Fellow real estate friends, this article has some fascinating insights on capital for our industry! 💡👷
- There's a big gap between traditional real estate equity and high-growth VC funds for "middle" innovative projects - too risky for us but can't scale fast enough. 🏗
- Many proptechs pairing OpCos (tech/IP) and PropCos (assets) still struggle because their OpCos have to meet unrealistic VC growth expectations. Not every real estate model can scale like software! 🚀🤯
- What's the solution? The author proposes two "middle capital" approaches:
✔️OpCo funds that expect lower growth from each company, but get good overall fund returns through lower failure rates than pure VC. Real estate failures are much rarer than startups going under!
✔️Co-GP PropCo funds that take risks on innovative properties in exchange for warrants in the OpCos. Compensates us for added risk while participating in the operating company's upside. 📈
- Huge potential market - many "invisible" companies caught between real estate and VC funding, or unable to start at all. 💰
- This capital can accelerate innovation that would otherwise take decades of old-school bootstrapping. 🏃💨
- More experimentation needed, but expect to see new middle capital options between real estate and VC! 🧪
Let me know what you think! Have you seen any promising new capital models emerging in our space? 🤔 Very interested to hear your perspectives.
Please find the full article here
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Our innovative model offers the chance to both foster sustainability solutions through an inspiring community platform and see solid returns by backing the infrastructure for impact.
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