Our investment in Orbital Witness
Global real estate is a mind-bogglingly big industry, worth around $280 trillion. For context, that’s three times larger than the global equities market and more than double the value of the world’s oil reserves. It’s also worth 3.5x (our rapidly shrinking) global GDP.
The industry also spends gargantuan amounts on property due diligence. In the UK alone, this amounts to £4bn per year. Given the sums of money involved in these transactions it is no surprise. On the retail side we’re all familiar with horror stories of what can transpire after a house purchase “what do you mean we don’t actually own that part of the garden?”. On the commercial side, the stakes are even higher.
Whilst proptech is transforming the real estate industry, due diligence remains a backwater. In ancient times, a ceremonial act known as “livery of seisin” was used to transfer property and land. The person transferring handed a twig or clod of turf to the new owner to mark the completion of a transaction. Paper has replaced lumps of turf but in the past 150 years, not much more has changed.
Due diligence remains complex, slow and costly. Manual interpretation of paper documents means 40% of transactions are delayed and legal fees typically consume 1% of overall transaction costs. Further, the work is repetitive and dull for lawyers.
Enter Orbital Witness. Launched in 2018 by Ed Boulle and Will Pearce, their mission is to replace this manual legacy with a universal risk rating system for land and property. An Experian for the global real estate industry if you like.
“Universal” means all parties involved in a transaction can reference a single, trusted source. From the investors and developers looking to buy the property, to the lenders financing the transaction and to the insurers who underwrite indemnity and title risks.
At the centre of these parties are the lawyers who currently grind through reams of paper to perform their due diligence. This is where Orbital Witness has started its journey. The value proposition is simple — help leading law firms significantly accelerate their diligence process and reduce grunt work- “most lawyers didn’t go to law school to do property due diligence”.
Orbital Witness collects and digitizes data from sources like the Land Registry and Local Authorities. It applies rules-based and machine learning models to provide an instant view of issues that affect the valuation, liquidity, or intended use of real estate. These models are trained by observing the real questions and process lawyers use to perform due diligence. Given Orbital Witness already counts 4 of the 5 magic law firms as clients, its models are being trained on some of the best real estate lawyers in the world.
Taking a practical use case, imagine a private equity fund looking to acquire a DIY retailing company with substantial property assets. Ordinarily, the PE fund would write to the UK Land Registry requesting the details of any registered assets held by the company.
Using Orbital Witness, lawyers can compress a two-week process into a matter of seconds. Rather than the traditional method of performing diligence at the end of the process, it is performed at the beginning — when the insights are most valuable. Further, 100% of a potential portfolio can be diligenced rather than the often-used 5%, massively reducing risks.
With lawyers at the centre of the property transaction process, it is no surprise the other participants — investors, lenders and insurers are also being exposed to the value and benefits Orbital Witness brings. Imagine an instant risk profile for any individual property or portfolio available to all parties on-demand.
If you’re like us, you’ll naturally be curious about the origin of the name, Orbital Witness. It comes from the time Will and Ed spent together at a space industry incubator. Their original idea was to use satellite imagery to resolve property and land disputes. If only our ancestors who traded in twigs and clods of turf could see how far we’ve come.
We’re delighted to be joined in the round by Outward VC, Seedcamp and JLL Spark. Orbital Witness is a fantastic complement to our proptech portfolio including Zoopla, Residently, Bricklane, Virgil, Venn, Goodlord and Trussle.
