What SoftBank looks for when it makes real estate tech investments

The company's senior investor Justin Wilson explains what the giant venture fund is looking for in proptech at Inman Connect San Francisco

EMBRACE. FOCUS. EXECUTE. Build your 2019 roadmap to success with 4,000+ real estate leaders.
Inman Connect New York | January 29 - February 1, 2019

Japanese venture capital giant SoftBank has $100 billion to dole out, and some of that big money is going to the real estate industry.

SoftBank senior investor Justin Wilson took the stage with moderator Clelia Peters at Inman Connect San Francisco’s Capital Connect Friday morning to explain why and to share what SoftBank is looking for when the firm writes multimillion-dollar checks from its SoftBank Vision Fund.

“When we look at businesses, we want to find opportunities of companies that are really leveraging data extensively and in everything that they’re doing. We want to invest in platform businesses,” he said. “When we’re putting hundred-million, billion-dollar checks behind these companies, they have to have the potential to be very large businesses.”

SoftBank is known for its early investment in Alibaba, the Chinese company that is Amazon’s only global competitor. Since then, the firm has backed the lender SoFi, WeWork, Compass, Indian Uber competitor Ola and a host of other tech companies. SoftBank usually invests when startups are in the late stage with the potential for massive growth.

Wilson joined SoftBank three years ago, before the firm launched its $100 billion Vision Fund. The next-largest venture capital fund is about $6 billion at Sequoia Capital, Peters noted, putting SoftBank in a league of its own.

Wilson is the one who oversees many of SoftBank’s investments in real estate tech and proptech — a development he said is a result of his personal passion for the space. His dad often included him on home repair projects, instilling a passion for homes and real estate, he said.

“There’s always been this element of feeling a real attachment to home and real estate. It’s just been an area that’s been a personal interest, and then as the Vision Fund kicked off … real estate as an industry is just enormous,” he said. “It was an area that, as we talk about SoftBank’s $100 billion fund, we almost have to be playing in that space.”

SoftBank is a big supporter of Compass, in which it invested $450 million last year, including all of Compass’s technology for its agents. Compass, Wilson said, is leveraging its data in the way SoftBank is looking for.

“Compass has a really phenomenal vision. I think that they’re really going to be a huge innovator in this space. And I think that they’re really transforming the industry as a whole. They have an obsessed focus on really building these technology tools and building the capabilities, ingesting tremendous amounts of data,” Wilson said.

Wilson, and by extension SoftBank, see value in Compass’s emphasis on the agent while revamping the real estate industry, compared to some real estate startups more focused on technology.

“That agent relationship is so powerful. There’s so much trust. They’re really a partner through that journey for a homebuyer or homeseller,” Wilson said.

“But I think a lot of times people see that and say, ‘Great, the transaction is done, and maybe I’ll get an email once a year.’ That relationship starts to distance. Our view is going from a place where you have such phenomenal connection and trust that’s very hard to build — looking for platforms, and we think Compass is one of these platforms, that’s going to be able to leverage data and technology to be able to take those relationships and empower agents to continue to monetize and sustain those relationships with consumers over time.”

But besides Compass, SoftBank could find itself more involved in the real estate technology sector as the space continues to grow rapidly.

“We’re going to continue to see that evolution play out from what was very local at one point in time [in real estate], to greater scale because of that democratization and access to data,” Wilson said.

Email Emma Hinchliffe