STARWOOD-IFICATION OF REAL ESTATE
Increasingly, venture investors view real estate as the next industry to be transformed by disruptive technology. But as they start investing in the category, they might find that traditional real estate investors, including Brookfield Property Partners, one of the country’s largest landlords, are already ahead of them.
Convene, a New York City-based startup, is Brookfield’s only startup investment, and today Brookfield has doubled down on the bet. Brookfield led a $68 million Series C investment in the company alongside Conversion Venture Capital and ArrowMark Partners, the companies tell Fortune. The Durst Organization and Elysium Capital Management also participated. Convene previously raised $45 million in funding. Brookfield is “eager to explore working with and investing in” exiting startups, a company spokesperson said.
Convene’s business – “workplace as a service” — takes some explaining, which might be why CEO Ryan Simonetti frequently employs comparisons to other companies. “We are helping landlords run an office building like a full service lifestyle hotel,” he says. “It’s the Starwood-ification of real estate.”
Also: “What’s happening to landlords is, they’re the taxi cab industry before Uber. Convene is offering them the ability to not be disintermediated.”
And also: “We often get compared to WeWork, but we believe co-working is the first step in a much larger opportunity.”
Essentially, Convene manages the amenities of an office building, like the food, the conference rooms, event spaces, the gym. It currently offers 12 “branded” retail locations in three U.S. cities. In addition, the company offers a “managed amenities” package to landlords, where the company handles the service part of all those amenities. Notably, Convene offers these services on behalf of the landlords, not the tenants. Tenants are increasingly asking for these things when they move in, Simonetti says, and landlords are willing to pay for them. It has opened two of those so far in New York City.
Simonetti was previously an investor at Lehman Brothers, where he focused on office buildings and hotels. Amid the financial crisis, he realized landlords weren’t paying attention to the needs of their customers. They weren’t providing “amenity-rich experiences” the same way boutique hotels and luxury condo developers were starting to, he says.
Convene is capitalizing on that trend. Further, employees’ ability to work from anywhere at any time has merged personal and professional into what Simonetti calls “work-life integration.” Beyond that, companies are now using fancy offices as a way to attract talent, rather than as a balance sheet liability.
Convene, which has 262 employees, has grown profitably since it was founded in 2009. It took the company some time to get to a place where it is ready to grow quickly, but now, Convene is poised to grow exponentially, Simonetti says. “We feel comfortable dramatically accelerating the speed at which we scale,” he says. In the next year, the company will more than double the number of managed locations to 30.
Convene’s amenities business does not feel much like a tech startup business model, but Simonetti says the next phase includes a software product that will “digitize” the buildings Convene is in, allowing employees to do everything from going through security and booking a conference room to booking a class and sending feedback about the temperature, all within one app. Technology’s role in the buildings is to reduce friction, Simonetti says.
“We think the massive shift toward amenities and flexible space is something landlords have to respond to,” he says.
Deals. No matter how fierce the competition in new tech categories may seem, there’s always a good chance they’ll end up merging. Didi and Uber. LivingSocial and Groupon. DraftKings and FanDuel. ELance and ODesk. The latest? Taboola and Outbrain, the billion-dollar “around the web” links rivals, according to reports. That makes past instances public taunting a bit awkward. For example, the time Outbrain’s CEO in 2012 posted a photo of himself “eating Taboola for lunch” and later sniped on Twitter after Taboola’s revenue run rate announcement. Here’s a 2014 story I did on their rivalry.
Also notable: Blackstone Group and 21st Century Fox are discussing an acquisition of Tribune Media. And ESW Capital is taking Jive Software private. More details on both below.
PE + Tech + Girls: KKR has partnered with Girls Who Code, the nonprofit working to close the gender gap in technology. It’s the first time Girls Who Code has teamed up with a private equity firm, and it’s significant given how many businesses KKR owns and how active the company has become in technology. To start, KKR companies GoDaddy and First Data will sponsor Girls Who Code’s Summer Immersion Program. The firm says it hopes to get more of its 100 portfolio companies involved soon.
Tech + Girls: Along a similar line, BBG Ventures has expanded Wave, a program that pairs girls with mentors in tech companies, from 150 mentors to 350.
Correction: Domo raised $100 million in new funding, not $200 million, as Friday’s Term Sheet stated.
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HEALTH AND LIFE SCIENCES DEALS
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PRIVATE EQUITY DEALS
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• HgCapital agreed to sell Qundis, a Germany-based metering devices manufacturer, to Kalorimeta. Financial terms weren’t disclosed but media reports value the deal for as much as €400 million ($436 million). Read more.
• Thales (ENXTPA:HO) has agreed to acquire Guavus, a San Mateo, Calif.-based big data analytics company, in a cash transaction valued at up to $215 million. Guaves raised more than $100 million in venture funding from investors including Artiman Ventures, Goldman Sachs, Intel Capital, Investor Growth Capital, Liberty Global, and Sofinnova Ventures.
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