Fundrise, known for its real estate Investment platform, launched its Innovation Fund last year with the goal of offering access to venture tech investments for as little as $10. In a move that overlaps real estate and tech investment, that fund recently announced two new investments in the property technology (aka proptech) sector: Jetty and Inspectify.
In September, the fund announced a $2 million investment in Jetty, an integrated financial services software platform for property managers and renters. It was part of a round led by Citi Impact Fund and joined by PayPal Ventures and Experian Ventures.
This follows a $4 million investment in Inspectify, a designer of property inspection software, in July. The Innovation Fund led that funding round, which also included investors such as Nine Four Ventures, Munich Re Ventures, Foundation Capital, and DivcoWest Ventures.
While the fund is investing widely outside of real estate tech, CEO Ben Miller said that Fundrise’s experience as a real estate fintech could inform its strategy.
“We’re a fintech company, so we have something about finance, and we know something about technology,” Miller told Cardiff Garcia on the “Onward” podcast. “The type of technologies we’re interested in, we actually use.”
The Fundrise Innovation Fund
Fundrise made its name by offering individual investors the opportunity to buy into real estate investments through an online platform with as little as $10. Its flagship fund invests in both residential and commercial real estate and distributes returns to the pool of individuals according to their equity in the fund.
But in recent years, the company has diversified its approach, starting both the Innovation Fund and the Opportunistic Credit Fund, the latter of which invests in helping property owners secure bridge loans as they deal with the fall out of rising interest rates.
The thread of real estate investment runs through the company’s strategy, but Miller made it clear that the Innovation Fund isn’t limited to proptech. Its current holdings are weighted toward data infrastructure and artificial intelligence, with more significant investments in companies including Databricks, ServiceTitan, and Vanta.
“Breadth and depth is an asset, not a liability. I think our Innovation Fund will make us a better investor in real estate too,” Miller told Garcia. “The two biggest drivers of real estate are demographics and technology … We always go back to macro and technology. Combine macro thinking with great technology products, and we can create better outcomes for investors. So the deeper we get in technology, I think the better off we are and better off our investors are.”
Jetty and Inspectify
In a letter to investors, the Innovation Fund detailed its reasoning for investing in Jetty. Citing the 36% of Americans (120 million people) who rent their homes and the fact that rental housing represents approximately 12% of the U.S. gross domestic product, the letter argues that Jetty is addressing a need for flexible services for renters and property managers.
“With the launch of their first four products and adoption by many of the largest owners and managers in the country (including Fundrise), Jetty is the clear leader in the race to modernize the financial services aspect of rental real estate, and well on their way to becoming the overall category winner,” read the letter.
The letter noted Jetty’s integration of a variety of rental-related financial services in a single platform and the potential to eliminate unnecessary fees and hassles related to issues like security deposits and rent payment methods. Renters can use Jetty’s platform to replace a security deposit with small monthly payments, purchase renters insurance, and pay their rent with a buy-now, pay-later model.
The fund’s other recent proptech investment, Inspectify, is a property inspection platform with a client base that includes real estate investors, property managers, lenders, insurance carriers, and brokerages across the U.S. Its technology is designed to standardize and streamline inspection services, gathering and reporting data on issues such as property conditions, appliance life spans, and repair cost estimates.
Inspectify was the Innovation Fund’s first proptech investment and like Jetty, it’s a technology that Fundrise regularly uses for its own properties. A letter detailing the Inspectify investment noted that Fundrise has run nearly 5,000 inspections using the platform in the past two years.
“By leveraging technology to completely disrupt the status quo manual inspection industry, which is frictional to work with while at the same time falling short on providing actionable data for the party who wants to understand the property, we believe Inspectify has built the future of physical property diligence.”
What’s Next?
Inspectify and Jetty are Innovation Fund’s first two proptech investments, but they will likely not be the last. The sector is growing, with some estimates forecasting a 9% compound annual growth rate in the next 10 years to reach a value of $86.5 billion. Given Fundrise’s history of involvement in the sector and its recent focus on building a tech investment fund, proptech could be a significant target for future investment.
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