Fifth Wall launches latest flagship fund

Proptech venture capital firm Fifth Wall has reached a first close on its latest flagship fund, bringing in new investors as its founder says that “spring has sprung” in the market. The firm secured new commitments from Public Storage, Ryman Hospitality Properties, Federal Realty Investment Trust, Kite Realty Group, Titan Group, Independence Realty Trust, Riyadh Valley Company, Lowe’s and Sidara. Those players join more than 110 existing strategic investors, including CBRE, Hilton, MGM, Equity Residential, Related, Starwood Capital, British Land, Lennar, Marriott, Digital Realty, Lineage and Hines. Although the firm has not disclosed how much capital has been committed, Fifth Wall founder Brendan Wallace told EG that the first close accounts for a “substantial portion” of a $500m (£410m) hard cap. A final close is expected later in the year. “The success of funds is explicable through a number of lenses, but timing is among the most important,” Wallace said. “We’ve only raised a flagship once [before], in 2019. That fund invested in many of the top proptech companies to come out of that vintage – the most successful being Lessen and Aurora Solar. We decided to raise a flagship fund now because I think the moment is very opportune.” For Wallace, the seasons are changing in his market: “Spring has sprung in the proptech ecosystem,” he said. “It’s on the back of a very cold, challenging, bitter winter characterised by a complete meltdown in technology capital markets and real estate capital markets, paired with the pandemic and existential questions around real estate and a reshuffling of the deck among real estate asset classes.” The fund’s first close comes alongside two notable exits for the firm within the space of a month: software company ServiceTitan went public with a $9bn market capitalisation in Fifth Wall’s seventh IPO from its portfolio, while flex office operator Industrious, one of Fifth Wall’s first and largest investments, was bought by CBRE.  What changed in the market that allowed those exits to happen now? “To have new life, you have to have death,” Wallace said. “There’s a circle of life that applies in everything, including the business world. What we saw from 2017 to 2021 was a Cambrian explosion of proptech companies and funds. The reality is that when an extinction event arrives, which it did in the form of very challenging capital markets, many of those firms did not survive. The ones that did, survived because they adapted. They had to get profitable and attract the best talent. We just lived through a moment of commercial Darwinism at grand scale in the proptech ecosystem.” Some of the end-users for these evolutionary winners, however, are still not up to speed with the opportunity. “Real estate is a massive part of the economy,” Wallace said. “But even with all the innovation, the seven IPOs Fifth Wall has had, all the unicorns in the space, all the value that’s been created in proptech – it’s still massively under-technologised. We started the firm because our belief was that the real estate industry has been slow and late to adopt technology. It would not be an overstatement to say that the real estate industry has been horrendous at adopting technology… and this is no less true in 2025 than it was when we raised our first fund in 2017.” With $600m-plus of dry powder, Wallace and his team are nonetheless hunting out the next investments that can help change real estate leaders’ perception of what tech can offer their industry. The firm’s last flagship fund made a number of European investments, and Wallace expects perhaps 10-20% of the new capital to flow into the region. “We remain really excited about European markets,” he said. “Europe has always been at the vanguard of sustainability and decarbonisation. It has led the US historically. I would say in the last five years you’ve seen a shrinking of that lead… What I can say is that because the new administration in the US is likely to be more averse to climate [action] than the last, I think Europe will again emerge as the categorical leader in climate and sustainability.”