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Fifth Wall completes $500 million Climate Fund

Firm says LP commitments have increased climate tech R&D investments 5x compared to previous 10 years.

Fifth Wall, a real estate and property technology-focused venture capital firm, today announced completing its $500 million inaugural Climate Fund to decarbonize the real estate industry, according to a press release.

Launched with $116 million last August 2021, the fund is aimed at environment-friendly technology for renewable energy, energy storage, smart buildings and carbon sequestration.

The Climate Fund includes LP commitments from organizations including like American Homes 4 Rent, BBVA, British Land and Camden Property Trust among others, and brings Fifth Wall’s total capital under management to $3.2B.

“The strategic LPs in our Climate Fund have instead taken a true leadership role among the industry by making real financial commitments to address real estate’s contributions to climate change,” stated Brendan Wallace, Fifth Wall co-founder and Managing Partner, in the release.

Fifth Wall says fund participants gain access to technology that can support goals to decarbonize their assets, noting that over 100 of the largest real estate owners and operators are invested in its funds.

“The investment for us is relatively small, but the access to a number of small proptech, as well as environmental companies all looking to improve single-family rentals is really what excites us about the opportunities. We have a lot of rooftops and a lot of consumption of energy,” David Singelyn, CEO of American Homes 4 Rent, told CNBC.

Real estate contributes to 40% of global carbon dioxide emissions, with 70% of that figure stemming from building operations and construction accounting for the remaining 30%. The firm also noted that despite the industry’s large carbon footprint, only $94.6 million had been previously invested into climate technology R&D over the past 10 years. It says due to commitments to the Climate Fund, that figure has increased five-fold.

With the funds accumulated so far, Fifth Wall has already invested in “promising” tech companies like Assembly OSM, Brimstone, Clarity AI and Electric Hydrogen among others.

“What we’re looking to do is identify the major spend categories where real estate owners are going to have to deploy capital. And then our business is buying non-controlling minority positions in those companies,” Wallace told CNBC about the firm’s emphasis on the collaboration with these companies to accelerate growth.

This fund’s completion continues momentum for Fifth Wall, following $1.1B raised across its funds and investments in over 25 new portfolio companies in 2021. The firm also celebrated five IPOs from companies it had previously invested in, including Procore, Blend, Doma, Hippo and SmartRent.

In other recent proptech news, Pacaso data indicates a 25% increase in luxury second home transactions during Q2 of 2022. WeWork also launched its new flex space management solution, WeWork Workspace.

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