The multi-billion-dollar real estate developer and property manager JLL is getting into the tech investment game with the launch of a new $100 million fund run by corporate subsidiary JLL Spark.
Initially envisioned as a technology-focused business unit of the multinational real estate company, the firm eventually turned to the more traditional venture capital investment model as a way to get more exposure to all of the new technologies that are coming to market, according to JLL Spark’s co-chief executive, Mihir Shah.
For Shah and his co-founder Yishai Lerner, running the real estate company’s investment firm is the first foray by either executive into the world of real estate or property technology. But both men have been working in the startup world of the Bay Area for more than a decade.
In fact, the two serial entrepreneurs launched one of their first companies from the TechCrunch 50 conference way back in 2007 (it was a mobile app that mimicked Yelp).
The two eventually sold their mobile review business to GroupOn and began doing some angel investing. It was during that venture into the wild world of seed-stage prospecting that Shah got bitten by the real estate bug while trying to buy some commercial real estate.
“I was looking at the process and was thinking ‘Wow! That is not a modern process,’ ” Shah said.
Unbeknownst to Shah, at the same time he was looking for commercial real estate, the commercial real estate industry was looking for someone like him.
JLL had put out feelers and hired headhunters to find someone who could take the lead at the firm’s burgeoning technology practice, Shah said.
“They had all sorts of internal initiatives bringing in new technology companies and services to their existing clients,” Shah said. “They understood that technology was going to transform all aspects of the industry.”
One of the first steps that JLL had taken was to acquire Stessa, which developed and sold asset management software for the real estate industry. But Shah and Lerner quickly realized that the buy and build strategy wouldn’t be robust enough for JLL’s needs.
“Over the last six months we saw how much innovation was happening in the proptech space and we thought it made more sense to launch a venture fund,” Shah said.
The firm will invest anywhere from a few hundred thousand dollars to a few million into seed stage or Series A companies with the option to dabble in later stage deals, according to Shah. The firm has made two investments so far — neither one of them in startups.
The commitments have been in one accelerator program, the New York-based MetaProp, which focuses on real estate tech investment, and Navitas Capital, which is billed as a later-stage investor in the same space.
Both investments appear to be geared toward educating the firm’s two principals on the market and what’s already happening in the space.
The benefit that a corporate firm like JLL can provide to startups is the access to pilot projects where companies can deploy their technologies and, indeed, that’s the pitch that Shah makes to potential portfolio companies.
“Money is not enough,” he said. “There’s a lot of products out there, but they’re struggling with distribution.” JLL has designated a few buildings in top cities around the world to fast track new technologies and provide trial spaces for them to develop, Shah told me. “Our value as a strategic is to build that bridge and make that connection.”
“Creating this $100 million venture fund through JLL Spark allows us to continue to lead the real estate industry in bringing the best proptech ideas to reality,” said Christian Ulbrich, JLL’s Global chief executive. “It complements and expands our substantial ongoing investments in innovative, cutting-edge digital solutions, which is a core part of our Beyond strategic vision and commitment to achieve ambitions for our clients.”