Stacy Valentine, Senior Vice President of Operations, Laramar Group, saw her company’s investment into Nine Four Ventures fund as a dual benefit: The primary driver was investing in PropTech companies, with a secondary benefit of operational improvements from working with the companies. This group of owner operators who were now LPs at RET were not obligated to purchase, but the alignment with RET opened doors with these owner operators which might not have existed previously. ![]() Instead, RET offered potential customers. While most VC firms offer money, tech guidance, and the knowledge on how to make an exit, Danner said these elements were not their biggest need. Terry Danner, Chief Executive Officer at SightPlan, who is an RET Portfolio Company indicated RET was unique in how they were structured and what they were trying to achieve. ![]() Therefore, Page indicated funds like RET can assist beyond just capital injected into startup ventures. PropTech startups also have other challenges, such as property management software integration, which can be a major hurdle for adoption. Because of this drain on funds, LPs then have the added worry that the new technology provider they are piloting may not have the financial stability needed to scale, or even continue as an ongoing operation, which then creates a stalemate of sorts when it comes to rolling out these new technologies, as owner/operators then have to evaluate both the technology being provided, but also the financial viability of each startup. Alec Page, Vice President RET Ventures, indicated the industry is under-resourced from a tech adoption perspective, and new tech vendors have struggles with long sales cycles and a high cash flow burn rate as pilot programs mature. On the flip side, PropTech startups gain advantages when it comes to access to owners and operators who are invested into the funds, the Limited Parters, or “LPs”. Kurt Ramirez, General Partner at Nine Four Ventures, indicated the multifamily industry has been very slow moving from a tech adoption perspective, and as a venture fund, they can speed that process along and improve adoption of new technologies. ![]() Through these funds, owners and operators can indirectly invest in startups within multifamily, but also gain market research and clarity on which startups to initiate pilot programs. Enter firms like RET Ventures, Nine Four Ventures, and Moderne Ventures, VC firms who serve both as investment vehicles as well as strategic advisors when it comes to PropTech adoption. ![]() The surge in technology startups in multifamily has created an exciting opportunity for improvements across the board in multifamily operations and development, but it also has created a new challenge of sifting through the noise. Some of this funding is unique in that the source of funding is also coming from within the industry, as owners and operators utilize VC funds as a vehicle to both invest in PropTech startups, as well as vet the myriad of options available to them. Historically, innovation in multifamily has been said to be slow and plodding, and many argue that is still the case however, new Venture Capital funding is changing the face of technology startups and creating interesting dynamics in tech adoption within the industry. This piece stemmed from a session at NMHC’s OPTECH Conference, “Partnering with a VC firm on PropTech? Different Goals, Different Strategies”.
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