Why Real Estate-Focused Venture Firm Fifth Wall Just Raised $503 Million For A New Fund: Term Sheet

Real estate-focused venture capital firm Fifth Wall has closed what it’s calling the largest real estate venture fund raised to date—having secured $503 million in commitments that it plans to invest in real estate technology, or “proptech,” companies.

My colleague Rey Mashayekhi has the news this morning. He reports that the new fund is more than double the size of the three-year-old venture capital firm’s first fund, which closed at $212 million in 2017. But interest in the burgeoning proptech market has only grown since then, and Fifth Wall raised capital for “Fund II” from more than 50 limited partners (LPs) in 11 countries—most of whom are institutional commercial real estate owners, operators and investors.

You might remember that I interviewed Fifth Wall co-founder Brad Greiwe for Term Sheet last summer about the firm’s position in the VC ecosystem, its recent investments, and the state of the real estate market. At the time of our interview, Greiwe was very bullish on tokenizing real estate. He told me that “tokenization is probably the most interesting thing we think about on a daily basis.”

Now, it looks like the investment thesis for Fund II has slightly changed. Mashayekhi reports:

While the new fund will target an array of proptech services, [Fifth Wall co-founder Brendan] Wallace said investments will mostly focus on business-to-business enterprises such as Cobalt Robotics, one of four investments that Fifth Wall has already made through Fund II. The San Mateo, Calif.-based startup builds indoor autonomous robots that function as “robotic security guards,” and Wallace said Fifth Wall hopes its investment will see the technology deployed at its LPs’ buildings. Fifth Wall took part in Cobalt’s $35 million Series B round earlier this year alongside the likes of Coatue and Sequoia Capital.

Story coming soon on Fortune.com.

THE AIRBNB INVESTORS: I moderated a panel yesterday with Sequoia’s Alfred Lin, Andreessen Horowitz’s Jeff Jordan and Lightspeed’s Jana Messerschmidt at Fortune’s Brainstorm Tech conference. We covered a number of topics including their time as operators at high-growth companies, investing early in Airbnb, and their biggest failures as investors. Read the story here & watch the full panel video here.

NEW UNICORN: IAC/InterActiveCorp will acquire a $250 million stake in Turo Inc, a San Francisco-based peer-to-peer car-sharing company in a deal that values the company at more than $1 billion. 

…AND MORE FUNDING NEWS: Dust Identity has raised $10 million in Series A funding, led by Kleiner Perkins and including strategic investments from the VC arms of both Lockheed-Martin and Airbus. The money will help the Framingham, Mass.-based company refine and commercialize its novel technique of using minuscule diamond fragments to attach unique, durable tracking codes to physical objects, like high-tech components. Read more at Fortune.

PEOPLE MOVES: Here’s what’s going on at:

Warburg Pincus: Joseph Landy is stepping aside as co-chief executive officer of Warburg Pincus, the private equity firm he has helped manage since 2000, according to Bloomberg. Landy will transition out of the co-CEO role over the next year.

Atomico: Atomico founding partner Mattias Ljungman is leaving to raise his own seed fund, according to TechCrunch. Ljungman’s seed firm is to be called Moonfire Ventures and Atomico will reportedly invest in the new venture and become one of its first LPs.