Thursday, February 22, 2024

Fifth Wall shuts down a $500 million climate fund to decarbonize global real estate

Fifth Wall, a real estate technology-focused venture capital firm, is tripling down on its bet that climate technology will become a key driver in the real estate market.

It recently announced half-billion-dollar contributions to close its maiden Climate Fund, which began with $116 million in August last year. According to the firm, it is the largest private fund founded to decarbonize the real estate industry.

According to the United Nations Environment Programme Finance Initiative, real estate accounts for over 40% of worldwide carbon dioxide emissions. Building operations account for roughly 70% of total emissions, with the remainder resulting from the construction process. Since most real estate already exists, achieving net zero emissions is difficult.

The fund aims to invest in software, hardware, renewable energy, energy storage, intelligent buildings, and carbon sequestration technologies.

“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 noncontrolling minority positions in those companies,” said Brendan Wallace, co-founder and managing partner of Fifth Wall. He emphasized the fund then works with those companies to accelerate their growth.

“We have some of the largest owners and operators and developers of real estate as LP’s (limited partners) in our fund, so by virtue of those relationships, we can help grow these early stage tech companies, open these distribution lanes for them, where we basically have their largest customers as our LP,” he added.