Fifth Wall, a venture capital firm focused on real estate technology, is scaling back on its bet that climate tech will be an important driver in the real estate space.
The Climate Fund was launched with $116 million in August of last year. According to the firm, it is the largest private fund of its kind.
According to the UN Environment Programme Finance Initiative, 40% of global carbon dioxide emissions come from real estate. Most of the rest come from the construction process. The goal of net zero emissions is hard to achieve given that most real estate exists.
The fund invests in software, hardware, renewable energy, energy storage, smart buildings and carbon sequestration technologies.
Major spend categories are where real estate owners will have to deploy capital. Brendan Wallace is the managing partner of Fifth Wall. He said that the fund works with the companies to speed up their growth.
By virtue of those relationships, we can help grow these early stage tech companies, open these distribution lanes for them, where we basically have their largest customers.
Some of the biggest names in real estate are partnerships with those partners. American Homes 4 Rent is a company that builds and manages rental homes.
The investment for us is relatively small, but the access to a number of small prop-tech, as well as environmental companies all looking to improve single- family rentals is really what excited us about the opportunities. David Singelyn is the CEO of American homes 4 rent. From a marketing standpoint our residents are usually those in their 20s and 30s.
Real estate companies invest to improve their own businesses.
Financial investors and institutional investors understand that this is one of the biggest opportunities. Real estate firms have to decarbonize because it is a generational investment opportunity.
Wallace admits that his half billion dollar fund is just a drop in the bucket compared to what he says will be an $18 trillion expenditure to decarbonize commercial buildings alone.
He calls the lack of venture capital deployment in climate tech shocking.
Only a small percentage of venture capital dollars go into tech to decarbonize real estate. It is systemically underfunded in traditional venture capital markets.
Other limited partners include British Land, Camden Property Trust, Cosan, The Durst Organization, Equity Residential and Host Hotels & Resorts.
The fund has invested in a number of technology companies.
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