36th Annual Cornell Real Estate Conference – Panel Wrap Up – Venture Capital and Tech

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Ali Daye

Ali Daye is a second-year student in the Baker Masters of Real Estate Program. Prior to Cornell, Ali received a Masters in Construction Management from NC A&T State University. During his career in the construction industry, he was involved in the construction of many large-scale projects working for major construction management firms. Upon completion of the Baker Program, Ali intends to pursue a career in international real estate and development, with focus on sustainability, concentrating in the markets of the Gulf Cooperation Council.

The third panel of the 2018 Cornell Real Estate Conference featured the topic of Venture Capital and Tech, which explored the expansion of real estate technology and capital investments into such technologies. Moderated by Clelia Peters, Co-founder of MetaProp and President of Warburg Realty, the panel was composed of several individuals who are making waves in the proptech space across a variety of areas. The panel included the following participants:

Meghan Cross Breeden – Cornell ‘08, is a Partner at Amplifyher Ventures, which invest in startups created by women.

Marshall Cox – Cornell ’02, is the Founder and CEO of Radiator Labs, which created and markets an innovative steam radiator enclosure that saves, on average, 25% of monthly heating costs.

Raffi Holzer is the CEO of Avvir, which uses laser scanning to create Building Information Modeling (BIM) to capture mistakes during the construction process.

Edward Liew – Cornell ‘09, is a Senior Director of DivcoWest, a vertically-integrated real estate operating company, where he focuses on the investment and strategic implementation of real estate technology.

The panel started off by highlighting what proptech actually is and includes. It is often a misconception that the term proptech only refers to actual properties. As noted by the panel, proptech can include the use of technology in any aspect of the construction, operation, and maintenance of the built environment, hence the complete value chain. One panelist used the term “from dirt to disposition” to explain what is encompassed by the term proptech.

The panel highlighted that technological advancements in the building industry provide immense opportunities for investment. This is because components such as sensors and lasers, that make certain technologies possible, are much cheaper now and are more readily available. Data exchange platforms also have fewer limitations than in recent past, allowing for an ease in data collection and transfer.

Urban Umbrell Shed System (Courtesy: Urban Umbrella)

The construction industry, which has traditionally been one of the least innovative industries in America, is uniquely poised for technological disruption. One panel explained that much of the old guard is beginning to retire, creating a space for a new generation of construction workers who are more adept at using technology. The industry is also seeing disruption from more entrepreneurial-minded individuals who are coming in from outside the industry with new ways of solving problems. The panel cited case of Urban Umbrella which is an alternative to the traditional scaffolding which has been widely used throughout the construction industry since the 1950s. The technology was created in a design competition sponsored by former NYC Mayor Michael Bloomberg to reimagine the traditional and unsightly sidewalk shed often seen throughout large cities. After winning the design competition in 2010, the company created a prototype which led to it receiving millions of dollars in venture capital funding (Nonko, 2017).

The panel discussed the challenges to the adoption of some technologies. In many cities, regulations affect the usage and implementation of new technologies. For example, the use of drones, which have far-reaching potential on the built environment, is often restricted in heavily-populated urban areas. Another challenge is the need to prove efficacy before scaling new technologies. In the case of Radiator Labs, founder Marshall Cox, noted that it was a challenge for him to approach commercial real estate companies early on. However, he was able to foster strategic relationships with local universities whose substantial reductions in heating costs in older dorms served as evidence that he was later able to bring in front of established commercial real estate companies.

Globally, the proptech industry is expected to reach $20 billion by 2020 (Tan, 2017). Many investment and venture capital firms are seeing the potential for technology in all industries related to the built environment. The panelists noted several elements that can aid in the expansion of the proptech industry. Chief among them are the ability for startups to partner with more established commercial real estate companies and having new entrepreneurs who are in-tune to the needs of the commercial real estate industry and who are adept at creating new ways to solve problems specific to the industry. Overall, the panel provided a positive insight into the future of venture capital and technology and the potential that lies ahead.

Reference:

Nonko, E. (2017, September 13).NYC scaffolding is getting an upgrade. Curbed New York.

Tan, S. (2017, May 24). $20 billion in “proptech” globally by 2020: Taronga and KPMG. Financial Review.

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