Real estate is the largest asset class in the world; it’s everywhere around us: where we live, play, work, stay and create. It impacts anyone and everyone, globally.
Due to its structural nature and size, the real estate sector is not comparable to any other industry. It is by far the largest asset class in the world, it is also a fragmented and distinctive ecosystem, with most players welcoming the relative lack of transparency and efficiency. However, with increasing pressure from customers, investors – and to some degree regulators, the transformation of the real estate sector is gaining momentum, bound to have a significant impact beyond the industry itself. It is a secular mega-trend and a generational opportunity that lies ahead of us.
Real Estate has no choice but to reinvent itself into a more digital, data driven, consumer-centric and climate-conscious asset class.
Today we announce our official launch, with EUR 250mn permanent capital. We back and support emerging-technology companies, enhancing the real estate industry at large with a clear ambition to transform the sector as we know it.
We have been operating for about a year now, preferring to remain in stealth mode to continuously shape our thesis, scale our platform and close our first series of investments. To date, A/O PropTech has backed 10 companies, in Europe, the USA, and Israel including Bricklane, Fornova and most recently Plentific – leading a $32mn Series B round in late 2019.
A/O Proptech has been years in the making, shaped by a collection of experiences, inspirations and pain points across many different sectors: Finance, PE, Real estate, VC, Data Science, entrepreneurship – all connected by an underpinning realisation that real estate can be one of the most powerful vehicles for long-lasting change globally. Housing the single largest expense for most households, real estate consumes over 40% of the world’s energy: investing in making it more accessible and greener can be very impactful.
Our overarching vision is to leverage technology to transform the real estate industry, make it more data-driven, transparent and efficient. We invest in companies that have ambitions to tackle systemic issues and pain points of an analogue and highly fragmented industry and like us believe that applying digitisation, technology and data science coupled with new business models can go a long way into transforming it.
A new breed of specialist VC, a different kind of capital
We believe that for the industry to evolve, change also needs to come from within, led by its largest most dynamic incumbents. Amongst our investors are some of the largest institutional real estate companies in Europe, who combine a strategic pool of residential, commercial and hospitality assets over €32bn. This portfolio of assets is used and integrated by A/O PropTech to test, pilot, fast-track the commercial and operational scale of our portfolio companies – a first of this nature and size in Europe.
Our permanent capital approach – also a first in the space – allows the firm to be stage agnostic, with a more flexible and patient approach to long term value creation. Given its scale, fragmentation and historical resistance to technological disruption, the real estate industry will require long term capital at scale to support its transformation and digitisation. Investing with permanent capital allows A/O PropTech to stay agile and flexible, whilst removing the structural timing constraints that can be found in traditional fund structures.
This also helps us avoid potential misalignments with entrepreneurs over the investment timeframe. We are not going to invest ‘forever’, but we simply retain the flexibility to exit or monetise when it is the right thing to do for the company and its stakeholders. This allows us to be less constrained, stage agnostic and have a different perspective when we do invest.
The nature of our capital is an essential part of our model and we are convinced that it will be soon considered as the most adequate way to truly support value creation in the midst of secular mega trends.
We are lucky to be backed by visionary investors who bought into our unique model and in the future we will look to set up more traditional long dated fund like structures in order to accommodate strategic players who can only invest in these types of vehicles. Whilst we endeavour to make space for these investors, we will always anchor our deals with permanent capital.
Our mission and commitment
Our vision is underpinned by a mission and a commitment: In the climate change crisis, one should look no further than the real estate industry: it consumes 40% of the world’s energy and raw materials – and emits 30% of global CO2. Simply put: Real estate is the biggest cause of climate change.
We are now in the midst of a profound societal shift in the fight for sustainability, with growing pressure from lawmakers, investors and tenants. This is a defining moment. Real estate incumbents have to take responsibility and ownership of the climate released issues inherent to their industry, and those who don’t will be left behind.
An integral part of our strategy is to invest in technology companies targeting sustainability in real estate and fast track them into our platform ecosystem in order to accelerate their adoption across the industry.
We believe that the collaboration between the private and the public sector for such important issues is essential. In the next few weeks, we will be announcing additional investments in this space, at the intersection of proptech and climate tech with a European sovereign institution partnering alongside us.
A multi-disciplinary and versatile specialist firm
Our innovative approach to VC is also the result of the multidisciplinary expertise of our team. In addition to real estate and finance professionals, the A/O PropTech family is made of data scientists, mathematicians and engineers. Some of them have previously led large scale digital transformation projects for global banking, automotive, cosmetics and luxury retail groups.
This expertise is made available and is applied to support our portfolio companies but also our institutional real estate investors in order to help them transition into more digital and data-driven organisations. This is critical to the success of our ambitious vision: help the leading industry players position themselves and embrace transformation, by adapting their process, system and culture over time.
We view ourselves as a new kind of VC operator, working relentlessly across the entire ecosystem to promote sustainable change and anchor it at the root of the largest incumbents.
We fundamentally believe in the need to gather multi-disciplinary expertise to optimise the various aspects of VC investing. The deployment of data science methodologies, combined with the integration of digitised processes and curated data sets, will help shape the next generation of real-estate industry operating models.
Championing the European proptech VC ecosystem
To date, pure-play European proptech VCs have been lagging behind the US in terms of funding, scale, and ecosystem delivery. Europe can be a global leader in proptech. The sheer size of its real estate market, the various government initiatives supporting it, and the amazing talent coming through our universities a defining factors.
Some of the regulatory frameworks recently announced and implemented in Europe such as GDPR or RE2020 create tremendous new opportunities which will be a competitive advantage for European start-ups.
We want to champion that European PropTech ecosystem and pave the way for more collaboration, capital and support across the continent.
We are so humbled and grateful for the trust, support and scale provided by those who believe in us, our vision as well as our underlying mission-driven DNA. We will continue to back visionary, bold and resilient entrepreneurs, building a powerful ecosystem with fellow VCs and endeavour to make a positive impact along the way.
Our DNA is one that promotes diversity of backgrounds, experience and opinions, underpinned by a strong work ethic, real passion and humility. Our team is growing: if our vision and our mission resonate with you, you should reach out to us. We would love to connect.
Onwards and upwards.
The A/O PropTech Team