JLL’s 2021 Global Proptech Report identifies nearly 8,000 property technology companies around the world with a threefold increase over past 10 years. In the first half of 2021 alone, the proptech sector attracted $9.7 billion in funding. A recent ULI report confirms that industry experts anticipate growth in the areas of data analytics and project management.
Chicago-based JLL also is contributing to that growth. In 2018, JLL Technologies announced the $100 million JLL Spark global venture capital fund, designed to invest in proptech startups around the world. Those startups may be tackling facets of real estate like workplace delivery services, structural integrity, or indoor air quality.
Today, the JLL Spark portfolio comprises more than 30 startups, including San Francisco–based Openspace, whose software tracks construction progress, and Hubble, a platform that helps tenants find flexible workspaces in London.
In August, JLL agreed to acquire New York City–based startup Skyline AI, whose artificial intelligence helps analyze and originate real estate opportunities. JLL plans to roll the Skyline technology into products for its clients. Globally, JLL manages more than 5.4 billion square feet (nearly 501.7 million sq m) of real estate.
Raj Singh, who became managing partner of San Francisco–based JLL Spark earlier this year, says the fund pursues investments in proptech companies whose offerings can benefit JLL clients or JLL itself yet that also are “financially viable” businesses. In that regard, JLL adheres to a “dual focus,” he says. A typical venture capital fund zeroes in on the financial viability of a startup, but not on how it might employ the startup’s products or services.
Through its Spark X initiative, JLL Spark even incubates startups whose technology addresses unmet needs in the marketplace. Singh says the fund may acquire the incubated businesses or simply become their customers. In addition, JLL Technologies—the umbrella organization that includes JLL Spark—develops proptech internally.
“I don’t think we’re going to give up at all what we’re doing internally, but our external activity allows us to be a bit more future-looking because we can invest in companies that are trying to do something audacious or ambitious that might not be ready for primetime today, when we invest,” Singh says. “But in two to three years—perhaps even in five to seven years—we believe they’ll do something radical that will make a big difference. So, this acts as a way of being first in line for that innovation, but also gives a look at what’s happening in the industry, so it’s a trend analysis tool as much as anything else.”
When JLL Spark pumps a share of the capital in the fund into a startup, the fund replenishes that money so that $100 million always remains available, Singh says. That differs from a typical venture capital fund, which raises a certain sum of money and closes once that sum has been spent. Singh declined to disclose how much money JLL Spark has invested thus far, although he conceded that it is a “relatively large” dollar amount.
In most cases, JLL Spark makes early-stage, minority investments in proptech startups, according to Singh. JLL Spark often invests alongside other venture capital funds.
To take advantage of even more opportunities, JLL Spark plans to add a few more investment professionals to its team, Singh says. Now, the fund’s team comprises about 15 members.
“The way I think about it is that we have a platform that we want to be scalable, such that we can increase our presence so you, as an entrepreneur, will have somebody locally you can talk to who will be a JLL Spark representative and understands the environment in your area,” Singh says.
Efforts by JLL Spark’s investment professionals and other members of the team help the multibillion-dollar parent company take on what the recent JLL report describes as the “ubiquitous” nature of proptech.
“We believe that technology will disrupt pretty much every part of the commercial real estate experience,” Singh says, “so our goal is to be able to use that technology to help our clients get the most out of what they’re doing.”
Singh believes that commercial real estate is in the “early innings” of digitizing a building’s entire life cycle, including construction, sustainability, occupancy, buying, and selling.
JLL’s proptech report says the COVID-19 pandemic offers an “unparalleled opportunity” to rethink the built environment.
“The technologies that are now available—and others in the process of being developed—are set to radically reshape how we construct, interact with and use buildings,” according to the report. “The increasing deployment of technologies, from connectivity and hardware advances enabling the mass use of sensors to machine learning and artificial intelligence, now mean that nearly every aspect of the property industry has the capacity to evolve more quickly than ever before.”
Proptech companies have also attracted $18 billion in mergers and acquisitions activity in 2021.