Here’s what Brendan Wallace, co-founder and CEO of Fifth Wall had to say about the changing nature of property technology investment. As the largest investment firm dedicated to technology in the built environment, Fifth Wall manages over $3 billion in capital. Wallace’s statements come on the heels of some big moves in the industry. Fifth Wall had a successful IPO, raising about $625 million, and shares opened up 42% on their first day at Nasdaq.
Although this success seemed promising, Wallace raised a red flag about the direction real estate owners were taking. He warned that many are backsliding on sustainability and environmental, social, and governance (ESG) efforts. This trend has added to a “palpable, negative sentiment shift” in climate-related property technology investments. Though Wallace recognized the industry faced serious hurdles, he has never been anything but bullish on its future.
For example, Wallace highlighted the emergence of new unicorns such as Juniper Square and Bilt. Together, these companies provide a promising signal for where to invest in property tech. Bilt, the new loyalty rewards platform for housing, recently raised $250 million at a valuation-busting $10.75 billion. Along with General Catalyst, the round was co-led by GID. In addition to the strategic investment, United Wholesale Mortgage has taken an equity stake in the company. Wallace underscored that these advancements pave the way for more investment opportunities to come.
“My view is the real estate industry is still responsible for 40% of carbon emissions,” Wallace stated. He reiterated that the industry has for too long ignored its duty in combating climate change. Building new infrastructure and retrofitting old infrastructure to decarbonize is going to cost trillions. It’s a lot of money, and capital is going to flow into that space which is one of the reasons why we’re still deploying capital, because we’re the only ones,” he added.
Despite the ongoing struggles faced by many climate funds in raising capital, Wallace believes that local governments continue to support sustainability initiatives. Such local support can go a long way to creating a lifeline for property tech companies focusing on solutions in the climate resilience space.
Reflecting on recent years, Wallace remarked, “I’d say we just lived through probably the most challenging three years that certainly I’ve ever experienced.” He highlighted that the proptech industry has experienced the greatest amount of pro forma enterprise value destruction in history from 2022-2024. What he noted was that the last 15 months have witnessed just as remarkable enterprise value creation.
Fifth Wall’s IPO and investment strategy underscore its commitment to navigating the complexities of the property tech landscape during challenging times. Case in point, Wallace observed, is the pullback among risk investors. All the while, Fifth Wall continues to invest with reckless abandon to corner the market on this still-promising space.