No time like the present for aspiring female founders

Artemis Real Estate Partners, Basis Investment Group, Pro-invest Group – what do these successful private real estate firms have in common? All were founded or co-founded by women, and all were established during the aftermath of the global financial crisis. Real estate may have been in disarray, but when the market goes down, experienced investors will tell you it is only a matter of time before it comes back up again. That is why respective founders Deborah Harmon, Tammy Jones and Sabine Schaffer all took advantage of the post-GFC reset to carve out their own niches in the industry, experiences they and others shared in a deep-dive analysis PERE published this week.

“The heat was turned up in the GFC, and I kept saying to myself, if not now, when?” recalls Jones, who founded US real estate lender and equity investor Basis Investment Group in 2009. “Everyone thought that I was nuts. People told me that it was a weird time to start a company. I thought it was actually the right time to ride the wave of recovery. My gut was right, and in our first year we were wildly profitable.”

Dislocation creates opportunity, and the parallels between then and now are easily visible on the economic landscape: access to capital tightening, deals drying up and property values plummeting. The door is now open for a new group of female founders to capitalize on the latest post-crisis reset.

The current market dislocation was preceded by the seismic changes in tenant requirements and asset use patterns brought about by the ‘black swan’ event that was covid-19. The pandemic caused us all to rethink and question established models, providing an opportune time for innovation and change. Indeed, it was during this period of upheaval that former Starwood Capital executive Lanhee Yung decided to launch her own firm, Sagehall, in 2020.

The current downturn could similarly see more female founders emerge in private real estate, which counts far too few women-owned firms among its more established managers. Of the managers in PERE’s 2023 rankings of the 200 biggest capital raisers in the industry, published this week, only six were founded by women.

But the crisis-era mindset shift is a powerful tailwind. Several of the founders PERE interviewed were able to get a foot in the door when some institutions took a different tack post-GFC and opted to invest with new managers offering fresh perspectives. Investor support, after all, is a critical factor in any firm’s success.

Many of these female-owned firms endured a challenging first fundraise, with their founders hobbled by preconceptions in the investor community equating difference with risk, among other obstacles. However, aspiring female founders should find encouragement in the fact that investors today are more receptive to backing managers from underrepresented groups. Evolving attitudes towards risk, not to mention the rapid momentum behind ESG, means there is a greater degree of intentionality behind capital sources.

Numerous US pension funds, for example, from MassPRIM to the New Jersey DOI, have in recent years established programs to invest capital specifically with emerging and diverse managers – including Basis Investment Group – for their alternatives portfolios. That said, these investors still represent only a small percentage of the capital sources available to managers, and would-be female founders would stand to benefit from more institutions being willing to take a chance on them.

While women nurturing ambitions to go it alone can capitalize on investors’ hunger to bet on private real estate’s next superstar, they can also take inspiration from the successes of Harmon, Jones, Schaffer and others who have gone before them. The industry is changing slowly, but if history has taught us anything, it is that change is accelerated by widespread crises.

“These kinds of big macroeconomic events are shocks to the system,” says Schaffer. “It’s almost like the cards have been reshuffled.”

In this new hand that women have been dealt, we now have a higher chance of seeing an ace.