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Billions of dollars have been poured into PropTech startups in recent years, and it has not just been traditional venture capital firms funding the booming sector. Legacy commercial real estate firms that spent decades focusing their investment on physical properties have begun launching venture funds to invest in technology companies, aiming to solve problems in their portfolio and bring in big returns.
Investment in real estate technology companies grew by 92% in 2017 to nearly $12.6B, according to a report from research firm RE Tech. This has been driven in part by real estate giants like Brookfield, Blackstone and Simon Property Group investing billions into PropTech startups over the last few years.
Most of those companies focus on commercial office and retail properties and invest in tech companies that solve problems in those sectors, but one of the nation’s largest affordable housing developers is now getting into the space. Enterprise Community Partners Vice President of Innovation Matt Hoffman tells Bisnow the nonprofit plans to launch a fund next year to invest in early stage technology companies addressing housing affordability.
“We’re pursuing more disruptive change,” said Hoffman, who will speak at the Dreamit X Bisnow Innovation Summit taking place Nov. 6 and 7 in Tampa. “We would like to see the housing sector get exposed to a disruptive technology platform much like Uber was to the taxi industry or Airbnb to the hotel industry.”
New York-based Rudin Management Co., a 93-year-old real estate firm with roughly 15M SF of office and residential properties under management, in 2015 launched a venture fund to invest in real estate-related technology companies. The company has now invested in at least 13 companies, including VTS, Nestio and Honest Buildings.
“We used to be a real estate company that dabbled in technology, now we’re a technology company that dabbles in real estate,” Rudin Chief Operating Officer John Gilbert said.
Gilbert, who also serves as chief technology officer, said the first thing Rudin looks for in a potential investment is the problem it solves. If Rudin has been addressing that problem with an analog solution, he said it looks for a digital tool that can improve the process. He also said Rudin wants companies to which it can add value by leveraging its real estate.
“We’re interested in companies that we can collaborate with, that we can make part of our ecosystem and that we can make them smarter and faster simply by integrating within our leasing and operations and…