VC Firm Raises $866M for PropTech

Venture capital firm Fifth Wall recently announced the final close of its Real Estate Technology Fund III, totaling $866 million. The firm, which focuses on property technology, or proptech, has raised more than $1 million in proptech-related investments during the past year.

The announcement is a sign of optimism for proptech as uncertainty has surrounded the sector in recent months. The Real Estate Technology Fund III is now the largest proptech fund in history and also Fifth Wall’s initial hybrid fund, which comprises both early- and late-stage vehicles. It is also Fifth Wall’s third fund close in 2022 — the firm announced its initial $500 million Climate Fund in July.

“When we started Fifth Wall in 2016, ‘proptech’ was not yet a term,” Fifth Wall Co-Founder and Managing Partner Brendan Wallace said in a statement. “Since then, we believe that we played an intrinsic role in the ecosystem’s evolution and continue to propel it forward not only via capital, but industry awareness and strategic collaboration between our startups and real estate limited partners.

“It’s the natural next step that we’d expand the aperture, deploying two vehicles that enable us to invest from seed to IPO. It signifies our commitment to the ecosystem as it navigates the next wave.”

Fifth Wall’s Fund III consists of two different vehicles. Fifth Wall Early Stage Ventures, L.P. focuses on startup companies at the seed to Series B stage. Meanwhile, Fifth Wall Fund III, L.P. focuses on the firm’s late-stage venture vehicle serving companies at the growth equity or series C stage and beyond.

A number of existing and new investors around the world have committed to Fifth Wall’s Fund III, the firm said. Investors include Annaly Capital Management Inc., Arbor Realty Trust Inc., CBRE, CFG Bank and its wholly owned subsidiary Capital Funding LLC, Cushman & Wakefield, employees of Northwood Investors LLC, Equity Residential, Essent, Granite Properties, Hines, Invitation Homes, JBG SMITH Properties, Keppel Corporation, Koch Real Estate Investments, Lineage Ventures, Meritage Homes, The Moinian Group, Move, Physicians Realty Trust and PulteGroup, among others.

Procore, a construction management software provider, also invested in Fund III. This marks the first time that a prior fund’s portfolio company has invested as a limited partner. With the support of Fund III limited partners, Fifth Wall now has more than 110 strategic limited partners from more than 15 different countries. The firm’s total capital under management now stands at approximately $3.2 billion.

When Fifth Wall was founded in 2016, proptech was a relatively new venture category with $4 billion of capital activity. Today, it is one of the fastest-growing segments, marking a more than $30 billion per year category. In the first half of 2022 alone, more than $8 billion in growth equity and debt funding and multiple $1+ billion merger and acquisition transactions occurred in the U.S. proptech market.

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