Venture capital firm Fifth Wall just closed on a new $100 million retail fund fueling a fundamental belief that brick and mortar is far from dead.
An investor in direct-to-consumer brands including fashion and footwear labels Allbirds, Carbon38, and Taft, Fifth Wall amassed a powerhouse lineup of partners equally invested in helping digitally native brands expand into the physical sphere.
In a departure from other retail funds, Fifth Wall’s includes many of the largest retail real estate owners and service providers globally, from Macerich and Acadia Realty Trust to Cushman & Wakefield and Nuveen Real Estate. Fifth Wall already worked with many of these companies when it launched its real estate technology fund, and the new funding reflects the venture firm’s belief that it possesses the know-how to facilitate the direct-to-consumer leap from the online to the offline world.
“We’ve created industry consortia [comprised of] corporate strategic partners in real estate,” Fifth Wall partner Kevin Campos said, noting how this strategy enables the venture firm to pull in members from the investor group to aid DTC brands as needed. While Macerich has the large-scale mall know-how, Acadia offers experience developing high streets and Cushman & Wakefield provides industry knowledge through its service capabilities, Campos noted.
Fifth Wall pitched its own idea of the future of retail when it was recruiting investors partners, Campos said. “We said to them, ‘this is where we think retail is going, does it resonate with you, and would you like to be involved?'” he added.
Investors in the fund are also on the hunt for new brands that have a good chance of thriving and evolving into potential tenants in their retail spaces. Because the venture firm understands the complexities of a DTC balance sheet, it can “translate” the new lingo to the real estate partners, while they in turn can offer brands advice on site selection and–in many cases–store design.
“Our alignment with Fifth Wall is an example of how Macerich is leading the way in shaping the future of retail real estate,” Macerich CEO Tom O’Hern said. The firm’s top properties in top markets serve as natural platforms for emerging brands like Industrious, he added, as well as Untuckit and B8ta, both of which have drawn investments from Fifth Wall.
“This new retail fund, which supports the ecosystem of emerging retailers, is an exciting step,” O’Hern said.
Brett White, Cushman’s executive chairman and CEO, said the partnership with “Fifth Wall helps us support some of the most promising, up-and-coming brands as they expand their focus from exclusively online retail to brick-and-mortar stores.”
The average size investment is expected to be in the range of $1 million to $3 million, with a focus on early-stage brands with a proven concept based on a revenue base between $5 million and $100 million, according to Campos. The fund portfolio is expected to be the range of 20 brands.