The real estate technology market is one of the most promising and most funded markets globally. Agya Ventures is a real estate technology-focused fund that invests in exceptional entrepreneurs and early-stage companies shaping the built world. Kunal Lunawat, co-founder and managing partner of Agya Ventures will be sharing more details with us in this interview with TechBullion.
I’m co-founder and Managing Partner at Agya Ventures. Prior to Agya Ventures, I was an investor at Blackstone, and was part of the firm’s real estate private equity practice in New York and Mumbai. I grew up in Calcutta, India and was inspired to go into real estate by my father’s background as a first generation real estate developer. I hold a BA in Economics from Yale College and an MBA from Harvard Business School.
Agya Ventures is a NY-based early-stage venture fund focused on technology investments in real estate, travel, hospitality and construction. We invest in Seed and Series A companies and spend significant time working with founders helping them grow their businesses. Areas where we help our portfolio include: business development, hiring, and subsequent financing rounds. Our LPs include leading real estate developers, general contractors, smart city developers and systems integrators from Asia.
Two key innovations that we’re seeing include the rise of power buyers and the emergence of bidding platforms.
There’s an increasing number of power buyers, or companies that help individuals compete with institutional buyers by enabling them to give all-cash offers. Two companies of note that are doing this include Orchard and Knock.
We’re also seeing more companies that are bidding platforms such as Doorsey, that inject transparency into the home sale process by enabling bidders to see the clearing value of a home in real time.
In diligencing investment opportunities, we go over our 4-pronged framework, which includes looking at the people, opportunity, context and deal.
The first factor we consider, and the most important, is people. We want to understand founder motivations, founder/market fit and engage with company’s advisors and any existing investors on the cap table.
Next we consider the opportunity, taking into account how big the opportunity is, what product / market fit would look like, evaluate the product roadmap, the company’s unit economics, current traction and its go to market strategy.
For context, we position the company and opportunity in terms of where the world’s at both from a macro perspective, and with respect to changing consumer and enterprise trends.
Lastly, we consider the deal itself, where we peg the opportunity with respect to valuation, ownership percentage, pro-rata rights, liquidation preference and board observer seats.
Real estate has to bear responsibility for this: 40% of energy consumed annually, 40% of annual greenhouse emissions, and 40% of raw materials are consumed by the real estate space.
In this context, we look at technology solutions for sustainability across 2 lenses:
The first is technology that reduces operational emissions i.e. emissions by running the buildings on a daily basis (HVAC, cooling, lighting, etc.).
The second is technology that reduces embedded emissions i.e. emissions caused by building the asset in the first place (steel, concrete and other raw materials etc.).
Across both these verticals, some solutions that we are currently monitoring include: operational emissions capture and analysis, alternative building materials with reduced carbon footprints, and modular construction processes which combine the ‘just in time’ philosophy of the automotive industry, leading to reduced waste.
Dark stores are fulfillment centers (read: micro-warehouses) in urban centers, which stock goods that a traditional convenience store would, deploying data and technology to determine where and what to sell. To optimize for space, they carry a limited number of SKUs, which change dynamically on a given day of the week, based on consumer demand.
In terms of their business model, the notion of 15-minute delivery times is a compelling value proposition. That said, in a bid to capture the market, startups are aggressively signing real estate leases through their balance sheet, which adds operational leverage and creates an asset-liability mismatch. We don’t need to look beyond the co-working and short-term rental business models to see how that story played out.
The hospitality industry was impacted in an adverse manner during the pandemic, as both business and leisure travel came to a grinding halt. In New York alone, hotel occupancy plummeted to record lows of 33% as the city grappled with low tourist inflows. This was also a moment in time when we witnessed greater willingness among hotel owners and operators to embrace technology as they were keen to bring guests back. Here, we have witnessed 3 specific themes:
Three other areas of interest that I find compelling are the metaverse, which we expect will impact land ownership, retail, hotels and apartment tours, to name a few; the intersection of real estate and the creator economy, which will drive rentals and sales (think Playhouse, which is building the TikTok for real estate), and the impact of Gen Z, which is going to comprise 30% of the renter universe by 2023.
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