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SoftBank terminates $3B tender offer for WeWork shares

By Natasha Lomas

SoftBank Group has pulled a $3 billion tender offer for WeWork shares — citing closing conditions not being met.

The investment behemoth had been rumoured to be getting cold feet, when the WSJ reported last month that it was using regulatory investigations as a way to back out of its commitment to buy $3BN in shares from existing WeWork shareholders.

Under the terms of the share buyback deal negotiated last year, WeWork founder Adam Neumann had been set to receive almost $1BN for his shares in the co-working company. The former CEO had already been forced out at that stage after public markets balked over his managerial acumen, as we reported it at the time.

In a press statement issued today SoftBank SVP and chief legal officer, Rob Townsend, writes:

SoftBank remains fully committed to the success of WeWork and has taken significant steps to strengthen the company since October, including newly committed capital, the development of a new strategic plan for WeWork and the hiring of a new, world-class management team. The tender offer was an offer to buy shares directly from other major stockholders and its termination has no impact on WeWork’s operations or customers. The tender offer closing was conditioned on the satisfaction of certain closing conditions the parties agreed to in October of last year for SoftBank’s protection. Several of those conditions were not met, leaving SoftBank no choice but to terminate the tender offer.

SoftBank lists the unfulfilled conditions that have led it to terminate the offer as:

  • The failure to obtain the necessary antitrust approvals by April 1, 2020;
  • The failure to sign and close the roll up of the China joint venture by April 1, 2020;
  • The failure to close the roll up of the Asia (ex-China and ex-Japan) joint venture by April 1, 2020;
  • The existence of multiple, new, and significant pending criminal and civil investigations that have begun since the MTA was signed in October 2019, in which authorities have requested information regarding, among other things, WeWork’s financing activities, communications with investors, business dealings with Adam Neumann, operations, and financial condition; and
  • The existence of multiple new actions by governments around the world related to COVID-19, imposing restrictions against WeWork and its operations.

A spokeswomen for WeWork declined to comment on SoftBank withdrawing the offer. But Reuters has reported that a special committee of WeWork’s board said it was “disappointed” by the development and is  considering “all of its legal options, including litigation.”

At the time of writing SoftBank had not responded to a request for comment.

Its press note makes a point of emphasizing that “Neumann, his family, and certain large institutional stockholders, such as Benchmark Capital, were the parties who stood to benefit most from the tender offer”.

“Together, Mr. Neumann’s and Benchmark’s equity constitute more than half of the stock tendered in the offering. In contrast, current WeWork employees tendered less than 10 percent of the total,” it writes, adding: “SoftBank previously worked with WeWork to complete an earlier phase of the tender offer that allowed over 4,000 employees to reprice out-of-the-money stock options at lower strike prices, delivering value in excess of $140 million to these employees in the form of reduced exercise prices (where such options would have been worth substantially less or nothing absent such repricing).”

Earlier this week WeWork announced the sale of Meetup, a social networking platform designed to connect people in person, for an undisclosed sum that’s reportedly far less than the $156M acquisition price WeWork paid for it back in 2017.

The novel coronavirus has certainly brought disruption to the hipster white collar co-working and social networking business, as populations are encouraged do to the opposite of mingle. The near term prospects for co-working spaces in a new age of social distancing and encouraged (or enforced) home working look bleak.

Yet, outside Asia, WeWork has to date closed only a tiny minority of its locations globally as a result of the coronavirus pandemic.

Even in heavily affected cities in Europe, such as Madrid and Milan — where governments have imposed strict quarantine measures to try to stem the tide of COVID-19 deaths — WeWork has not taken the step of shuttering co-working spaces.

Instead, in Europe and the US, it has only been temporarily closing buildings or even just individual floors if infections are identified.

It’s a different story in Asia. Per an updated list of building closures on WeWork’s website, the company closed more than 30 locations across cities in India on March 23 — but only after the government imposed a three-week nationwide lockdown, instructing India’s 1.3BN people to stay at home.

Elsewhere, WeWork members may see little reason to break quarantine in order to travel to a shared workspace when, provided they have Internet at home, they can stay where they are and be just as productive without risking spreading or catching the virus — hence the Zoom videoconferencing boom.

WeWork’s handling of the coronavirus crisis has also caused some rifts with its membership, with press reports of members angry at it for refusing refunds for spaces they can’t (in good conscience) use.

It has also faced criticism from members angry it’s prioritizing rent collection from now very cash-strapped small businesses rather than closing down during a public health crisis. (We’ve heard similar stories from members who did not wish to be publicly identified.)

WeWork, meanwhile, has justified staying open in a pandemic by claiming its locations contain people doing essential work.

When we asked the company about its response to the coronavirus last month, it told us: “We are monitoring the coronavirus (COVID-19) pandemic closely and have implemented a number of precautionary measures” — saying then it had strengthened “on-site cleanliness measures” and suspended all internal and member events until further notice, as of March 12.

On the same date it had offered its own staff the option of working from home — though its doors remained open to keycard-holding, fee-paying members.

Not all entrepreneurs are 30-year-old guys

By Walter Thompson
Barbara Sprenger Contributor
Barbara Sprenger does double duty as CEO of The Satellite Centers, a network of flexible workspaces, and Satellite DeskWorks, cloud-based software to manage co-work spaces, executive suites and corporate flexible space.

All co-working isn’t WeWork . And not all entrepreneurs are 30-year-old guys.

I know this well, having built my first startup in the mid-1980s after a potential employer said women wouldn’t be accepted in technical sales. Within five years, their large computer manufacturing business was gone, but we were selling our products around the world.

About twelve years ago, my partner and I saw how the workplace was changing as laptops and WiFi allowed people to work anywhere. At the same time, endless commutes and long office hours were separating families, generating excess CO2 emissions and making work-life balance almost impossible.

We understood that enabling people to work close to home, rather than in their home, could address these issues while reducing isolation and distractions. We could apply our startup, manufacturing, building and operations backgrounds to this problem to develop automated, welcoming workspace centers in neighborhoods and small-town cores, and we could make this replicable.

This was 2008 — nearly a decade before Masayoshi Son plowed billions into WeWork with the directive to be crazier, go bigger. Our model was very different from WeWork’s model of large centers in large cities that primarily targeted large corporations. It was more than a real estate play and with an interesting problem to solve: community focused centers were valuable to regular people, but could these be created sustainably and profitably over the long term?

We thought it could. So we built it.

The crux of what we developed was smaller, replicable, technologically-enabled and automated centers, outside big cities, that could meet the needs of their members and do it profitably and with minimal staffing. We developed our co-working management software, Satellite Deskworks, along with our now patented tracking and automation, to run any type of shared use center, and to do it simply, intuitively, and comprehensively.

I do not get funded. Several guys — without cynicism — suggested that I get a 30-year-old front man.

With the model proven, we began working on funding to scale the enterprise. The business plan, slide deck and pro forma were written. The pitches started, all the while running and growing the business from personal and generated funds. More pitches. And more pitches. Clearly we weren’t making it interesting enough. Or it was too early. Or the people with funds didn’t understand how important this was for the vast majority of workers and their local communities. Or perhaps there was just something wrong with us, since the business was already working.

Some of the pitch meetings felt like walking through the looking glass: One VC group provided us with an internal sponsor who advised us to only talk about software. Then his associate took over and said that advice was all wrong: our strength was in the combination of real-world and software.

On pitch day, before our presentation, a single-function app was pitched — just an idea, no product. It got funded. Subsequently, even though we had three profitable centers and several software clients, I was told that we weren’t far enough along to validate the market. Another group declined to fund us, then a year later asked me back as an expert on co-working to explain this emerging industry to them. But, again, no funds were forthcoming.

Over and over again, I’d be told that the presentation was spot-on, and yet, no funds.

I’m an older woman. I got my undergraduate degree at 43 years old and a masters at 46. I had started, run and sold my first startup to a large multinational by the time I was 40. I am good at what I do; I build and scale businesses.

Another group declined to fund us, then a year later asked me back, as an expert on co-working, to explain this newly emerging industry to them.

But I do not get funded.

This is not a complaint. This is a fact. I understand what happened at those pitches. Despite our scalable, successful business model, the decision makers were trying to gauge what others at the table would do, how they would perceive me. And the double-whammy of being older and a woman was a bridge too far.

Like picking at a scab, I talk to people knowledgeable in venture who nod their heads at the idea that I’d have trouble getting funded, no matter how well the model worked or the software functioned.

Several guys — without cynicism — suggested that I get a 30-year-old front man. But instead, I focused on growing my business organically, perhaps missing the opportunity to truly scale something that communities of all sizes need.

There is a serious flaw in how businesses are funded, and it is the same discussion we had twenty and thirty years ago about who was at the table in managing businesses.

Vibrant, innovative concepts and businesses are frequently started by people who aren’t happy with their options inside the box of the corporate world. 45% of small business owners are from minority ethnic groups. Women start businesses at twice the rate of men, yet female founders got 2% of VC dollars in 2017. Black women are the most educated group in the U.S., yet they receive about 0.2% of VC funding.

Older founders are seen as less dynamic, less adventurous, while the reality is that half the startups in the U.S. are by people over 50 — and older entrepreneurs are actually more likely to succeed.

Despite the fact that many acknowledge this as a problem, the solutions seem elusive. But they shouldn’t be. Corporations are stronger because of bringing diversity to boards, and the VC model would be stronger by employing many of the same tactics. The likelihood that funded startups will succeed increases by appealing to a broader audience, and the best way to do that is to fund a broader segment of entrepreneurs. Although these shouldn’t be new concepts, let me propose a few ideas:

Set up and support funds at an intermediate level. There is a crying need for funding in the $1 million – $3 million range, particularly for women- and minority-owned businesses. We know how to successfully bootstrap, but however good we are, it takes investment to scale.

If you measure it, you get it. Set up metrics. 10% of your board will be women within a year, 30% within three years, and 50% within six years. Set up similar metrics for ethnic and racial diversity. Set a goal for the percentage of your portfolio that will be minority- and women-owned startups each year over the next five years. And measure the performance of these startups against the past portfolio.

Increase the diversity of VC management and boards. By including decision-makers at the table from a broad range of backgrounds, ethnicities, ages, and genders, the industry should get to a more diverse portfolio with a greater likelihood of overall success.

Get to critical mass. Token diversity accomplishes little. You need enough people to truly provide a voice and echo. It’s easy to ignore a single voice from a different perspective. Research has shown that for a group to even hear a woman’s voice in a meeting at least 30% of that group needs to be women.

So, yes, I walk into the VC pitch rooms, and I know I’m not walking out with funding. No one is going to wire me a generous seed round and tell me to go break things.

Because of who I am and how this particular world perceives me, I have to build a business that works, that stands on its own from the beginning. This is not the end of the world. Businesses should work.

But the VC model needs to work, too.

Leading VCs discuss how COVID-19 is impacting real estate & proptech

By Arman Tabatabai

Several months ago, we surveyed more than 20 leading real estate VCs to learn about what was exciting them most in the real estate tech sector and hear their opinions on proptech trends like co-working, flexible office space and remote office space.

Since we published our survey, COVID-19 has flipped the real estate sector on its head as more companies move toward mandatory remote work, retail businesses are forced to temporarily shut their doors and high-traffic properties thin out. Suddenly, the traditionally predictable world of real estate is more chaotic and unclear than ever.

What are the short and long-term impacts of pandemic-induced volatility? Does this open up opportunities for proptech startups or shutter them? What does this mean from an investing point of view? We asked several of the VCs that participated in our last survey to update us on how COVID-19 is impacting real estate startups, non-proptech companies in general and the broader real estate market overall:

Christopher Yip, RET Ventures

Despite its banner year in 2019, proptech will not be immune to the pressures venture-backed companies face in a market pullback, and we are preparing ourselves and our portfolio companies for a bumpy year.

With the real estate industry facing headwinds, SoftBank-backed Compass lays off 15% of staff

By Jonathan Shieber

Compass, the real estate brokerage startup backed by roughly $1.6 billion in venture funding, has laid off 15% of its staff as a result of the shifting economic fortunes created by the global response to the novel coronavirus pandemic, according to an internal email seen by TechCrunch.

Citing economic fallout that has seen stock markets plummet 30 percent in just 22 days Compass chief executive Robert Reffkin wrote that the company has seen an over 60 percent decline in real estate showings and is modeling a 6-month decline in revenue of 50 percent.

“We aren’t just facing an economic recession, we are facing an economic standstill,” Reffkin wrote. As the country’s unemployment rate soars to a projected 10 percent, Reffkin wrote that the company had no choice but to cut its workforce.

The 15 percent reduction in staffing is being accompanied by an 80% reduction in its concierge business and a shift to entirely virtual delivery. As part of the reductions in corporate spending, Reffkin cut his own salary to nothing and reduced the entire executive team’s salary by 25 percent.

For the employees that are laid off, the company said it would provide an “enhanced severance and COBRA health insurance” along with letting employees hang on to their company laptops and providing tools, training, and networking help so that they can try to get a new job.

The news from Compass is just one indicator of a potential reckoning coming for the booming property tech investment category.

Earlier today, TechCrunch reported that Zillow was suspending its homebuying activities as a result of the new economic reality.

Zillow said it decided to halt its offers to sellers after several states, including California, Illinois, Louisiana, Ohio, New York and Nevada, implemented emergency orders requiring people to stay home and all non-essential business activities, including some real estate-related activities, to stop.

Opendoor and Redfin made similar decisions to pause homebuying. Meanwhile other real estate companies are also laying off staff. The co-working startup Convene laid off staff as well, citing current market conditions.

Reffkin is hopeful that the economy will turn around and predicted that the economy could turn around in the next 100 days. And he ends his email looking forward to a return to normalcy for Compass and the broader market.

“I feel hopeful that China’s apparent success at reducing the spread of the Coronavirus and restarting their enormous economy may provide a blueprint for our future, as well,” Reffkin wrote. “And I feel hopeful because of the ways I see people throughout our company and throughout our society stepping up during this challenging time.”

To date, Compass has raised $1.6 billion in financing from investors including the Canadian Pension Plan Investment Board, Fidelity, Wellington Management, Softbank Vision Fund, and the Qatar Investment Authority, according to Crunchbase.

 

Zillow suspends home buying due to COVID-19

By Kirsten Korosec

Zillow said Monday it will temporarily stop buying homes in all 24 markets where it operates in response to public health orders related to the COVID-19 pandemic, the latest real estate startup to shift how it operates as the disease caused by coronavirus continues to spread.

Zillow said it decided to pause making offers to sellers after several counties and states, including California, Illinois, Louisiana, Ohio, New York and Nevada, implemented emergency orders requiring people to stay home and all non-essential business activities, including some real-estate related activities, to stop.

Zillow follows action from other real estate startups such as Opendoor and Redfin to temporarily pause making offers on homes.

“We plan to restore Zillow Offers full operations once health concerns pass and local health orders are lifted,” Zillow Group CEO and co-founder Rich Barton said in a statement. “In the meantime, we are working to support our customers and partners in these uncertain times when home has never been more important.”

The company started to slow its pace of buying homes last month, while accelerating sales in the quarter, Barton said. Zillow’s inventory is now 1,860 homes, a 31% decline from 2,707 homes at the end of 2019.

The company said it will continue to market and sell homes through “Zillow Offers,” and will temporarily suspend plans to open additional Zillow Offers markets. Zillow also halted open houses in all markets, beginning last week.

We have a strong balance sheet and cash position, and are taking proactive steps to reduce spending to offset the important financial support we’re giving our industry partners so we may continue to best serve our mutual customers,” added Barton.

SoftBank-backed Indian startup Oyo to cut 5,000 jobs globally

By Manish Singh

Oyo said on Wednesday it is laying off 5,000 people from its global workforce as the Indian budget hotel startup looks to cut its spendings and chase profitability.

The latest round of job cuts would reduce Oyo’s headcount to 25,000 in over 80 countries where it operates. An Oyo spokesperson said the job cuts are part of restructuring that the startup announced in January.

“The global restructuring exercise at OYO was announced in January 2020 and the recent developments in China are in line with the same. China is a home market for OYO, and we will continue working with our thousands of retained OYOpreneurs to deliver against our core mission of creating quality living experiences for millions of middle-income people around the world,” the spokesperson said.

“During the tough Coronavirus situation, we will continue to support the benevolent and resilient Chinese society, in every possible way. We want to thank our partners, employees and customers for standing strong together.”

Bloomberg reported that the job cuts would largely impact Oyo’s business in China, where the company plans to let go half of its 6,000 direct full-time staff, the U.S., and India. Oyo also plans to “temporarily” lay off 4,000 discretionary workers, some of whom will be invited back once the business recovers, the report said.

Founded by Ritesh Agarwal and heavily backed by SoftBank, Oyo has aggressively expanded to international markets in recent years and sought to become the biggest hotel chain globally.

During its journey, it has also raised more than $1.5 billion. In October, Agarwal, 26, announced that the firm was seeking to raise an additional $1.5 billion, with him financing $700 million personally.

But the startup’s aggressive expansion came under scrutiny last year after things went spectacularly south, and quickly, at WeWork, another SoftBank portfolio startup.

The New York Times reported earlier this year that many of the hotel partners of Oyo felt cheated and in dire financial condition after the startup reneged on its committed promises. Indian business outlet The Ken further documented the increased pressure the startup put on its employees to meet unrealistic expectations.

Oyo reported a loss of $335 million on $951 million revenue globally for the financial year ending March 31, 2019.

“As difficult as some of these decisions have been to make, especially when it comes to changes to our staffing model, we have reasons to believe that this is the right thing to do for the business and for the 25,000+ OYOpreneurs who remain with the company. We are mostly through, and will complete this restructuring shortly, as we prepare for a strong and sustainable growth in 2020, and beyond,” Agarwal wrote in a blog post in January.

SparkLabs Group launches Connex, an accelerator program for smart city technology

By Catherine Shu

SparkLabs Group announced today that it has launched SparkLabs Connex, the latest program in its network of startup accelerators and venture funds. Focused on real estate technology (proptech) and the Internet of Things, SparkLabs Connex will tap into startup ecosystems in Silicon Valley, Seoul, Shenzhen, Taipei and Singapore.

The program will support startups working with tech, like artificial intelligence, 5G, low-power wide area networks, eSIMS and security, essential to green building and smart city programs. Charles Reed Anderson, the founder of Singapore-based IoT, mobility and smart city advisory firm CRA & Associates, will lead SparkLabs Connex as its managing partner.

The program’s partners include Nokia, True Digital, Beca and Skyroam, as well as the cities of Taipei, Taiwan, Songdo, South Korea and Darwin, Australia, which will be working with its portfolio startups to test and deploy their technology. SparkLabs Connex is also working with Go Smart, the Taipei City initiative to create a global network of smart cities, and the Urban Technology Alliance, which tests smart city tech in France, Spain, Japan, South Korea and Taiwan.

In a press statement, Anderson said, “My ambition for SparkLabs Connex is to become the innovation hub for the IoT, smart city and prop tech ecosystems, and I’m excited with the quality and variety of partnerships we have signed at launch-and will sign in the future. SparkLabs Connex is more than an accelerator, it’s an ecosystem play, and we believe it creates a unique value proposition for startups, partners and investors.”

A look at Made Renovation, which just raised $9 million in seed funding to zero in on bathroom remodels

By Connie Loizos

Made Renovation, a new, San Francisco-based company, thinks it has found a profitable way to help homeowners get done something that busy general contractors in the Bay Area won’t otherwise make time for, which is bathroom remodels.

Why they typically pass on these: they have too many entire homes, or, at least, entire floors, to build for affluent regional homeowners who’ve kept the construction industry buzzing for years.

It’s a problem that founders Roger Dickey, who previously co-founded Gigster, and Sagar Shah, who previously founded Quad, think they can solve through technology, naturally. Their big idea: create bathroom templates that customers can customize but whose scope and costs are generally understood, line up these customers, then hire general contractors who are willing to focus only on these bathrooms.

It’s an idea that’s picking up traction with these GCs, says Dickey, who explains it this way: “General contractors generally see net margin of 3%” no matter the size of the job, owing to unforeseen hurdles, like pipes that suddenly need to be rebuilt, drains that need to be dug and materials that don’t ship on schedule.

In addition to timing issues, GCs are also often dealing with frustrated building owners who might underestimate a project’s costs, particularly in California, where construction bills often cause sticker shock.

Made Renovation sees an opportunity to make both the lives of GCs and homeowners easier. Through pre-negotiated pricing, volume and materials handling (it right now rents part of a warehouse where it receives goods), it’s promising GCs a “reasonable margin” so they can not only pay their crews but live a higher quality of life themselves.

Meanwhile, per the plan, customers need only choose from the company’s “modern” collection, its more traditional “heritage”design or its “artisan” collection — all of which can be customized — then sit back while their long-neglected bathrooms are remade.

Whether Made Renovation can pull off its grand vision is a giant question mark. The construction industry is nothing if not messy, and in addition to convincing GCs of its merits, Made Renovation — like any marketplace company — has to strike the right balance between customer demand and supply as it gets off the ground.

In the meantime, investors clearly think it has promise. Led by Base10 Partners and with participation from Felicis Ventures, Founders Fund and some individual investors, the company has already raised $9 million in seed funding across two tranches.

Part of that capital is on display right now in San Francisco, where Made Renovation today opened its doors to customers who want to check out its design ideas and, if all goes as planned, will begin lining up their own home improvement projects. Customers simply pick a collection, Made Renovation then puts together a “mood board” of materials from that collection, sends out a 3D rendering of what to expect, then goes into build mode with its GC partners.

As for what happens when that build goes awry, Dickey says Made Renovation has it covered. Most notably, while it guarantees the work to its own customers, the GCs with whom it works guarantee their work to Made Renovation.

Dickey also notes that while the startup “may lose money on some projects,” he stresses there are caveats that customers agree to at the outset. Among these, he says, “We can’t X-ray their walls and see if they don’t have wiring up to code. We don’t cover dry rot in walls.” Technology, suggests Dickey, can only do so much.

If you’re in the Bay Area and want to check out its new storefront, it’s on Chestnut Street in SF, in the city’s Marina district. The company hopes to perfect its model in the Bay Area, says Dickey, then expand into other regions. As for why Made Renovation decided to tackle one of the most challenging U.S. markets first, he suggests it’s the best way to test its mettle. “I like the idea of starting a company here, because if we can make it work here, I think we can succeed anywhere.”

A security mishap left Remine wide open to hackers

By Zack Whittaker

Security is all too often focused on keeping hackers out and breaches at bay. But in the case of Remine, a real estate intelligence startup, it left its doors wide open for anyone to run rampant.

Remine is a little-known but major player in the real estate analytics and intelligence market. It works by collecting and mining vast amounts of real estate data — from public listings to privately obtained data from brokers and real estate agents from across the United States. The company, which last year raised $30 million in its Series A to help expand its real estate data and intelligence platform, claims it has data “on 150 million properties across all 50 states.”

But that data was only a few clicks away from being easily accessible, thanks to a misconfigured system.

The misconfiguration was found in Remine’s development environment, which although protected by a password, let anyone outside the company register an account to log in.

Thinking it was a secure space, Remine’s developers shared private keys, secrets and other passwords, which if exploited by a malicious hacker would have allowed access to the company’s Amazon Web Services storage servers, databases and also the company’s private Slack workspace.

Mossab Hussein, a security researcher at Dubai-based cybersecurity firm SpiderSilk, found the exposed system and reported the findings to TechCruch so we could inform the company of the security lapse.

The exposed private keys, he said, allowed for full access to the company’s storage servers, containing more than a decade’s worth of documents — including title deeds, rent agreements and addresses of customers or sellers, he said.

One of the documents seen by TechCrunch showed personal information, including names, home addresses and other personally identifiable information belonging to a rental tenant.

After TechCrunch reached out, Remine co-founder and chief operating officer Jonathan Spinetto confirmed the security lapse and that its private keys and secrets have been replaced. Spinetto also said it has notified customers with a letter, seen by TechCrunch. And, the company has retained cybersecurity firm Crypsis to handle the investigation, and that the company will “assess and comply” with applicable data breach notification laws based on the findings of the investigation.

Remine escaped bruised rather than breached, a lesson to all companies, large and small, that even the smallest bug can be enough to wreak havoc.

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Fifth Wall’s Brendan Wallace on coronavirus, WeWork and what’s shaking up proptech

By Connie Loizos

Last week, we interviewed Brendan Wallace, a real estate-focused venture capitalist whose portfolio companies include Opendoor, which buys and sell homes, and scooter company Lime, which helps building owners navigate around parking requirements by installing docking stations instead.

We first talked with Wallace almost exactly three years ago when he and partner Brad Greiwe took the wraps off their venture firm Fifth Wall Ventures and its $212 million debut fund. What really stood out to us at the time is that it was backed by a long list of real estate heavyweights. They’re understandably eager to get a peek at up-and-coming technologies and, in some cases, deploy them.

Wallace and Greiwe have been awfully busy since that initial conversation. Last year, they closed a second flagship fund with $503 million in capital commitments. Fifth Wall is also working to close two other funds, including a $200 million retail fund focused on matching online brands with real-world real estate and a reported $500 million carbon impact fund whose capital will enable its limited partners to expressly invest in sustainable technology.

Wallace declined to discuss the last two funds, presumably owing to SEC regulations, but he did talk with us about what he says is the biggest thing to shake up the real estate industry in “the last five decades.” We also chatted about how the coronavirus impacted a recent fundraising trip to Singapore and how WeWork’s public retrenching has affected how investors feel about real estate startups right now (he suggests WeWork’s fall definitely made an impression). Some excerpts from our conversation follow, edited lightly for length and clarity.

TechCrunch: We’d read that you were recently in Singapore meeting with new investors.

Brendan Wallace: Yes, I was in Singapore meeting with our existing investors and it was a pretty unique time to be there. When I went, which was about two weeks ago, the outbreak of coronavirus was fairly contained in China. But then as you probably read, it spread pretty rapidly in Singapore, so at the moment, I’m actually kind of self-quarantining myself in my own house.

Where top VCs are investing in construction robotics

By Arman Tabatabai

Venture capital has been flooding the various subverticals under the robotics umbrella in recent years, and the construction space is one of the largest beneficiaries.

Last November, we surveyed 13 of the top robotics-focused VCs to find out which areas of robotics are exciting them most going into 2020. One of the most common areas of attention respondents highlighted were startups focused on construction and manufacturing. In 2019 alone, the robotics space saw roughly 600 venture-backed fundraising rounds, while construction companies successfully raised roughly 200 venture rounds.

With our 2020 Robotics + AI sessions event on the horizon in early March, we’re diving back into the sector to learn about the attributes of construction attracting robotics VCs the most and which types of startups VCs are actually writing checks for in 2020. We asked 16 leading people who actively invest in construction robotics and work at firms spanning early to growth-stage to share what’s exciting them most and where they see opportunity in the sector:

 

Rohit Sharma, True Ventures

True Ventures has been investing in industrial automation broadly for 4+ years and focusing on founders who bring technology to market that eliminates repetitive manual labor and multiplies human productivity by automating routine tasks.

After closing its $2.2 billion latest tech fund, KKR adds top Cisco exec to its leadership team

By Jonathan Shieber

KKR, the multibillion-dollar multistrategy investment firm, is beefing up its technology practice with the appointment of Rob Salvagno as a co-head of its technology growth equity business in the U.S. 

It’s a sign that KKR is taking the tech industry seriously as it looks for new acquisition and investment opportunities.

Salvagno, the former vice president of corporate development and head of Cisco Investments, was responsible for all mergers and acquisitions and venture capital investments at the company.

Over a twenty-year career Salvagno helped form and launch Decibel, the networking giant’s early stage, several hundred million dollar investment fund.

“Our business has evolved significantly since we first launched our technology growth equity strategy over five years ago with a small team of five. Since that time, the growth of our business and the number of compelling investments we’re seeing around the globe have allowed us to not only expand our team, but also our technology experience, network and geographic reach,” said Dave Welsh, KKR Partner and Head of Technology Growth Equity, in a statement. “With the addition of a tech industry veteran like Rob to our team, we’re excited to continue to build for the future and position ourselves well to capture the many investment opportunities we see ahead.” 

To date, KKR has invested $2.7 billion in tech companies since 2014 and established itself as a player in late stage tech investment with a team of nineteen investment professionals. Earlier this month, the firm closed its $2.2 billion fund dedicated to growth technology investment in North America, Europe and Israel.

“Rob has an extensive background in security, [infrastructure] software and app dev and dev ops, a background which we believe will complement the existing teams’ skillset very well,” said Welsh in an email. “[And] our focus areas for our second firm will be similar to the prior fund, namely a heavy focus on software with some additional focus on consumer internet, fintech/insurtech and tech enabled services.”

Application development software and security technologies will also remain a core focus for the firm, according to Welsh.

“Additionally, we will be ramping up our time spent on infrastructure software (i.e. software used to run modern data center / cloud environments), application dev and development operations (i.e. app dev and dev ops solutions) as well as software solutions focused on certain vertical industries (such as real estate, legal, construction, hospitality),” the KKR co-head wrote in an email.

Real estate startup Homie plans to expand to more cities with $23 million in Series B funding

By Sarah Buhr

Homie has made an impression among younger, first-time home buyers in the Utah and Arizona markets for cutting out the traditional closing costs, 6% real estate commissions and arduous paperwork associated with traditional home sales. It now plans to explore opening up in three new markets and will begin a Vegas launch in March with a fresh infusion of $23 million in Series B equity financing.

While most real estate outfits now cater to customers online, Homie takes a different approach, employing real estate agents who will help them through the process but who don’t take a commission. Instead, sellers get a $1,500 flat fee and buyers and sellers are guaranteed built-in attorney assistance for the negotiation process.

The 6% traditional commission associated with the home-buying process has been around for decades. However, it has also come under fire from the Department of Justice, which recently disagreed with a motion from the National Association of Realtors to dismiss several civil lawsuits lobbied against the organization. The move hints that the U.S. government may see these fees as archaic and unjustified, as well.

How do traditional agents feel about a proposed loss of commission? Those outside of Homie TechCrunch spoke to on anonymity have said it often takes more work with less pay to close a deal this way. However, that structure seems to resonate with Homie users. Through Homie, the company claims to have saved over $55 million in commissions, with a revenue growth of 150% over the past year. This bodes well for the company, if true.

The ability to expand is also a possibly good marker for the health of the company. Homie co-founder Johnny Hanna told TechCrunch previously he’d looked at the Vegas area, as well as Dallas for expansion.

A few other places we could see Homie pop up in the next year include Boise, Seattle, Colorado Springs and Nashville.

The other new news out of Homie this year is the addition of real estate adjacent services like Homie Loans™, Homie Title™ and Homie Insurance™, all of which serve to streamline the process for customers.

“Buying or selling a home is expensive and time-consuming because of all the different companies you have to work with,” Hanna said in a statement. “Communication becomes a game of telephone because of all the parties involved. We are disrupting the traditional model and saving customers thousands of dollars by combining technology, a team of experts, and a one-stop-shop for real estate. Technology has changed everything except the real estate business model. That time has finally come.”

UPDATE: Los Angeles-based CREXi raises $30 million for its online real estate marketplace

By Jonathan Shieber

Los Angeles is one of the most desirable locations for commercial real estate in the United States, so it’s little wonder that there’s something of a boom in investments in technology companies servicing the market coming from the region.

It’s one of the reasons that CREXi, the commercial real estate marketplace, was able to establish a strong presence for its digital marketplace and toolkit for buyers, sellers and investors.

Since the company raised its last institutional round in 2018, it has added more than 300,000 properties for sale or lease across the U.S. and increased its user base to 6 million customers, according to a statement.

It has now raised $30 million in new financing from new investors, including Mitsubishi Estate Company (“MEC”), Industry Ventures and Prudence Holdings . Previous investors Lerer Hippeau Ventures and Jackson Square Ventures also participated in the financing.

CREXi makes money three ways. There’s a subscription service for brokers looking to sell or lease property; an auction service where CREXi will earn a fee upon the close of a transaction; and a data and analytics service that allows users to get a view into the latest trends in commercial real estate based on the vast collection of properties on offer through the company’s services.

The company touts its service as the only technology offering that can take a property from marketing to the close of a sale or lease without having to leave the platform.

According to chief executive Mike DeGiorgio, the company is also recession-proof thanks to its auction services. “As more distressed properties hit the market, the best way to sell them is through an online auction,” DeGiorgio says.

So far, the company has seen $700 billion of transactions flow through the platform, and roughly 40% of those deals were exclusive to the company.

“The CRE industry is evolving, and market players, especially younger, digitally native generations are seeking out platforms that provide free and open access to information,” said Gavin Myers, general partner at Prudence Holdings, in a statement. “CREXi directly addresses this market need, providing fair access to a range of CRE information. As CREXi continues to build out its stable of services, features, and functionality, we’re thrilled to partner with them and support the company’s continued momentum.”

CREXi joins the ranks of startups based in Los Angeles that have raised money to reshape the real estate industry. Estimates from Built in LA count roughly 127 companies, which have raised in excess of $2.4 billion, active in the real estate industry in Los Angeles. These companies range from providers of short-term commercial office space, like Knotel, or co-working companies like WeWork, to companies focused on servicing the real estate industry like Luxury Presence, which raised a $5 million round earlier in the year.

Due to inaccurate information provided by the company, an initial version of this story indicated that CREXi had raised $29 million in its Series B round. The correct number is $30 million.

Placer.ai, a location data analytics startup, raises $12 million Series A

By Catherine Shu

Placer.ai, a startup that analyzes location and foot traffic analytics for retailers and other businesses, announced today that it has closed a $12 million Series A. The round was led by JBV Capital, with participation from investors including Aleph, Reciprocal Ventures and OCA Ventures.

The funding will be used on research and development of new features and to expand Placer.ai’s operation in the United States.

Launched in 2016, Placer.ai’s SaaS platform gives its clients to real-time data that helps them make decisions like where to rent or buy properties, when to hold sales and promotions and how to manage assets.

Placer.ai analyzes foot traffic and also creates consumer profiles to help clients make marketing and ad spending decisions. It does this by collecting geolocation and proximity data from devices that are enabled to share that information. Placer.ai’s co-founder and CEO Noam Ben-Zvi says the company protects privacy and follows regulation by displaying aggregated, anonymous data and does not collect personally identifiable data. It also does not sell advertising or raw data.

The company currently serves clients in the retail (including large shopping centers), commercial real estate and hospitality verticals, including JLL, Regency, SRS, Brixmor, Verizon* and Caesars Entertainment.

“Up until now, we’ve been heavily focused on the commercial real estate sector, but this has very organically led us into retail, hospitality, municipalities and even [consumer packaged goods],” Ben-Zvi told TechCrunch in an email. “This presents us with a massive market, so we’re just focused on building out the types of features that will directly address the different needs of our core audience.”

He adds that lack of data has hurt retail businesses with major offline operations, but that “by effectively addressing this gap, we’re helpiong drive more sustainable growth or larger players or minimizing the risk for smaller companies to drive expansion plans that are strategically aggressive.”

Others startups in the same space include Dor, Aislelabs, RetailNext, ShopperTrak and Density. Ben-Zvi says Placer. ai wants to differentiate by providing more types of real-time data analysis.

While there are a lot of companies touching the location analytics space, we’re in a unique situation as the only company providing these deep and actionable insights for any location in the country in a real-time platform with a wide array of functionality,” he said.

*Disclosure: Verizon Media is the parent company of TechCrunch.

Matera raises $11.2 million to let you handle residential property management yourself

By Romain Dillet

Matera, the French startup formerly known as illiCopro, is raising an $11.2 million funding round (€10 million). The company has been building a SaaS platform to give you all the tools you need to handle property management for your residential building.

Index Ventures is leading the round, with existing investor Samaipata also participating. Business angels, such as Bertrand Jelensperger, Paulin Dementhon and Marc-David Choukroun are also participating.

In France, there are two ways to handle property management of residential buildings. Co-owners of the hallways, elevator and common space of the building can either hire a company to do it and handle all the pesky tasks, or you can do it yourself.

Matera wants to target the second category — co-owners who want to manage their building themselves. Other startups, such as Bellman, have chosen a different approach. Matera has built a web-based platform to view information, communicate with other co-owners and make sure everything is up-to-date.

Everybody has their own account and can access the platform. Co-owners meet regularly to handle outstanding issues. Matera centralizes all topics, helps you write a report and checks that it complies with legal requirements.

Matera then handles everything that involves money. You can collect money from co-owners every month and check how your money is spent. The platform tries to do the heavy lifting when it comes to accounting.

Finally, Matera helps you manage contracts with partners — elevator maintenance, heating maintenance, cleaning company, water, electricity, insurance, taking care of the garden, etc. You get an address book for your partners, and the company is working on a way to help you switch to another partner from the platform.

If there’s something you don’t feel comfortable doing yourself, Matera can help you work with legal, accounting, insurance and construction experts.

So far, Matera has managed to attract 1,000 residential buildings representing 25,000 users. The company plans to expand to other European countries in the future, starting with Belgium, Spain, Italy and Germany. With today’s funding round, the company plans to hire 100 persons.

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