Climate Fund Spotlight: Hometeam Ventures
Alexandria Lafci, GP and managing partner of Hometeam Ventures, and her partner Julieta Moradei, are tackling a global problem as old as time by investing in transformative, cutting-edge technology companies in one of the world’s largest but least innovative industries.
The colossal problem? Global homelessness and inadequate housing.
The industry that needs to be brought into the 21st century? Construction and home building.
Hometeam Ventures is not only helping to break molds in an outdated industry, but they’re also one of a small handful of funds that invests solely in early-stage construction tech (pre-seed and seed), and the first firm headed by two historically underrepresented women in the construction sector.
The Problem
According to a UN Habitat report, there are over 1.6 billion people in the world today with inadequate housing – that’s 20 percent of the world’s population. This mind-bogglingly huge number is projected to explode to 3 billion people by 2030.
Alexandria’s experience as co-founder and COO of New Story, a non-profit tackling the global homeless crisis, and Julieta’s experience as New Story’s head of R&D, exposed them to all the multifaceted challenges that cause and perpetuate homelessness. The conclusion they came to, and the basis for their fund thesis, is that innovation in the construction sector is a prerequisite to closing the global housing gap.
The Opportunity
The global construction industry is behemoth. It’s the biggest industry in the world, represents 13 percent of global GDP, and employs about 7 percent of the world’s working-age population. Despite that, R&D spending in construction runs well behind that of other industries – less than 1 percent of revenues – resulting in one of the most antiquated and one of the least digitized sectors on earth.
Opportunities to invest in construction tech are vast. “When we think of construction technology,” explains Julieta, “we’re really thinking of it through the full value chain of building. It’s not just about going on a piece of land and building a home. Building a house takes much more than that. It’s when you first find the land, put in the utilities, survey the land, make the design, get permits from the city, the actual building of the home, and then afterward there’s mortgages, repayment, and insurance. So, when we think of the technologies that we want to bring in, we’re looking at the entire value chain and then segmenting it into all these buckets. Then we find technologies in each bucket that will dramatically reduce the cost of that bucket by bringing in automation and tools that are making it faster and cheaper.”
The good news is that conditions on the ground are ripe for the disruption of the sector. “The construction industry is notoriously risk averse and until recently, very hesitant to adopt new technology, making it unattractive for venture dollars,” says Alexandria. “However, a series of tailwinds including the COVID-19 pandemic, a new generation of construction executives, material price volatility, labor shortages, and more have improved the industry’s receptiveness to technology. We are in the early innings of construction’s digital revolution. The time to invest is now.”
Contruction Tech + Climate Tech
According to the Environmental and Energy Study Institute, residential and commercial buildings are responsible for nearly 40% of US carbon dioxide emissions. There is a direct correlation between decreasing building costs through the reduction of inefficiencies in the construction lifecycle and the reduction of CO2 emissions.
One of Hometeam Venture’s areas of exploration is on reducing housing costs through re-materialization – a method of lowering housing costs and increasing sustainability by reducing the amount and type of building material used. A portion of their portfolio will be startups that find ways to decrease the material quantity (structural optimization) in construction and/or use more sustainable materials and processes. In this way, they will have a direct effect on reducing overall carbon emissions in building.
Examples of construction technologies that they are investing in include:
New material science
Structural optimization to reduce overall materials needed
New construction methods that incorporate strategies such as design for deconstruction, the circular economy, and recycled materials
Efficiencies in material sourcing and local delivery through locally sourced materials
Double Bottom Line approach
Alexandria and Julieta’s network and experience-based insights at New Story are driving them to stay hyper-focused on one thing: reducing construction costs and creating affordable housing. From top Silicon Valley leaders to the world’s largest real estate developers to Secretaries of Housing, they have access to a large network of domestic and international leaders that add value to their portfolio.
This laser-focused team is pursuing a truly double-bottom line approach by getting catalytic proof of concept (POC) capital for portfolio companies early in their lifecycle. The startups they invest in can test, iterate, and learn through partnerships Hometeam helps develop. After the proof of concept, they connect companies to scaling partners such as government officials, housing companies, or NGOs.
An example of this was with their portfolio company Airworks, a company that creates AI-powered aerial mapping using drone footage. Hometeam secured a partnership with the Authority of the Panama Canal and the National Land Administration Authority of Panama to hire Airworks to survey 115 hectares of land to create formal land titles for 700 families.
In this way, through investment capital, they steer startups to work where they're needed most so that they can deliver innovative housing solutions to those who need them most.
VCI’s Climate Justice Initiative
At VC Include, we are proud to support Hometeam Ventures with our Climate Justice Initiative for Diverse Emerging Fund Managers. There isn’t a better example of a team funding impact-driven innovation that lowers greenhouse gas emissions (GHGE), while also earning significant financial returns in an under-digitized sector. We can’t wait to see their investments bear fruit as they help close the global housing gap and help create a cleaner, more equitable world.
