Toronto real estate mogul Michael Cooper and his portfolio of Dream real estate companies have become the latest big-name Canadian corporate players to invest in the booming technology business.
Two of Mr. Cooper’s properties, Dream Unlimited and Dream Office REIT, have teamed up with Canadian venture capital firm Relay Ventures to create Alate Partners, a Toronto-based business that will invest in what’s known as the “property tech market,” or companies that provide new technologies to property owners. Each of the two publicly-traded Dream companies will stake $10-million to Alate to start while Relay will match them with $20-million of its own, drawn from its $200-million third venture fund.
“This is the first investment we’ve made in technology, but we think it will be an essential component of any real estate company in the future,” Mr. Cooper said, adding landlords must add technology to their offerings to be competitive for tenants. “Our tenants are [becoming] much more demanding of the owners ... We think technology fits in because it really helps us make sure our customers get what they want.”
Alate’s mandate is to both invest in property tech companies around the world and also potentially own and operate them outright, Mr. Cooper said, offering its properties to investee companies as a “test-bed” to roll out their technologies. The company is starting out with four employees, led by Mr. Cooper’s daughter Courtney Cooper, who has held a series of mid-level positions at Dream Unlimited and Great-West Life.
Alate has already made two investments in early-stage tech companies: Lane, which provides a communications technology platform that enables commercial landlords to connect with tenants; and ParkWhiz, which allows drivers to find, book and pay for parking through an app. Relay’s managing partner John Albright said “we believe Alate will be a business that generates more than $100-million in revenue, is profitable and has a market capitalization of $1-billion or more.”
Toronto-based Relay does early-stage investments and has financed smart thermostat company Ecobee and restaurant payments platform Touch Bistro.
Real estate, as with many industries, has proven ripe for disruption by new technology solutions aimed at making buildings “smarter” thanks to the addition of billions of sensors that can upload massive amounts of data to the cloud, allowing property managers to save money on energy, maintenance and other forms of monitoring such as air quality. Dream is joining two other institutions that have recently committed capital to the property-tech market: Toronto-based Brookfield Asset Management, which has set aside more than US$200-million for such investments through its Brookfield Ventures unit; and Fifth Wall Ventures, a new venture capital firm that raised its first US$212-million fund last year backed by several real estate giants including CBRE and Hines.
They have helped drive increased investment into early-stage property tech firms, which drew a combined US$1-billion in venture capital in the third quarter, a record according to PricewaterhouseCoopers. “There is a huge amount of capital targeted toward technology, which is enabling disruption in certain areas, and real estate is a big target with lots of money coming into it quickly. We’re jumping into it fast,” Mr. Albright said.
With its commitment to Alate, Dream joins several Canadian corporations including financial services players such as Power Corp. of Canada and Intact, as well as a handful of other large corporations – notably Vancouver-based telecommunications giant Telus Corp. – that have committed funds to invest in early-stage ventures.
However, Rich Osborn, who manages Telus Ventures, the most active Canadian corporate-backed venture capital operation, said this country’s corporate class as a whole is under-represented in the domestic venture capital market. He noted Telus is the only Canadian corporation represented in a list of the 10 most active corporate-backed venture investors in Canada, which is otherwise dominated by the likes of Bosch, Salesforce, Intel and Amazon.
“There’s a real dearth of corporate venture in Canada,” Mr. Osborn said. "There are just not that many corporates with dedicated pools or structures like [Alate]."
He encouraged Canadian CEOs to consider expanding into venture investing, saying: "With the pace of change now I think leadership teams have got a dual challenge to both protect their core business while efficiently exploiting future opportunities, whatever industry they’re in. ... You have to use all the tools at your disposal to stay relevant and compete and I think corporate venture is one of the best tools out there.”