real estate technology market? How big is the opportunity?
Real estate is the largest asset class, and real estate technology is the force currently having the largest impact on the sector. We are seeing it very directly in the real estate venture capital space. The amount of money invested in proptech per year has increased from $60 million to over $12 billion (a 200x increase) since Camber Creek was founded in 2011. Today, we have companies like WeWork, Zillow, AirBnB, and Redfin that have created enormous value in the real estate, and we have many more exciting new startups that are using technology to create positive disruption. On the investor side, we have seen a surge of interest from new entrants into this space including real estate companies, generalist venture capitalist and family offices. The increased activity is helpful in growing the ecosystem but it simultaneously creates a lot of noise.
What are the key areas in which technology is being adopted in the real estate sector?
There are a number of exciting trends happening in real estate technology right now. Real estate is largely bought, built, managed and sold using the same tools that were used 25 years ago. For example, many real estate companies still rely on Excel spreadsheets, PDFs and even the occasional fax machine for much of their work flow. This is illustrative of a broader opportunity in the space for purpose-built business tools and workflow software to make it easier, faster, and less error prone to do the same work. Our portfolio companies VTS and Bowery are great examples of these types of solutions.
Additionally, “big data” is starting to change the way people make decisions in real estate. There is a tremendous amount of data that enables real estate transactions and operations, and we are in the early stages of seeing data scientists working with real estate experts to unlock asset value. Our portfolio company Measurabl is an interesting example of a company leading the way with sustainability data at scale.
At the asset level, there is a lot innovation coming around tenant/resident/end-user experience and the maximization of underutilized space. This is happening across all asset classes. For example, in the multifamily sector, we're seeing a number of companies literally turning apartment buildings into hotels. One of our portfolio companies – WhyHotel – is taking a novel, tech-forward approach to a problem that almost every developer of a multifamily rental property has contended with. They're operating pop-up hotels in new developments that are in the lease-up process generating revenue in place of vacancy loss all the while providing a tier 1 hotel experience in an apartment setting.
From an investment point of view, what key segments within the real estate industry you see more attracting and why?
Our investment thesis is unique and it's fairly simple – we ask ourselves two questions. The first is “can we use this product/software/service within our portfolio matrix?” [We define “portfolio matrix” as the buildings we & our LP own/manage, the tenants and residents who work and live in the buildings and the vendors who maintain all three.] The second question is “do we believe we can make a venture return?” – which is arguably the more important question and seemingly doesn't get asked by many proptech investors. It's one thing to have a cool tech solution – it's quite another to fully comprehend the sales ceremony extant to the real estate industry. It's just not that easy to sell into. So, if the answer to the first question is “yes” (i.e. we can use the product/software/solution in our portfolio matrix) but the second question is “no” (for whatever reason – maybe it takes too long to sell), we pass. Conversely, this means we do a deep diligence dive only when both of those questions are answered in the affirmative. At the moment, this is a surprisingly unique perspective within the proptech space.
Tell us about your organization?
Camber Creek is a NY & DC based venture capital firm that invests in enterprise technology for the real estate industry. We have been leading the space for almost 10 years. In that time, we have honed our ability to identify and scale market leaders built upon Camber Creek's unmatched network of decision-makers and principals in all real estate asset classes. This network provides us with a platform to rapidly test potential companies during diligence to determine actionable facts and propriety insights. We can literally “try before we buy” allowing us to find winning companies prior to making an investment. Once an investment is made, our hands-on approach provides portfolio companies access to the network and significant new revenue opportunities. This allows us to de-risk investments, accelerate the growth of portfolio companies, and create exceptional returns for our investors. We have approximately $50mm under management and 18 companies in our portfolio.
What are your future plans?
Our strategy has been working really well. We tested and refined our investment thesis with our first fund, and proved with our second fund that we can execute our strategy successfully at scale. We are able to de-risk our investments, our brand and network are allowing us to win highly competitive deals, and in the process, our portfolio companies are creating enormous value for our investors. The real estate tech space is continuing to see massive growth, and we are in a great position in continuing executing our strategy.
Do you look to invest beyond the US market?
Yes. We are actively speaking with a number of companies that are based outside of the US, and many of our portfolio companies are global.
