One Of The World's Biggest VC Firms Is Targeting Real Estate Tech For More Investment

Bessemer Venture Partners, which led the seed investor round for Hightower’s IPO, is bullish on CRE tech, a vastly underserved space that principal Talia Goldberg told us is poised for serious growth in coming years.

BVP, among the world’s largest VC firms, with $4.5B under management, invests anywhere from $100k up to $75M in emerging, web-based software companies (including Toronto’s Shopify).

Over the last year and a half, the firm has been focused more intently on the real estate industry, both commercial and residential, Goldberg said. BVP has made several investments in Hightower, the leasing management software provider that merged last year with VTS in a $300M deal. It's also a backer of the listing site 42Floors.

BVP hasn't made investments on the residential side so far, “but it’s an area we plan to spend more time in,” Goldberg said.

VTS and Hightower's 2016 merger created one of the world's largest real estate tech companies, providing asset management tools for 5.5B SF of commercial real estate.

Real estate is a trillion-dollar industry in the U.S., Goldberg said, making it "a huge asset class.” Yet, when it comes to where venture capital and tech investment dollars are being directed, real estate-related firms are “really under-indexed,” with limited activity relative to the size of the industry.

That’s exciting for Goldberg and her team.

“We like having the opportunity to invest in companies that not everyone’s looking at right now,” she said.

CRE has been slow to adopt tech for managing data and analytics, with industry players traditionally keeping information close to the vest. That makes Hightower a game-changer, Goldberg said.

The company recognized a “huge opportunity” to design a product that enables CRE owners and brokers to access real-time leasing data, tenant prospects and portfolio analytics, “information that’d been siloed traditionally.”

Hightower and VTS will be stronger together, she said. The firms have compatible visions, and “now that there’s a dominant leader in the space, they’ll be able to focus on building better tools and services.”

BVP plans to up its investments in real estate tech. On the CRE side, there’s enormous potential in cloud-based software that automates laborious processes and assists brokers, owners and tenants in better understanding and interacting with properties.

Goldberg's group is also seeking to expand into the residential side. “We’re keeping our eyes on this area,” she said, noting she's fond of disruptors like the online home-sale service Opendoor. BVP is also watching the short-term rental space, where Goldberg said there's ample room for an alternative to Craigslist.

“It’s a horrible way to search for rentals," she said. "So we’d be thrilled to invest in a company that improves that process."