Moderne Ventures invests in technology companies building products and services applicable to the real estate, insurance, mortgage, home services, and finance industries.
The industries we focus on are huge – accounting for more than 20% of Gross Domestic Product – and in many ways, operate the same way as they did decades ago. Technology simply has not penetrated and changed these industries like it has in others... yet. We believe attractive investment opportunities exist in companies that drive these industries forward by focusing on solutions within our industries (verticals) as much as solutions to common problems across our industries (horizontals).
We emphasize the “applicable to” in our description because we are investors in horizontal solutions as much as, if not more than, vertical ones. This is a not-so-subtle difference that’s worth digging into a bit more.
If you are a company building a product or service within one of our industries (a ‘vertical’) we must see your potential to dominate a sizable niche or a path to a large addressable market. You must be solving a real (big) problem. These industries break down into smaller segments, as do most addressable markets. Taking real real estate as an example: commercial vs residential, high-mid-low average transaction sizes, geographic markets, rent vs buy, etc. As a result, we carefully consider how large our vertical-focused companies’ target markets truly are and the approach necessary to dominate them.
Our target industries include 2MM+ independent contractors, 600K+ small and medium sized businesses, are holders of the largest portion of our population’s wealth, are one of the largest asset classes in the world, and have complementary operational structures. They are driven by referrals, efficient lead generation and qualification, unique broker/agent dynamics, logistically complex transactions, and an overwhelming lack of data standards and transparency. If you are a company building a horizontal solution – one that solves problems spanning industries - by establishing credibility in one of our industries you can be successful in expanding into the next. As the issues above are increasingly addressed, the friction around horizontal solutions smoothes out.
Real Estate Technology?
We believe that the technologies that will impact our industries the most will likely not originate within them. As a result, we consider far more companies for investment than a traditional ‘real estate tech’ investor. An example we often use is Docusign (a portfolio company). Docusign isn’t traditionally categorized as ‘real estate tech’, but they impact the industry immensely. Transaction management and signature authentication are critical components across all of these industries and by establishing credibility in one, they established credibility in the rest. Now they’re a unicorn (...narwhal) a few times over.
Moderne Ventures delivers tangible results to portfolio companies that few others can: customers. We do this by leveraging our Limited Partners (investors) and our formal mentor network, who represent some of the largest entities in these industries. Our LPs and mentors are actively involved with our portfolio companies and the Moderne Passport program because they know that technology will impact their industries and companies, and they need to be on the forefront. They are willing adopters who leverage us to “filter the noise” of the startup world, relying on us to bring the most impactful solutions to bear.
The Moderne Network represents buyers and sellers who account for more than half of all residential transactions in the US. They own and manage multiple millions of square feet of commercial space. They are accountable for billions of dollars of new and re-development. They spend billions of dollars in advertising spend each year. Through Moderne Ventures they also effectively invest in and own a part of these companies that are driving change within their industries. As a result, they are dually incentivized to adopt their products and services. Our goal is to create a self-reinforcing bond between our investors and our portfolio companies, which we do through the Moderne Passport program and the Moderne Network.
This structure also explains our investment strategy of investing in earlier-stage companies (seed through B stages, with a ‘sweet spot’ in the A rounds). Investing in earlier stage companies allows us to move their needles most effectively. We help develop and execute on top-down and bottom-up go to market strategies in industries that are rife with idiosyncrasies that you must be embedded within to truly understand, and connect companies with potential customers that can mold products and services into scalable solutions.
The above is admittedly an oversimplification on many levels, but in the coming weeks and months we will continue to “peel the onion” and provide deeper dives around our industries, our fund, and our companies. We encourage those who are interested in technologies and their companies that are influencing these industries to engage with us via this blog, or contact us directly.