Fifth Wall, One Year In:

Finding Product/Market Fit Building A New Model of Venture Capital Firm

“Real estate tech is a hard space to invest in. Why? Because success or failure for early-stage companies often hinges on the adoption decisions of a handful of industry incumbents. Entrepreneurs needed institutional validation for their transformational ideas. We decided to try a bold approach to solving this problem: what if the biggest customers for Built World technology could invest in and leverage their domain expertise to help the very entrepreneurs whose growth they were accelerating? These corporates wanted to help entrepreneurs, but a platform to do so hadn’t emerged. And in a world filled with often undifferentiated venture capital investors, Built World entrepreneurs increasingly seek value-added investors with a unique ability to understand and support their company’s growth.”

- Brendan & Brad, May 2017

There were three primary ways we sought to blaze a new path when Fifth Wall launched:

  1. Target a unique market: Fifth Wall was the first fund focused specifically on Built World Technology, where there had never before been a fund explicitly focused on real estate, hospitality, construction, and urban infrastructure technology. We consciously assembled our strategic LP base with key anchors — the largest owners and operators of real estate in the world, representing the largest potential customers and partners for the Built World technology ecosystem.
  2. Focus on a specific “product” that entrepreneurs need: There’s an abundance of generalist VCs with capital and relationships. Fifth Wall was laser-focused on programmatically accelerating growth for our portfolio companies, pairing deep industry knowledge with well-defined distribution channels leveraging our large real estate LPs and broader real estate relationships.
  3. Deliver quantifiable results: Our portfolio companies could measure revenue that Fifth Wall brought in through our strategic industry relationships.

Throughout this first year, what has been most encouraging for us is evolving our “product/market fit” to be exactly where we saw a void: access to indispensable connections, relationships, intelligence, and strategic dealmaking across the Built World landscape. We’re thrilled to share our reimagined approach has delivered on its promise for entrepreneurs in our portfolio. Today, Fifth Wall is excited to announce we’ve delivered over $100 million in quantifiable revenue to the dynamic companies within our portfolio (through partnerships, customers, and introductions), including over 2,450 new customers acquired through Fifth Wall relationships.

As we head into our second year, we continue to invest in and support the brilliant entrepreneurs driving innovation and pushing the boundaries of the Built World, and we’re particularly grateful for the opportunity to work hand in hand with the dynamic entrepreneurs steering our current portfolio companies. As we move forward, we wanted to share a look back at what has been nothing short of an extraordinary year.

Facilitating the Right Connections

We are enormously grateful to our anchor LP’s for backing us, not only with their financial support but more importantly, with their willingness to lean in to innovation and approach technology as a disrupter that will enrich rather than threaten incumbent industries. These anchors are the largest and most influential real estate owners and operators in the world, representing more than $640 billion of physical real estate and over seven billion square feet across every major sector of the industry:

  • CBRE: largest brokerage and real estate services company in the world
  • Equity Residential: one of largest apartment owners in the U.S.
  • Hines: largest developer of office buildings in the U.S.
  • Host Hotels & Resorts: largest hospitality REIT in the U.S.
  • Lennar: largest homebuilder in the U.S.
  • Macerich: third largest mall owner in the U.S.
  • Prologis: global leader in industrial/logistics real estate across the Americas, Europe and Asia
  • Lowe’s Home Improvement: FORTUNE 500 home improvement company serving more than 18 million customers a week in the United States, Canada and Mexico
  • Rudin Management Company: one of the premier commercial real estate owners, builders, and managers in New York City

Between Fifth Wall’s anchor/strategic LPs, VC network, portfolio CEOs, and our broad real estate network and relationships, we have been privileged to help our entrepreneurs navigate the increasingly complex landscape of the real estate industry and structure game-changing partnerships, delivering quantifiable value to their companies. The best and most gratifying feedback we get on a daily basis from our portfolio CEOs is that we do exactly what we say we’ll do:

Supporting Entrepreneurs with a New Type of Team

Over the past year, we’ve welcomed a diverse and visionary team to Fifth Wall. We recently increased our service offering by expanding our Advisory team, charged with facilitating opportunities both within the Fifth Wall strategic LP network, as well as outside it. In many ways, we set out to emulate Andreessen Horowitz’s Portfolio Operations team — we admire their idea of offering a robust set of services to advise and grow their portfolio companies. What we netted out with at Fifth Wall, however, was an engagement strategy true to our own unique model. Our team goes to work on behalf of our portfolio companies and strategic LPs to advance, support, and advise them in every vertical of their business.

To help advance these efforts, both KC Cleary and Natalie Bruss joined Fifth Wall to helm our strategic Advisory team, which goes well beyond general business development — their expertise touches real estate, technology, trend forecasting, and partnerships while pulling from their extensive experience across the consulting, marketing, media, real estate, technology, and finance sectors. We also were privileged to add Joe Wang from McKinsey and Kate Bassett from WME-IMG to the Fifth Wall fold, as well as expanded Adam Demukayor’s role to strengthen relationships among our strategic LPs and real estate operators, and provide day to day support for portfolio CEO’s. The dedicated Advisory team also allows our incredible investment professionals, led by Roelof Opperman and Vik Chawla, to focus on identifying promising entrepreneurs to partner with, and laying the infrastructure for those relationships.

This is where the creativity of not only our team, but the next generation of venture capital leaders is best exemplified — not just in strategic capital, but in problem solving that produce results for entrepreneurs. With the unique backgrounds, perspectives, and relationships that come with having such a diverse and untraditional team, we take pride in thinking outside the box and delivering on our promises.

Partnership Results

Over the past year, we’ve structured over 36 distinct partnerships between our portfolio companies and strategic LPs and, in the process, gained a strong understanding of what works, who it works with, and why. Below are just a few examples of these partnerships we’ve facilitated on behalf of our portfolio companies:

Fifth Wall, Looking Ahead

We’re in the middle of seismic shifts for the U.S. economy as Built World technologies transform the way we live, sleep, and interact with our world. We have come to recognize the unquantifiable value in building lasting, trusted, and proprietary relationships within the real estate community and beyond. These relationships are crucial to opening strategic doors for our portfolio when going to bat for them.

Over the next year, we’re making it our mission to further extend our distribution base and insights funnel, while diversifying around geography and asset class. Now that we’ve identified our place and purpose within the market, we’re doubling down. We will continue to evolve our definition of a venture capital fund to better serve the needs and passions of those technology entrepreneurs making the Built World their life’s work. We’ve created an ecosystem to connect the world’s largest and most influential owners and operators of real estate with the most innovative entrepreneurs redefining what’s possible in a Built World future, and could not be more excited about what comes next.

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