MetaProp has closed its second real estate-focused venture capital fund on $40 million, the New York-based firm announced this week.
With capital from MetaProp Ventures II, the firm will invest $150,000 to $2 million in about 40 early-stage start-ups globally. The company invests across real estate technologies, including 3D printing, blockchain, co-working and co-living, augmented reality and digital energy management.
Limited partners in the fund include private equity firms like PGIM Real Estate as well as brokerages and major property services companies such as CBRE and Cushman & Wakefield.
“To the early stage proptech community, we represent access to a broad consortium of real estate’s most coveted clients early in their life,” Zak Schwarzman, MetaProp partner and head of venture capital, told PERE. “For our real estate industry partners, we help them capture the value – both financial and commercial – being created by this emerging wave of proptech innovation.”
Unlike proptech venture capital peers that focus on more mature companies, such as JLL’s JLL Spark and Brookfield Asset Management’s Brookfield Ventures, MetaProp seeks to invest and shape start-ups at the seed stage, “when they’re still malleable and early enough that a forward-thinking real estate player can have outsize impact,” Schwarzman said.
While MetaProp would represent the first institutional capital invested in a start-up, the firm could later bring another proptech venture capital firm, along with other more generalist venture capital firms, for subsequent funding rounds. In the first, $5 million fund that closed in early 2017, for example, co-investors in portfolio companies included Bain Capital and the Los Angeles-based proptech venture capital firm Fifth Wall Ventures.
MetaProp has made 10 investments to date from Fund II, investing alongside groups including JLL Spark and early-stage venture capital firm IA Ventures. One investment was in New York-based Workframe, which offers a platform for office moves and build-outs that brings together tenants, brokers, landlords and other groups to collaborate on one system.
“There’s a really compelling case for technology when well-conceived within a real estate organization. A big part of our job is to demystify technology and help proptech companies present themselves to the real estate industry in a way a real estate professional can understand,” Schwarzman said. “Technology can be a real difference-maker in driving revenue, whether through increased rents or differentiated services and products. When presented that way, you’ve seen real estate companies sit up, pay attention and engage.”
Schwarzman said MetaProp’s investments span the intersection of real estate and capital markets, space utilization, architecture and engineering construction. Printing, for example, fits in the last category as start-ups consider how building components, and even entire properties, could be 3D printed.
“We’re investing both in startups that help today’s real estate professionals and incumbent firms do their jobs more efficiently and profitably, as well as more disruptive upstarts that pose a direct threat to today’s incumbents,” Schwarzman said.
Overall, capital invested in proptech firms jumped from $451 million in 2013 to $3 billion in 2017, according to research firm CB Insights.