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Fifth Wall VC Persuading Real Estate Rivals to Work Together

The company closed a $503 million fund to invest in property technology startups by raising money from mall owners, hotel operators and office developers.

(Bloomberg)—Fifth Wall employed an unusual strategy to raise its second venture fund: It got rival real estate companies to pool resources to invest in property-technology startups.

Los Angeles-based Fifth Wall said Wednesday that it closed the $503 million fund by bringing together mall owners, hotel companies and office developers. Four major U.S. homebuilders invested in the fund -- D.R. Horton Inc., Lennar Corp., PulteGroup Inc. and Toll Brothers Inc. -- as well as competing brokerages CBRE Group Inc. and Cushman & Wakefield Plc.

“Increasingly, real estate owners have recognized it’s very hard to do venture on your own,” Fifth Wall co-founder Brendan Wallace said in an interview. “It’s better to get the right solution than it is to get a solution your peers don’t have.”

Fifth Wall, which closed its first fund in 2017, has more $1 billion under management. It has invested in co-working companies Convene and Industrious, startups that focus on making buildings more energy-efficient and software firms focused on simplifying the process of getting a mortgage.

There were more than 50 investors in the latest fund, and many of them will use Fifth Wall to vet tech solutions they can use in their day-to-day businesses, Wallace said. Lennar, an investor in the first fund, has inked partnerships with five Fifth Wall portfolio companies.

To contact the reporters on this story: Patrick Clark in New York at [email protected]; Lily Katz in New York at [email protected].

To contact the editors responsible for this story: Debarati Roy at [email protected]

Christine Maurus

© 2019 Bloomberg L.P.

TAGS: Proptech
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