Last week, Fifth Wall, the largest venture capital firm in proptech, announced the closing of its $866 million Fund III, the biggest property startup investment fund ever. The closing brings Fifth Wall’s total capital raised over the last year to more than $1 billion.

​

Shortly after the Fund III closing, PropTech Insider sat down with Brendan Wallace, co-founder and managing partner (along with Brad Greiwe) at Fifth Wall, to discuss how such a historically huge fund came to be, the firm’s new interest in early-stage proptech startup investing, and what looks hot in proptech in 2023.

​

A serial entrepreneur and investor, Wallace began his career at Goldman Sachs in the real estate, hospitality and gaming group, before joining Blackstone’s real estate private equity practice. He co-founded the L.A.-based Fifth Wall in 2016.

​

What area of proptech are your LPs and the overall real estate industry emphasizing now?

It’s a great question, and the reason I’m struggling to answer it is because the answer is kind of everything. For example, construction tech is a prime example of what I would define as a newly attractive category for Fifth Wall investment. Part of that was because construction tech was probably three or four years behind proptech in terms of its innovation cycle.

​

We’re seeing this kind of Cambrian explosion of new technology solutions to improve how we build everything: homes, buildings, factories, etc. So that’s a new category for us, alongside anything and everything to reduce the energy consumption per square foot of real estate assets, which is very much in demand and interconnected to what has been historically described as smart building technology. A lot of the demand for what we called smart building tech at the asset level was based on what tenants want. This delivers a better tenant experience, but a derivative impact of that is that when you better understand how people are using your asset you can become less energy consumptive at the asset level in aggregate through automation and machine learning. So what’s happening is that smart building technology is now becoming interconnected to climate tech in really interesting ways that I think are going to be an exciting category for space.

 

What’s the first thing you are planning to do now that you’ve closed Fund III?

Make an excellent next first investment.

 

Want to give a clue as to what that will be? What sector of proptech?

We’d like to do something really exciting in the construction tech space.

​

Philip Russo can be reached at prusso@commercialobserver.com.

https://commercialobserver.com/2022/12/fifth-wall-brendan-wallace-866-million/