Why commercial real estate needs a category-defining company like withco
Today, withco is coming out of stealth and announcing more than $30M in venture funding to empower small business owners to become commercial property owners. I’m excited to announce my and Canaan’s participation as co-leads of withco’s second round in 2021 alongside my good friend Pete Flint from NFX, whom I deeply respect as an investor and entrepreneur. We joined an outstanding group of existing investors including Founders Fund and many new ones.
Pete and I have spent the past two decades building, investing in, and pioneering what we know today as PropTech. Pete led the charge on the residential side with Trulia, serving as the company’s Founder & CEO from inception through to its multi-billion dollar sale to Zillow. I spearheaded the commercial side as President, Chairman, & CEO of LoopNet – the leading marketplace for the commercial real estate industry – and took the company through to an IPO and eventual sale. We both had a blast building brand new markets from scratch. Real estate had never been innovated with software before.
When I first met Kevin, and heard the “why”, “what”, and “how” for withco, I knew I had to invest. I understood long-tail commercial real estate better than most and thought I was uniquely qualified to help. As I kept learning, withco brought me back to a feeling that Pete and I independently had when we first started disrupting the real estate industry. As one of the world’s largest and oldest industries, it was a feeling of both immense opportunity and inevitability. And as we got to understand Kevin’s layered vision and precise execution for the company, we realized that we were not only witnessing the creation of a brand new massive market category, but also the minting of its category leader.
Shortly after the great financial crisis of 2008, when home prices were at their historical lows, a handful of entrepreneurs emerged to combine volume-driven purchasing of single family homes with great software. Invitation Homes began buying properties in Arizona in 2012 and to date has purchased tens of thousands of homes across the country. I’m excited that Jerry Coleman, one of its Co-Founders and also Founder & Former CEO of Offerpad, joined us as an investor in the last round. Eric Wu, also a withco investor and advisor since Day 1, and Keith Rabois, withco’s lead investor through Founders Fund, started building Opendoor and buying homes around the same time as Jerry. Out of a crisis came incredible innovation and the market’s darling residential PropTech company.
As investors, we all feel that coming out of this pandemic—one that has affected so many small businesses and commercial property owners alike—that withco will do for the commercial real estate market the same that Jerry, Eric, and Keith have done for residential. And Kevin and the team are uniquely positioned having had the foresight to see the opportunity even before the pandemic started.
I had spent most of my career at LoopNet becoming an expert in long-tail commercial real estate and building software for and relationships with the leading brokerages and property owners and investors across the country. The small business commercial market—made up of properties often under $5M in value, not necessarily in urban cores, and with single-tenant occupants—sees over $90B worth of deal flow annually, but lacks a scalable, efficient mechanism that can efficiently price and purchase long-tail transactions.
withco fundamentally changes that, partnering with landlords and their brokers to be an institutional-grade buyer that can accurately price and quickly purchase the inventory that no one can or is willing to understand. In making financing available to qualified small business owners, we also believe withco is creating a new category of real estate assets to new investors with larger, lower cost pools of capital, and doing so at scale. If you’re a broker, seller, investor, or lender, withco is the programmatic purchasing platform that you’ve been waiting for.
While it’s hard for me not to talk about the company’s social impact on American small business and how Kevin’s journey has prepared him in unique and specific ways to drive the company’s vision, I will let others do so as I feel most uniquely positioned to speak to withco’s real estate category creating opportunity. I and we at Canaan are so proud and excited to support Kevin and the withco team to realize their vision to make it exciting again to be a small business owner in America. It’s an America that I want to live in. I’ll leave it at that.