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The new fund will invest in Seed/Series A startups to build JLL into a digital real estate leader
If you're going to be on the cutting edge of your business, one way to stay relevant is to invest in new technologies transforming your industry.
JLL Spark, a relatively new division of 235-yr-old commercial real estate services and investment firm JLL, announced the launch of a $100 million VC fund, called JLL Spark Global Venture Fund, to invest in real estate startups.
"The idea behind Spark was to bring in entrepreneurs and new technology partners to JLL and its clients, and we thought we'd build new tech-based products," said Mihir Shah, Co-CEO at JLL Spark, launched in 2017 to essentially acquire or develop new technology solutions
"But as we started learning about the [real estate] industry, we realized there were many new startups that would be worth investing in," said Shah, whose co-CEO in the endeavor is Yishal Lerner, Shah's founding partner in Mob.ly, which was acquired by Groupon.
The fund, which is fully financed by JLL, is now another channel to build JLL into a digital real estate services leader. Its investment sweet spot will be in startups developing products that can help JLL investor [people who buy and sell commercial real estate] and occupier clients [who own or rent large commercial properties].
"If you're a tech startup, your biggest challenge is the deployment and sales cycle [getting the product to real estate operators]. And if you're an owner or renter of commercial properties, it's not easy to assess these new technologies," said Shah. "We want the Spark fund to be the bridge."
As for the tools to help clients that buy and sell commercial real estate, "these investors are interested in technologies that take all this data around IoT devices and use the data to improve operating costs and better space utilization or predictive maintenance."
To see some digital tools - from market analysis, location selection, managing business facilities, etc. - that JLL is already using for its clients, check them out here.
As for the broad themes that Shah considers, he's looking at 2) tech platforms that are scalable and that can harness or manage "energy, space, and maintenance" 2) platforms that deliver better experiences for tenants 3) online leasing aggregators that start with an online experience when you're looking for space 4) blockchain applications.
Why real estate innovation now?
Investments in venture-backed real estate startups are just starting to take off. Of course, there's companies like Zillow ($7.6B market cap) and Redfin ($1.83B), which went public in the last several years. But those two are mainly residential-focused platforms.
The commercial real estate sector is just starting to evolve, said Shah, explaining that technologies have become well advanced that commercial real estate operators and investors are realizing there's too many benefits to ignore. Processing speeds have become so fast that data can be quickly analyzed and turned into actionable insights. Additionally, companies like WeWork have "brought up this notion around experience and flexibility in the office space," said Shah. "This brought to our attention that we can use technology to make the experience of the tenants a lot better."
The fund will focus on seed and Series A, with amounts ranging from a few hundred thousand dollars to several million. The fund may at times lead rounds, said Shah.
Said Christian Ulbrich, JLL’s Global CEO, in a statement: “Creating this $100 million venture fund through JLL Spark allows us to continue to lead the real estate industry in bringing the best proptech ideas to reality. It complements and expands our substantial ongoing investments in innovative, cutting-edge digital solutions, which is a core part of our Beyond strategic vision and commitment to achieve ambitions for our clients,”
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