Agya Insights: Edition 103
DeFi x Real Estate
March has been a busy month at Agya so far, with new investments, our ongoing website overhaul (soon to come), and exciting developments on the portfolio. We are working towards our annual LP meet this summer and hosted our portfolio dinner in San Francisco earlier this month, which we plan to make a recurring affair.
This time around we share our thoughts on what the EB-5 program teaches us about DeFi’s opportunity set in real estate, an area of continued interest at Agya. And like before, there’s a quick round-up of what we are reading + real estate tech financings announced over the last 2 weeks + call out for a book that’s been in demand among UI/UX designers.
Warmly and on behalf of the team,
💡 What’s Happening
EB-5 and DeFi: According to the WSJ, the EB-5 visa program has allowed real estate developers to raise $40 Bn in development financing since the program’s launch after the ‘08 financial crisis.
Context: Foreign retail investors would invest anywhere between $0.5 mn - $1.05 mn in qualifying real estate projects and settle for materially low interest rates. Why? The EB-5 program offers a green card and has witnessed strong traction among high net worth individuals in China and India.
DeFi: The EB-5 program illustrates developer appetite for alternative financing sources that are cheaper than market. And while green cards and the program itself have had staunch critics, it does offer a glimpse into the opportunity set for DeFi startups.
How? Real estate developers demonstrated willingness to accommodate a hairy and cumbersome process to get access to cheap capital via the EB-5 route. If DeFi creates similar pathways for cheaper than market capital, and is marginally less cumbersome than EB-5, there’s a substantive market out there.
The current regulatory maze notwithstanding, DeFi holds the promise of ushering in a more transparent and robust financing ecosystem for real estate and construction. And even if part of the promise is fulfilled, the EB-5 financing numbers will look a fraction of where DeFi can take us.
📚 What We’re Reading
Shikake, the Japanese art of shaping behavior through design, using subtlety and duality of intent
Drew Meyers’ blast from the past on are real estate agents overpaid? A lot has happened since this article was written in 2014, as Drew indicates in his more recent piece here.
Noteworthy that the life insurance industry has had similar debates on brokers and their share of premiums for policies sold. Life insurance brokerages are still in business, and haven’t been substituted by tech yet, although there’s lot of efficiencies to be gained both for the broker and the policyholder.
Perhaps, there are learnings for real estate tech from their counterparts in insurance?
Consumer Trends 2022 by Coefficient Capital and The New Consumer. Gen Z and millennials represent 40% of the US population and are entering their prime spending decades. Note how many from this demographic (i) feel more like themselves online than offline (ii) care deeply about community and (iii) and want to feel personally connected to the brands they buy.
If data shapes reality, this will have implications for real estate, across retail, residential and office, to begin with.
🤝 Who’s Hiring
Truehold enables seniors to unlock equity for their real estate by providing sale-leaseback solutions, leveraging data and technology.
They are hiring a Director of Engineering and Director of Product. Both positions are remote
💸 Select Financings in the Built World
Veev | veev.com
$400 mn Series D
Tech-enabled, panelized home builder
Roofstock | roofstock.com
$240 mn Series E
Single-family rental investing
Alfred | helloalfred.com
$125 mn Growth
Residential management platform transforming the rental experience
OpenSpace | openspace.ai
$102 mn Series D
Photo documentation for the construction industry, powered by AI
Diamond Age | diamondage3d.com
$50 mn Series A
Affordable home construction through robots
Selfbook | selfbook.com
$15 mn Series A extension
Payments solutions for the hospitality industry
Praxis | praxissociety.com
$15 mn Series A
Membership-based, values-aligned society building a new city
Piñata | pinata.ai
$13 mn Series A
Renter rewards platform for on-time payments
Daybase | daybase.co
$9.6 mn Seed
Local network of on-demand workstations for the future of work
For the complete list of real estate tech and construction tech investment announcements from March 1 - 15, click here!
h/t Aaron and Hovik for helping with this edition of the newsletter.