RET Ventures, an industry-backed venture capital firm focused on technology for the multifamily, single-family rental (SFR), and home building industries, has closed its second fund to power the next generation of technology solutions. The $165 million fund surpassed its initial goal of $130 million due to strong investor interest. It will complement RET Venture’s initial $109 million fund raised in November 2018.
The RET Ventures II Fund was backed by more than 40 strategic investors—a consortium of leading multifamily and SFR owners, operators and developers who serve as technology development partners and customers for the startups in which RET Ventures invests.
“Our mission at RET Ventures from the beginning has been to bring together entrepreneurs and the institutional owners and operators that power the $7 trillion multifamily and SFR industries to drive innovation and create a better, more efficient, and more sustainable housing sector,” said John Helm, founder and partner at RET Ventures. “After the great success of our first fund, we are excited to more than double the size of our strategic investor base in this new fund, which will enable us to further shape the future of real estate technology in the years to come.”
According to RET Ventures, the growing group of real estate strategic investors helps the firm identify the pain points felt by owners and operators that can be solved through technology. In addition, it offers RET-backed companies and entrepreneurs more direct access to the nation’s largest multifamily and single-family operators.
Participants in the second fund include affiliates of major multifamily REITS, including Essex Property Trust, Mid-America Apartment Communities, and UDR, as well as private owners and managers, such as BH Management, Bozzuto, Cortland, Edward Rose & Sons, Greystar Real Estate Group, Starlight Capital, Starwood Capital Group, and Waterton. The collective group owns or manages approximately 2.4 million rental units.
“Over 45 million U.S. households live in rental real estate, and the industry is in a rapid state of evolution, as the pandemic, the rise of remote work, rapid household formation, and changing consumer preferences continue to alter where and how Americans live,” said Christopher Yip, partner at RET Ventures. “As these dynamics play out, technology will play a pivotal role in reshaping the home and helping the industry adapt to a rapidly changing world.”
UDR has long been a proponent of technology and was one of the founding anchor investors in RET Ventures in 2017.
“We have since realized enormous benefits throughout our portfolio through the adoption of leading-edge technologies aimed at generated operating efficiencies, better engaging with our tenants, and more quickly responding to the ever-changing needs of our business and customers,” said UDR chairman and CEO Tom Toomey. “We are proud to mark a new chapter in that relationship by investing in the latest RET fund and look forward to our ongoing role of helping to shape the development of rent tech for years to come.”
National real estate investor and operator Waterton also has made a strategic investment in the second fund, providing a continuation of its long-term commitment to innovation and technology.
“Since we are major tech users as well as investors, this initiative ensures that Waterton has access to the best terms from providers as well as possible inclusion in beta testing and product development,” said Waterton CEO and chairman David Schwartz. “We believe this investment also enhances the vetting process for Waterton, with RET Ventures’ experts aiding our evaluation of tech companies and services.”
In addition to the deep base of multifamily investors, RET Ventures continues to expand its reach. The group of strategic investors now includes two large SFR operators—Invitation Homes and Pretium (Progress Residential)—that own and operate a combined 135,000 units, nearly 50% of the nation’s institutionally owned SFR units.
“The single-family rental market is experiencing a significant period of growth, both from renters who are increasingly untethered to dense urban centers and looking for more space and from investors looking to capitalize on these emerging trends,” said Invitation Homes president and CEO Dallas Tanner. “Technology will play a critical role in this market as it continues to grow, as SFR operators stand to benefit greatly from tools that can streamline management and maintenance, as well as those that provide a worry-free experience for renters.”
RET Ventures Fund I has three completed or announced portfolio exits to strategic and financial acquirers. Among RET Ventures’ most prominent portfolio companies, SmartRent provides smart home automation for property managers and renters. RET led the company’s Seed and Series A funding rounds and has participated in subsequent rounds, remaining its largest shareholder. RET’s investments and guidance has helped fuel SmartRent’s growth from 17 units in 2017 to more than 160,000 units in 2020. In April, SmartRent announced plans to go public via a special purpose acquisition company (SPAC), with an initial valuation of $2.2 billion.
Other companies within RET Venture’s portfolio include:
- CheckpointID, technology that verifies government-issued ID to reduce rental fraud; it was recently acquired by MRI Software;
- Falkbuilt, a construction technology company that streamlines interior construction with its digital construction components technology;
- Funnel, a marketing and leasing software provider for multifamily owners and managers;
- GiGstreem, which recently closed a $50 million debt financing round to deploy building-wide Wi-Fi in multifamily communities;
- Kasa, a flexible accommodations company that partners with rental properties to increase income streams; and
- SightPlan, a provider of maintenance and resident service software.