VC Fund invests €130 million for sustainable real estate technology solutions
Mikkel Bülow-Lehnsby, NREP manager, is more conscious of the sustainability problems in his industry, after more than a decade working for Danish real estate fund. But just as NREP was launched to see urban property as a product rather than an asset, he wishes to see the sector not an issue but as a part of the solution to climate change.
He's got the money now to make a significant difference. NREP's 2150 fund revealed that in just six months it had raised EUR 130 million ($ 158 million), the first closure of what is expected to be a EUR 200 million ($ 243 million) fund. Bülow-Lehnsby’s mission for the fund is to “identify technologies that can solve some of the biggest problems that our industry has, and integrate it in the industry.”
NREP isn't new to the real estate sustainability debate, having sponsored, among other initiatives, the use of recycled materials in construction. Nevertheless, Bülow-Lehnsby feels that the industry has sorely lacked the implementation of technological solutions, and his intention to become a facilitator between real estate incumbents and technology firms led to the establishment of the 2150 fund, named after the newest zip code in Copenhagen, a former industrial area of the Danish capital that is being redeveloped with the vision of making a "sustainable city of the future.”
The funding team includes Christian Hernandez, a former Facebook executive and venture capitalist; Jacob Bro, a former chief product officer of Rocket Internet; and Christian Jølck, a former chairman of the board of sustainability advocacy group SYNERGI. Joining them as partners are Nicole LeBlanc, formerly with Alphabet’s urban product incubator, Sidewalk Labs; Rahul Parekh, founder of the VC-backed food-tech startup EatFirst and a former executive director at Goldman Sachs; and Alexandra Perez, who incubated and launched urban tech startups at Tech City Ventures.
Bülow-Lehnsby does not think that the urban growth is losing momentum, although the Covid-19 pandemic has caused people to rethink the role of big cities in their lives. If nothing else, he believes that the pandemic has formed an opening to apply technology in new ways to real estate.
“There’s no better time to create change than when you have events that cause people to start doing things differently,” says Bülow-Lehnsby. He personally noticed the change at NREP, where the construction department become more custom to using technology in its construction processes because of remote working. “It’s not that [the technology] doesn’t exist; it’s just that this industry has not embraced it.”
The venture capitalist, Hernandez, agrees that the pandemic is more of an opportunity than an impediment. “It made people realize the need to make our cities more resilient and sustainable, which is, I think, why we were able to raise $130 million in six months,” he says. “What has changed is the rate of adoption that Mikkel alluded to. All these building managers had these visions of all this tech and sensors they want to install in buildings, but it’s kind of hard to do that when there’s people inside the buildings. Now, guess what: There’s nobody there.”
The opportunity, both for corporations and for the world, is massive. An estimated 75 percent of global carbon dioxide emissions are accounted for by cities and urban activities, and real estate is one of the big culprits: According to a United Nations Environment Programme Finance Initiative report, as of 2016, the construction industry accounted for 30 percent of global annual greenhouse gas emissions and consumed about 40 percent of the world's energy.
The advisory board of the fund, entrusted with helping 2150 adhere to its goal, includes famous names such as renowned architect Bjarke Ingels and Christine Harada, who served as the chief sustainability officer of the Obama Administration.
The first investment of the fund, the scale of which was not revealed, is in CarbonCure Technologies, a Canadian business whose technology decreases the concrete cement content while retaining carbon dioxide in the concrete itself, minimizing the carbon footprint of the material. The fund has invested alongside the Climate Pledge Fund of Amazon, the Bill Gates-backed Breakthrough Energy Ventures and the Climate Innovation Fund of Microsoft.
Gates spotlighted CarbonCure in his interview with CBS’ 60 Minutes last week, much to 2150’s delight. “It’s obviously always great to have your first investment be marketed by Bill Gates himself,” Bülow-Lehnsby says. “That’s not a bad starting point.”