Fifth Wall, a US firm dedicated to proptech opportunities, has finished raising a European investment product with €140 mln of equity pledged by investors.
Many limited partners in the company’s European Real Estate Technology Fund are notably well-known real estate owners and developers from across the European marketplace.
They include Aldar Properties, Azora Capital, BNP Paribas Real Estate, Conren Tramway, Damac Group, Gestilar, Inmobiliaria Colonial, Ivanhoé Cambridge, Knight Frank, Merlin Properties, Momeni Group, Neinver, affiliates of Northwood Investors, Pecunia, PGIM Real Estate, Pontos Group, Redevco, Segro, and Tramway Capital.
The success of the oversubscribed fund underlines a view that limited partners see investment in a proptech fund as educational given the industry is still nascent. Not only do investors expect a financial return from investments into the basket of portfolio company investments made, but they are also convinced they will understand proptech ideas and applications better from the inside as a limited partner. In some cases, they will see directly applicable benefits to their own real estate portfolios or construction methods.
In a statement, Segro – one of the investors in Fifth Wall’s European fund – backs this view up. Soumen Das, CFO at the logistics specialist, said: ‘Fifth Wall’s leading platform and deep market knowledge has delivered valuable insights into the PropTech market and emerging technologies.’ Segro had already made a previous investment to an earlier fund.
Patrick Brenninkmeijer, business development director at Redevco, also makes the same point. He said: ‘The value of being invested in Fifth Wall’s European Real Estate Technology Fund is the early exposure to transformative proptech solutions and the guidance of the Fifth Wall team in exploring new ways to solidify Redevco’s business model.’
The European fund will target investments in high-potential European startups and will also potentially provide co-investing opportunities alongside the firm’s core North American Real Estate Tech funds. Investments out of this fund will range from Series A to Series C rounds. The fund has already completed investments into fast-growing startups, including Clikalia, the leading Spanish Ibuyer platform and Gorillas, an on-demand grocery delivery company.
According to PitchBook data, the European proptech market currently represents approximately 20% of all global proptech activity in 2021, including €3.8bn of venture capital investment in over 200 deals. That is an increase of 3.5 times the investment levels of 2020, and more than 4 times the 2019 levels. The median European proptech deal size has increased from €1.6mln in 2019 to €3.2mln in 2021.
The European Fund is co-led by Roelof Opperman and Miguel Nigorra, both based in London.
Fifth Wall is not the only company this year to announce fundraising success.
In January, Germany-based PropTech1 Ventures closed an oversubscribed €50mln fund for the ‘untapped innovation potential of the real estate industry’. In this case, investors included Basler Insurance as its first investor from the insurance industry.
In addition, the venture capital fund added international real estate companies and entrepreneurs from Austria, Norway, Germany, and Canada to its investor base.
These included Martin Hintze and Rainer Bormann, partners of Sector7 Investors, Markus Ertler, Austria's "Business Angel of the Year 2019", Paul Schaufler, CEO of auritas Finanzmanagement, business angel and real estate entrepreneur Philip Wältermann of PWI, and Jon Øyvind Eriksen, CEO of deeptech investor Aidiom and founder of Signicat, the leading provider of digital identity solutions in Europe.
Additionally, a private investment vehicle of Robert Cervinka, long-time managing director at various opportunistic real estate private equity funds such as Ares Management and Cerberus as well as former MD at RREEF/ Deutsche Bank, invested into the fund.