Technology VC Steps Up Focus on Real Estate Disruption

RIALTO, CA–Venture capital is pouring into the property industry with real estate tech startups securing $3.4 billion in funding last year, according to CB Insights.

A good bit of this has been from funds focused on commercial real estate, such as JLL Spark, which recently invested $6.5 million in HqO, a commercial real estate tech start-up focusing on the tenant experience, along with several other investors including Navitas Capital. The lure for investors was the company’s trove of anonymized data, said Travis Putnam, partner at Navitas Capital. By giving landlords a better understanding of client demographics, tenant interests, onsite retail patterns, and overall occupancy trends, they can make more informed decisions and increase NOI, he said.

At the same time, pure play technology funds have moved into this space with the intention of introducing the same type of disruption seen in other sectors.

One recent example: Plant Prefab, a home design and prefabrication company, recently raised a $6.7 million Series A funding round with participation from Obvious Ventures and the Amazon Alexa Fund, the latter being a $100 million venture fund that invests in voice innovation technology. The funding will be invested in, among other things, developing Plant Prefab’s Plant Building System.

For the Alexa Fund the appeal appears to be the home as a place where smart devices live.

“Voice has emerged as a delightful technology in the home, and there are now more than 20,000 Alexa-compatible smart home devices from 3,500 different brands,” said Paul Bernard, director of the Alexa Fund, in a prepared statement.

“We’re thrilled to support them as they make sustainable, connected homes more accessible to customers and developers.”

Obvious Ventures, for its part, appears to be more drawn to the housing play. “Plant Prefab is focused on dramatically improving efficiencies and environmental responsibility in the $330 billion market for new homes in the US,” said Andrew Beebe, managing director of Obvious Ventures, in a prepared statement. “With increased costs, labor shortages, reduced affordability, and the enormous impact housing has on carbon emissions, there are few challenges more important than creating more accessible, healthy housing.”

“Technology companies have infiltrated the home,” CB Insights said in a recent report.

“Smart home products and personal digital assistants sit on our coffee tables. We can use mobile apps and voice commands to control our lighting, temperature, and home security.”

But despite how smart home devices have become, the home itself, from design to materials, hasn’t fundamentally changed, it said.

“That is beginning to shift.”