New forms of capital always have some element of appeal, along with some sort of risk. Here, experts pull apart both aspects of venture capitalist funds in the housing community.
Few things are as backward as housing in the United States. Virtually everything about how housing is designed, financed, constructed, managed, and sold is beset with inefficiencies and outdated, analogue answers to modern problems. But this may be changing. A number of startups are bringing novel thinking and tech to fossilized sectors of the housing industry.
These approaches have caught the interest of VCs, whose waning interest in solving for things our moms used to do for us has sent them looking for more enduring opportunities. This interest has translated into investment, and last summer Techcrunch declared that “VC doors are wide open for real estate startups,” and noted a $100 million increase in investment in real estate focused startups from the previous year.
While this is encouraging to anyone concerned with remedying the U.S.’s myriad housing crises, it’s news that must be treated soberly. Time will tell whether the majority of VCs can tolerate the long runways, huge amounts of capital, and innumerable regulatory hurdles that come with most housing ventures.
Rather than speculating whether the current VC interest is here to stay, I emailed a number of housing startup founders and experts — most of whom have dealt with VCs firsthand — to see hear what they have to say on the matter.
Stonly Baptiste, Co-Founder and Partner at Urban Us Ventures
Do you think VC money is really interested in housing long-term or is housing simply having its moment right now?
Housing is having a moment, but it could be a very long moment. The challenges and opportunities are massive, and so long as that's true, entrepreneurs will show up. Where there are entrepreneurs, there will be at least some VC money. How much will depend on the results of the current investments as well as the quality of the entrepreneurs the space attracts.
We're [Urban.us] committed to moving the needle on housing affordability, quality of living, and sustainable construction. There are numerous very large markets under the umbrella of housing and we're just starting to scratch the surface.
What, if any, are the long-term implications of the inflow of venture capital into the housing market and its related industries?
Long term implications are hard to tell this early. We don't know who the new incumbents are yet. Short term implications are an increase of opportunities for this very old and inefficient industry to modernize.
Harley Courts, CEO Nooklyn; Jon Dishotsky, CEO Starcity; Brad Hargreaves, CEO Common; Martyn Hoffmann, CEO Kasita; Aaron Holm, CEO Blokable; Roger Krulak, CEO FullStack Modular; Shruti Merchant, CEO HubHaus; and Dror Poleg, ReThinking Real Estate also share insight.
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