Some of the most prominent names in Canadian real estate are backing a new venture capital fund looking to finance startups that bring innovations that can save money and cut emissions to their pandemic-challenged sector.
Greensoil PropTech Ventures, co-founded and chaired by former Minto Group executive Alan Greenberg, has raised about half of a targeted US$100-million for its second property technology, or proptech, fund. Public Sector Pension Investment Board (PSP), one of Canada’s largest pension funds, is anchoring the Toronto-based fund. Other investors include an affiliate of Starlight Group Property Holdings Inc. (Canada’s largest owner of rental units), Tridel Group chief executive officer Leo Del Zotto, ex-Kingsett Capital president Peter Aghar, Bayshore Capital chairman and CEO Henry Wolfond, and Osgoode Properties president Stephen Greenberg (a cousin of Greensoil’s chairman).
“Our vision is that real estate … is going digital,” Greensoil managing director David Kolada said, adding PSP “is showing real leadership” among Canadian pension funds by developing a proptech investing strategy. “We expect other [large asset managers] to follow as they connect the dots between proptech, sustainability and the benefits” such investments can bring to protect the value of their holdings in the giant, traditional asset class.
“The need for innovation has never been greater” for the real estate industry, said Kristopher Wojtecki, managing director of real estate with PSP, one of Canada’s largest pension managers. “Investing in proptech will allow us to stay at the forefront of the changing landscape of the real estate sector and help future-proof our existing portfolio … [and] add new ways in meeting the fund’s real estate mandate.”
Greensoil was an early player in proptech venture capital space, founded in 2012 by Alan Greenberg and Dutch-Israeli investor Gideon Soesman. It raised US$59-million for its first proptech fund in 2015, which backed 11 startups that have brought the internet-of-things and other emerging technologies to the real estate sector to help building owners increase operating efficiencies, reduce costs and lower energy usage.
The first fund’s investments include Toronto smart building technology provider ThoughtWire Corp. and Halifax-based CarbonCure Technologies Inc., which injects carbon dioxide into concrete, reducing the emissions from producing the building material. A separate Greensoil fund based in Israel invests in agriculture and food startups.
Proptech has since become one of the fastest-growing segments in venture capital. While the amount of global financings last year dropped by 25 per cent to US$23.8-billion owing to the pandemic, the proptech sector is expected to rebound in 2021, driven partly by growing commitments by building owners to achieve net-zero carbon emissions over the next 30 years. Several large U.S. real estate investors are also sponsoring special purpose acquisition companies (SPACs) in the proptech space.
“We are witnessing the demand for creative solutions to reduce real estate’s environmental impact,” Greensoil chairman Mr. Greenberg said. “We believe the pace of adoption will continue to increase as tried and proven solutions targeting low-hanging fruit are now mainstream and early-adopter real estate firms are looking for more sophisticated solutions.”
Greensoil will look to invest in companies predominantly in North America, but in also Europe and Israel, that are generating revenue in the single-digit millions of dollars.
“The fund provides exposure to technologies that could have applicability in our own portfolio” of eight million square feet of commercial space and 70,000 rental units, Starlight chief operating officer Glen Hirsh said.
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