Fifth Wall, the fast-growing real estate tech venture firm, revealed Monday that it has scored $140 million for its Early-Stage Climate Technology Fund. That's up from $116.8 million earlier this month, when the firm last disclosed its fundraising efforts for the climate investment vehicle in an amended SEC filing.
In December, Fifth Wall announced it had brought in prolific clean-tech investor Greg Smithies to head its efforts to "decarbonize the built world." That's when the firm went public about its plan to raise at least $200 million to invest in climate tech. The firm said today that it has brought in another partner to co-lead its climate team: Peter Gajdoš, the San Francisco-based former head of venture investments for wealth management group IPM.
Last year, Fifth Wall co-founder Brendan Wallace predicted that the real estate industry would one day become "the biggest spender on climate tech for no other reason than its contribution to the carbon problem."
Fifth Wall declined to comment publicly on the fund when reached for comment last week by dot.LA.
With backing from Montreal-based Ivanhoé Cambridge, which holds tens of billions of dollars in real-estate assets, Fifth Wall's climate fund led a $16 million investment in Sealed earlier this year alongside actor Robert Downey Jr's climate fund. Other real estate investors in Fifth Wall's climate fund include Equity Residential, Hudson Pacific Properties, Invitation Homes and Kimco Realty Corporation, Fifth Wall announced Monday.
New York-based Sealed is on "a quest to retrofit the U.S.' existing residential building stock and help them run more efficiently," Smithies wrote in June. Part of that equation involves getting homeowners aboard the heat pump train.
The technology could help American households considerably slash carbon emissions by 142 million metric tons annually, according to research released by Carbon Switch.Sealed is one of at least three startups backed by Smithies in recent months, per the investor's LinkedIn. Others include Austin-based 3D-printed buildings startup Icon, which announced a $207 million late-August raise, and Emeryville-based pea milk company Ripple Foods. It disclosed a more than $57 million raise around the same time.
This story has been updated to include the latest fundraising figures from Fifth Wall.
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Funding for Southern California startups has stalled as some of the region's biggest investors spread money outside the region.
In 2010, roughly one in every 10 startup dollars deployed nationally funded tech companies in Southern California. A decade later, that share has remained stubbornly static, even as the total sum invested in local startups ballooned from $4 billion in 2010 to $14 billion in 2019. That's according to a new report commissioned by Alliance for SoCal Innovation, a nonprofit advocating for the local tech scene.
"The good news is the pie has gotten bigger, but our slice of it has stayed more or less the same," said Andy Wilson, the executive director of the Alliance.
A major reason why the share has not budged is that most local startups are still in their infancy, raising smaller rounds. That brings down total investment dollars. Southern California startups raising Series B or later funding accounts for 64% of total investment, compared to 68% for New York and 80% for the Bay Area.
"We really haven't done particularly well in late-stage funding," Wilson said.
The data — which encompasses San Diego, Orange County and L.A. — was compiled late last year by Boston Consulting Group and is now being made public.
It also found fewer venture dollars are staying local. In 2013, about 30% of dollars stayed in Southern California versus fewer than 10% last year, a direct consequence of firms like B Capital, Fifth Wall, and Sinai Ventures raising larger funds that are geographically agnostic.
"These bigger guys don't really seem to be focused on taking advantage of the local market opportunity," Wilson said.
Upfront Ventures has invested in the most local companies in the last three years with 58, followed by Greycroft, which has backed 45 startups. Of VCs not based here, NEA and Sequoia Capital led the way with 24 and 23 startups, respectively.
The report counted 3,750 startups in Southern California, which is about half the number in the Bay Area, and fewer than New York's 5,100 startups.
Despite a reputation for consumer tech, Southern California is the most well-diversified across industries among the country's top three innovation hubs, with an even split with software and tech, health and media companies.
"Most of the world thinks of us as king of the consumer Internet and media – Netflix and Snapchat – but SpaceX is here and Relativity Space and all the electric car companies are here," said Wilson.
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The largest property technology or "proptech" venture firm Fifth Wall is joining the SPAC boom.
In a filing with the Securities and Exchange Comission this week, the firm said its creating a special acquisition company (SPAC) and intends to raise up to $287 million by selling 28.75 million shares at $10 a piece to seek out opportunities in real estate tech.
A SPAC is a company created solely to raise capital and merge with a private company. These so-called blank-check vehicles have become enormously popular with more SPACs completing IPOs last year alone than in the previous 10 years combined.
The filing discloses that Fifth Wall manages $1.3 billion and has invested in more than 40 companies, including six that have gone on to become "unicorns." Fifth Wall ranks as one of the largest VC firms in Los Angeles and is the largest proptech firm in the world.
The company announced the close of its second real estate technology fund in 2019, with $503 million in dry powder. Last year, it became a Certified B Corporation or "B Corp," which means it is legally required to consider the impact of its decisions on workers, customers, suppliers, community and the environment.
A spokesman for Fifth Wall declined to comment on the offering.
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