Last week, The Real Deal published an insightful article on how niche and traditional venture capital firms have quickly institutionalized the PropTech space. It goes into length in highlighting the plight niche real estate venture capital firms must overcome when stacked against traditional generalist ones.
The article, however, does not say how real estate venture capital firms are growing their teams.
Dedicated real estate venture capital firms have come a long way. In the early 2010s, Navitas Capital and Camber Creek opened the floodgates with real estate-specific funds. Last year, the article noted, was the turning point for the real estate venture capital industry when Fifth Wall raised over $200 million.
It’s not just dedicated real estate venture funds that are pouring capital into PropTech startups. Developers and major brokerages too, many of whom have venture capital arms.
But what was the primary resistance for traditional generalist venture capital firms to not get into the PropTech field sooner? The article quickly zeroes in on the fact that “without real estate backgrounds, many VCs have only recently started to understand this reality, especially when it comes to more complicated business-to-business commercial real estate products.”
The reality is if real estate is complex then PropTech is even more complex.
For those looking to start a career in real estate venture capital, the path may be a little bit more opaque. There are only a few firms around and those that are around often don’t openly hire.
The hiring requirement for a traditional venture capital firm is more clear. For those coming from a non-business background, going to business school may serve as a stepping stone. Another route is to first gain experience in a private equity, investment banking, or consulting role and then make the transition into investing and helping earlier stage companies. Some take the entrepreneurial route, build their own startup success and go into the financing of other companies that way.
Truth is, there is no perfect blueprint for getting into real estate venture capital.
Business schools have traditionally been strong fodders for traditional venture capital firms. There are classes that teach the fundamentals of investing and strategy, but usually don’t provide a comprehensive foundation of the real estate industry. Only a handful of schools offers PropTech classes, with Columbia University and MIT being standout examples.
To better understand what VC firms look for in their new hires, I browsed job search engines, visited the career page of established real estate venture capital firms, and perused internet page archives to find active and expired job listings. Here’s what I can summarize from a couple of job listings from Simon Ventures, Fifth Wall, and MetaProp.
In terms of educational background, for their analyst hires, Simon Ventures and Fifth Wall seek candidates with a bachelor’s degree, without specifying what type of major, so don’t worry if you studied philosophy instead of business like your parents told you to. Fifth Wall does mention the candidate, academically, needs a “record of achievement” from a top-tier school. Not sure what that means but it probably takes more than just passing grades to get on their roster.
Simon Ventures wants candidates with “one to three years of investment banking, finance, investment management, startup or retail operating experience,” so they see a need for real world investment experience.
Fifth Wall casts a bit of a wider net, saying that the ideal candidate should have one to three years of “relevant experience in one or more of the following industries: consulting; venture capital, private equity, or investment banking; entrepreneurship or startups; and real estate.” If their latest crop of hires is representative of the real estate venture capital industry’s hiring practice, it also certainly doesn’t hurt to graduate from a top-tier business school like Harvard or Stanford.
MetaProp, who currently has an active job listing for a senior role, has a more robust professional experience requirement. Candidates should have more than five years of top-tier management consulting experience. In addition, the candidate will also have “real estate and/or financial services industry familiarity and, ideally, experience with private equity and/or venture capital.” Furthermore, the candidate should have more than “two years of experience with technology, startups and entrepreneurial environments with scarce resources.” They do not mention any education requirement, which might be one of the reasons for such specific work history needs.
From these job listings, we can glean that the hiring requirement is not that different from that of a traditional venture capital firm with the one exception, which is that it is preferable if not required to have some experience in the traditional real estate industry. Real estate is an extremely diverse field that touches multiple other industries such as construction, engineering, architecture, urban planning, finance, law, retail and hospitality. The real estate profession is then further sliced into the different asset classes: residential, retail, office, industrial and hotel.
While there might be no foolproof path to getting into real estate venture capital, one must be versed in a few areas. Being fluent in the world of finance will help in analyzing investments and comprehending what investors want. Experience in real estate gives depth of knowledge about the world portfolio companies will be competing in. Proficiency in technology is also a prerequisite in order to fully grasp the business models of potential portfolio companies. Problem is, these are three very different worlds and so understanding all of them is a barrier to entry all in itself.