When we set out at the beginning of the year to host the industry’s first summit connecting PropCo founders and operators with forward-thinking, technology driven real asset allocators, we knew we were in for quite an adventure. But we couldn’t have predicted how the journey ahead would turn out. From the beginning, we had a big vision. We wanted to do something different and unique: an event that allowed a select group of stakeholders shaping the future of the built world to gather together and enjoy nature, the great outdoors and connect at a critical time in the evolution of the PropCo ecosystem. In the end, the event also celebrated the debut of Alpaca Real Estate, helmed by founding partners Dan Carr and Peter Weiss.

We’re proud to report that Alpaca’s inaugural 30/30 PropCo Summit far exceeded our expectations. We found the perfect venue in Getaway Eastern Catskills (a portfolio company) and worked with event partner, Mint Collective, and a roster of top tier sponsors that helped make the event a reality. From the activities and entertainment to the connections made across the Summit, feedback in the days since has been overwhelmingly positive. Thank you to all who made the Summit a success.

The Goals

Throughout the event, we continued to emphasize three goals for everyone there — goals that were crucial to creating the unique experience we wanted to deliver:

• Have fun
• Meet new people
• Widen your perspective

On the first one, fun is truly core to the way we do business. Along with that, the event brought a highly-curated group of people together. It was important to us that attendees engaged with one other to create new connections and share insights on how to scale their respective companies and investment platforms. Last but not least, we wanted people to come away with a critical understanding of the potential synergies at play in today’s PropCo/OpCo structures and how innovative operating platforms can allow investors to differentiate their traditional real estate investment strategies and potentially generate alpha.

Highlights & Takeaways

We believe we are at a unique time in the capital markets: allocators have extremely high bars right now; however, allocators are also constantly looking for ways to differentiate their real estate investment strategies and generate returns for their investors.

Against this backdrop, there was a consensus that we’re sitting on two inflection points right now:

First, the majority of the demand for PropCo capital historically has been absorbed by high net worth individuals, family offices and esoteric hedge funds. More recently, we’ve witnessed a shift in this standard: more and more institutional investors are rolling up their sleeves, doing the work on these deals, and, in many cases, allocating meaningful capital to PropCo strategies. We think it’s safe to say that current interest from institutional investors was validated by who was at our Summit. Looking ahead, we think the percentage of PropCo deals funded by institutional investors will only continue to increase. We are proud that events like this one are helping to bridge the gap and connect traditional real asset allocators and founders.

Second, we’re seeing innovative PropTech solutions mature to the point where they can drive real ROI and accretion to a traditional real estate investor’s bottom line. At Alpaca, we refer to these solutions as “PropTech overlays.” From our vantage point, these overlays have the potential to create real alpha generation possibilities. We call this phenomenon technology-powered real estate. It’s the focus of the new Alpaca Real Estate platform launched just days before the Summit.

The People

From the outset, we purposefully limited the event to exactly 30 companies and 30 allocators (hence the 30/30 name). It’s no exaggeration to say the Summit truly drew an all-star roster of attendees. If you’re curious, you can view the complete list of who joined us in our Attendee Profile Book.

On the company side, in addition to the traditional venture capital that these businesses have collectively raised, the companies at the Summit also account for multiple billions of dollars of traditional real estate (“PropCo”) capital as well. As we see it, these PropCo structures are a critical reason that many of these companies have been able to scale. They ranged from Seed stage to pre-IPO. While most in attendance already have OpCo/PropCo structures in place, there were a few just beginning to raise their first PropCo strategies.

These companies represented a diverse array of sub-asset classes and product types including:

• Multi-Family
• Single Family
• Single Family Rental
• Build-to-Rent
• Industrial EV Infrastructure
• Industrial Co-Warehousing
• Hospitality
• Rural Hospitality
• Ghost Kitchens
• Retail
• Farm Land
• Parking Lots

On the allocator side, we welcomed some of the largest real asset investment firms globally, as well as some of the most forward-thinking and tech-driven investors in our industry.

What’s Next

Following the Summit and the official launch of Alpaca Real Estate (read the official announcement and press release), we see a bright future ahead.

We want to thank attendees, sponsors and partners for taking part in the inaugural 30/30 Summit and celebrating a major milestone moment with us. You are among the very first people to hear about the launch of Alpaca Real Estate (ARE) and our vision for the future. We appreciate your support as we enter this new chapter.

Read more background and press coverage from the Alpaca Real Estate launch below:

PERE Exclusive, “Alpaca launches Real Estate Investment Arm” (9/28/23)

Citybiz, “Alpaca Launches Private Equity Real Estate Platform” (9/29/23)

Connect CRE, “GCM Grosvenor anchors new RE Private Equity Platform” (9/29/23)

Investing Review.org, “Ares & Prospect Ridge Alum Launch new RE PE Platform” (9/29/23)

Yahoo Finance, “Alpaca Launches Private Equity Real Estate Platform” (9/29/23)

Credits & Thank Yous

We could not have created this experience without the participation and support from all involved, including:

Sponsors

Thank you to 30/30 PropCo sponsors Cooley, Allen & Overy, Keyframe Capital, Xeal, Maybern, Built Technologies, House Canary, Obie Insurance, Intelas, Trinet, Proptech Bankers, Morgan Stanley Wealth Management, JLL Capital Markets, GCM Grosvenor, CRETI, CRETech, Getaway, Blueprint and Liquid Death.

Attendees

View all attendees in the Attendee Profile Book.

Event partners

• Event Producers: Mint Collective
• Venue: Getaway
• Photography: Michaela Rabinov
• Culinary: Chef Shon Foster
• Lighting: Ramar Event Pros
• Decor: Bare Bones Living
• Rentals: Events Unlimited Party Rentals
• Music: Mojave Grey and Haasy

To everyone who attended, thank you for trusting our team and taking a risk on a new experience — one we look forward to building on in the future.

Subscribe to our newsletter for tech updates, events, open roles, and portfolio news. Follow Alpaca on Twitter, Instagram, or LinkedIn.

Disclaimer:

Alpaca VC Investment Management LLC (“Alpaca”) is a registered investment adviser with the U.S. Securities and Exchange Commission (“SEC”). Alpaca Real Estate Management LLC is a relying adviser of Alpaca. Alpaca solely advises private funds and such fund interests have not been registered under the U.S. Securities Act of 1933, as amended, or under any applicable state or foreign securities laws, nor have such interests been approved or disapproved by the SEC or the securities regulatory authority of any state or foreign jurisdiction. Statements contained herein do not constitute an offer to sell or a solicitation of interest to purchase any securities or investment advisory services in any state or in any other jurisdiction in which such offer or solicitation is not authorized.

Event Recap: Here’s the Rundown on Alpaca’s 30/30 PropCo Summit was originally published in Alpaca VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

Following our previous deep dives into web3, we’ve continued to monitor the space closely through often tumultuous times. We’re excited to share an update on our current thinking around the space, key themes at play in the current landscape and the opportunities we see ahead.

TLDR:

• In 2021 and 2022, web3 seemed like a paradigm shift in online interaction.
• In 2023, adoption froze, capital dried up, and startups pivoted.
• Blockchain is the best available technology to drive digital self-sovereignty, but startups must drive adoption with legitimate use cases.
• U.S. regulation will determine the quality and geographic focus of crypto investment opportunities.
• We are still bullish on web3 as an investable space, but our focus areas have changed.

When we published our original Field Studies on web3 in 2021 and 2022, we believed the world was rapidly approaching a paradigm shift in online interaction.

In Making Sense of the NFT Wave, we covered non-fungible tokens — groundbreaking new internet primitives that finally enabled verifiable ownership of digital assets.

Our second Field Study, Virtual Real Estate & The Metaverse, dove into how those same NFTs would play a crucial role in organizing new digital worlds.

Finally, in DAOs and Tools for DAOs, we looked at on-chain organizations: internet-native, decentralized communities attempting crazy projects like bidding on a copy of the US constitution or building a futuristic city from scratch in Wyoming.

2021 was a shot in the arm for the space. Beeple’s “Everydays” NFT sold at Christie’s for $69 million. El Salvador planned to introduce bitcoin as legal tender. NFT sales hit $25 billion. It was happening. Web3 was here, and it was going to permeate every aspect of our digital and financial lives.

2022, however, brought less optimism. Axie Infinity’s RONIN network suffered a $600 million hack. Bitcoin lost over 60% of its value. Terra’s ecosystem collapsed and took Three Arrows Capital with it. Still, amidst broad volatility in the space, the Ethereum Foundation completed the Paris upgrade, one of the more impressive engineering feats in recent memory. The long-awaited “Merge” successfully transitioned the Ethereum mainnet to proof-of-stake, addressing longstanding criticisms of web3’s energy consumption, scalability, and security.

Then, out of nowhere, FTX collapsed.

Capital raised for crypto firms went from $21.6 billion in 2022 to less than $1 billion in 2023. Funding for startups dropped, too — down 78% from 2022. Still, there is a contingent of founders and investors quietly building in web3, even as the space comes under increasing regulatory scrutiny in the U.S.

All that said, we figured it was high time to revisit our original thesis, break down how it’s played out to date, and share why we’re still fundamental believers in web3.

Our Original Thesis on Web3

Our initial investments centered around a few core ideas:

1. Web3 is a paradigm shift in how we interact online.

For the first time ever, anyone with capital and an internet connection could own proprietary digital assets and transact them using a sovereign digital presence. We believed this transformation would deeply impact online interaction.

2) Consumer onramps and core infrastructure are key to mass adoption.

NFTs, DeFi, web3 games, and DAOs took on millions of users while basic infrastructure like wallets and fiat onramps were still being figured out. We saw an opportunity to improve on core infrastructure blocks while also leaning into consumer use cases.

Investments: Swoops, Rare Circles, The Sandbox, Animoca Brands

3) Legitimate use cases and comprehensible UX/UI are essential.

We recognized that just understanding web3 would be a barrier to adoption, unless products were:

• Compelling enough to acquire web2 users.
• Designed so that web2 users could own assets and transact seamlessly.

Investments: Venly, Upstream

Findings From Our Original Thesis

1. Web3 use cases never went mainstream.

From decentralized exchanges and lending protocols to prediction markets and peer-to-peer payments, this web3 market cycle did have real consumer applications. The problem was that the core users — even with $40 billion in total value locked across web3 protocols — were almost entirely crypto-native, early adopters.

Product complexity, security risks, and unclear value propositions stopped web2 adoption in its tracks. One investor we spoke with noted the challenge of bridging the gap for web2 users:

“Web3 of the last few years is a hard sell to the average user because there has been limited value proposition (beyond speculative profit) but outsized security risk (one wrong click and your money is gone).”

2) Startups are extending runway, building product, and waiting.

With limited downstream capital available, we’ve seen startups focus on extending their runway, building out product, and pivoting into sectors that might adopt web3 faster. We’ve also seen founding teams backpedal from the term “web3,” — calling themselves “web2.5” companies — or removing references to blockchain entirely.

If web3 uptake follows the path of other technologies, the last few years show that we’re likely in a much earlier stage of adoption than we thought.

3) Financial incentive is core to understanding web3 products.

Profit drove adoption for the most popular web3 projects. In January of 2022, Axie Infinity had nearly three million concurrent players, while OpenSea saw nearly $5 billion of trading volume in NFTs. In these use cases, the core value proposition was simple: profit.

For early adopters, profit was enough of an incentive to overcome complex onboarding and security issues. For web2 users, though, the potential profit wasn’t worth creating a wallet, exchanging fiat for crypto, and learning how to interact with decentralized services.

Why We’re Still Fundamental Believers in Web3

We believe that an ideal digital world is self-sovereign. Our vision of a self-sovereign world is one where:

1) People can capture value they generate for a network.

Web2 social networks like TikTok, Instagram, and Facebook are examples of networks where users don’t capture the value they generate. Users create content and spend time on the platform — generating billions of dollars in revenue for companies like Meta and ByteDance — but see little in return. We think a more equitable model that allows users to capture some of the value they create drives uptake and leads to a more sustainable business long-term.

We’ve made other investments like Foyer on this same principle, albeit without the underlying blockchain technology. Homebuyers generate thousands of dollars in value by purchasing a home (e.g., in the form of fees/deal flow for the homebuying “network” of brokers, agents, and lenders) but seldom see any of that value returned to them. Foyer’s specialized home-savings account equalizes that relationship by using those same real estate partnerships to boost buyers’ savings.

2) People can control their assets and transact freely.

Roblox is one example of an ecosystem where users are subject to platform rules that restrict their ability to transact — the result being that most will likely never be fully compensated for their work.

Roblox creators craft experiences, in-game assets, and plugins to earn Robux, the platform’s virtual currency. Using Roblox’s tools, distribution, and infrastructure, creators earned a collective $348 million in the first half of 2023. Those earnings, however, were restricted as each creator must earn a minimum of 30,000 Robux ($105) prior to receiving any real-currency payouts.

In 2022, the top one thousand Roblox creators earned a minimum of $55k, but the average creator earned 13,500 Robux ($47.25) and the median creator earned just 50 Robux ($0.17). Though Roblox has steadily decreased the minimum earnings requirement (down from 100,000 Robux in 2021) just over 14,000 creators are qualified to receive real-world payouts through its Developer Exchange.

** Robux exchange rate = $0.0035 / R$

Web3 brands have taken a different approach to user-generated IP. Azuki, an anime-themed metaverse brand, allows holders to not only display their NFT, but also create and sell derivatives of the artwork. This commercial license is in addition to the usual rights associated with token (NFT) ownership: the right to freely sell, transfer, or dispose of the artwork. Even in a stalling NFT market, Azuki’s June Elementals Drop brought in $38 million in just 15 minutes.

At Alpaca, we’ve made a direct bet on ownership-driven communities with Swoops. Swoops is the basketball simulation game and virtual league that lets you own, manage, coach, and profit from your own digital basketball team. In addition to the entertainment and community from playing the game, Swoops users (known as General Managers or GMs) have financial upside. GMs can earn real money from tournament winnings, head-to-head competitions, and player sales on the secondary market.

We’ve observed that leaning into ownership supercharges network effects. To date, Swoops GMs have played over 300,000 games and created more than 400 branded teams.

3) People help govern the networks they participate in.

While it might feel surprising to reference the July 2023 WGA/SAG-AFTRA strike in a long-form piece about web3, it’s a perfect example of what happens when people can’t help govern the networks they participate in. While the strike covers a range of issues — from pay increases to health benefits — the rise of streaming (and its lack of residuals) has emerged as one of the main pillars of debate.

As arguably the most important stakeholders in the entertainment industry, the strike shows that actors and writers don’t actually have much influence over how the industry (their “network”) operates.

When we explored DAOs in our 2022 Field Study, we recognized that they suffered from a range of inefficiencies from security to regulation. We did identify, though, that they had the potential to enhance trust and transparency in environments where consensus is a relevant priority.**

With the strike reaching a tentative agreement just this week, it’s worth considering how implementing some DAO-like governance could play a part in shepherding the industry’s ongoing transformation.

Our investment in Upstream, a no-code platform that makes it easy to launch a DAO, is one such bet on alternative governance structures. We recognize today (as we did in our 2022 study) that DAOs are still very much in the early stages of deployment. We expect that interest in on-chain governance will re-emerge once the broader web3 market has more time to mature.

** Note: Our original Field Study focused specifically on pseudonymous environments, but we believe this easily extends into communities where people use their everyday identities.

Where We’re Spending Time: Gaming & Consumer

We’ve identified two sectors that we believe best suit web3’s current adoption:

1. Gaming

We’re still interested in gaming, with much of our original thesis unchanged:

• Gamers tend to have the most familiarity with core web3 primitives like wallets, NFTs (collectibles), and virtual currency.
• Games like Roblox, Fortnite, and CS:GO already exhibit web3 traits like interoperability and secondary markets, though most are still part of siloed ecosystems.
• There are opportunities for both native and crossover IP that integrate web3.

Gaming also faces unique challenges:

• Existing gaming communities have often rejected web3, most notably with Mojang’s intended ban on NFTs and Valve simply banning blockchain games and NFTs outright in 2021.
• Web3 lacks a native device layer (though Solana is trying) so its development speed and financial incentives are at the whim of web2 platforms like the App Store and Play Store.
• Financial incentives can sometimes interfere with gameplay mechanics. Early financial experiments in AAA games like loot boxes and microtransactions have already upset some users.

2) Consumer Products & Services

We remain interested in tools, platforms, and products that bridge the gap for web2 users and drive mass adoption. Some tailwinds:

• Core onboarding around web3 (wallets, fiat onramps, general onboarding/safety) is still in the earliest stages.
• There are successful consumer products that integrate web3 without confusing users.
• With just 420 million web3 users globally, there’s plenty of room to grow.

This approach does have its challenges:

• Pure infrastructure for existing web3 users won’t accelerate adoption. Consumer and enterprise applications that bridge the gap for web2 are critical.
• With the past few years of headlines, people are incredibly skeptical of web3. Successful products will need stellar track records of trust and safety to overcome web3’s tarnished reputation and regain the public’s confidence.

Where We’re Not Spending Time: Collectibles, DeFi, L1s/L2s

Collectibles/Digital Art — “NFTs as NFTs”

In line with our 2021 Field Study, we still don’t view collectibles and digital art as areas of interest. This is primarily driven by their speculative nature and frequent lack of utility.

DeFi/NFT Finance

Regulation (discussed in depth below) poses a significant risk to DeFi startups seeking to scale.

L1s/L2s — New Protocols

With the current state of web3 adoption, we believe that breakthrough use-cases will be built on existing protocols with developed ecosystems.

Regulatory Considerations

Before we discuss the regulatory environment, a word on definitions:

1. We use the term “web3” to refer to a new version of the internet built on decentralized, blockchain-based protocols.
2. For clarity, this section will use the term “crypto,” as it’s generally used to refer to all blockchain-based products and services, including digital assets.

Where Regulation Stands Today

Since 2013, the U.S. Securities and Exchange Commission (SEC) has used enforcement actions as their primary response to the growth of digital assets.

In June 2023, the SEC made its boldest move to date — charging Coinbase with operating as an unregistered securities exchange, broker, and clearing agency.

While there are some signs of life — Ripple and Grayscale notching wins in court, H.R. 4763 circulating in the U.S. House — the crypto industry is stuck in regulatory limbo.

We see two different ways this could play out, each with profound effects on crypto’s investment potential.

Case A: Digital Assets are Securities or “Regulation by Enforcement”

The SEC framework for evaluating digital assets — the so-called “Howey Test” — originates from a 1946 U.S. Supreme Court ruling asserting that an “investment contract” exists when:

• There is an investment of money in a common enterprise.
• There is a reasonable expectation of profits.
• The profits are to be derived from the efforts of others.

SEC enforcement actions demonstrate the agency belief that virtually all digital assets pass the Howey Test, and thus are securities to be regulated accordingly. In 2021, Chairperson Gensler shared his intention to rein in the crypto “Wild West.” Two years later, that intention hasn’t changed:

“I’ve never seen so much just noncompliance and hype masquerading as reality as I’ve seen in this field.”

Critics claim the SEC’s approach is “regulation by enforcement,” and that treating digital assets like traditional securities will threaten U.S. financial and technological leadership.

In the July announcement of H.R. 4763, the Financial Innovation and Technology for the 21st Century Act, Representative Glenn “GT” Thompson (PA-15) stressed the point:

“[H.R. 4763] marks a significant milestone in (…) efforts to establish a much-needed regulatory framework that protects consumers and investors and fosters American leadership in the digital asset space. Over the past several months, our teams solicited extensive feedback from stakeholder and market participants, and worked diligently to produce a legislative product that aims to close existing authority gaps, ensuring U.S. leadership in financial and technological innovation.

Assuming this regulatory pathway, we predict two key transformations:

1. Existing U.S. crypto companies will adapt to regulation or modify their offering to avoid the costly administrative and financial “lift” on adherence — sacrificing core features and adoption in the process.
2. Investment capital and engineering talent will accelerate their transition out of the U.S. and into friendlier regulatory environments.

For venture investors, the United States’ status as a major geopolitical power presents additional complexity. Hostile U.S. crypto policy could potentially influence adoption and regulation in international markets.

Case B: Digital Assets are Not Securities or “Regulatory Clarity.”

The alternate path — broadly preferred by those in the industry — involves introducing a robust regulatory framework to accelerate crypto adoption and maintain US technological and financial leadership.

Coinbase’s defense, filed in an amicus brief, details their objection to the Howey test for digital assets, leaning heavily on arguments from Ripple’s overturned court case:

1. Digital assets are commodities, not contracts.

2. Because transactions are obfuscated, there’s no relationship between buyer and seller.

3. Digital assets are too decentralized for a single party to control.

Should these arguments succeed, it’s possible that the Howey test — and the Supreme Court ruling it’s predicated on — could come into question. Seemingly aware of this, Coinbase launched a grassroots campaign to mobilize 52 million U.S. crypto users in what is shaping up to be a “last stand” for domestic regulation.

One investor we spoke to agreed that regulation is the lever to pull when it comes to crypto adoption:

“I believe we are three to five years away from a significant inflection point in [crypto] adoption. There are a number of catalysts that might cause it, but I think the single largest binary trigger will be regulatory clarity. There are a number of cases in progress — the most interesting being Coinbase’s defense from the SEC. When regulatory clarity emerges, investors, talent, and capital will leave the sidelines and enter the space.”

We find that regulatory clarity, implemented thoughtfully, will benefit crypto:

1. Talent and capital will race back into the U.S. market.
2. Historic levels of undeployed capital in crypto venture funds will bolster early-stage dealmaking and support existing startups.
3. Friendly U.S. crypto policy will accelerate global adoption.
4. A regulatory framework will allow entrepreneurs to exploit the full potential of blockchain technology with products and services that are safe for public investors.

In the interim, though, venture investments in crypto are — at their core — directional bets on regulatory outcomes. Should the U.S. emerge as hospitable to crypto, we believe there will significant global opportunity at all stages of investment.

Conclusion

In this piece we covered our original thesis, our experience in the market over the last two years, and why we’re still believers in web3. We found that while most of our core theses have remained, we’ve had to adapt to the changing regulatory environment and the speculative nature of most early web3 use cases. We’ve also zeroed in on gaming and consumer — the two areas we see the most opportunity — while continuing to shy away from collectibles, DeFi, and new protocols.

We also covered regulatory considerations, finding that crypto policy in the U.S. will determine the quality and geographic focus of investment opportunities in decentralized technologies.

Blockchain took a serious reputational hit over the last few years, but it’s still the best available technology to drive digital self-sovereignty and ensure that people, users, and companies alike get a fair shake from the networks they participate in.

As a firm, the Alpaca team is continuously conducting Field Studies.

• Do you have a great idea for a Field Study thanks to a pain point you can’t figure out?
• Do you know an expert we should talk to for upcoming studies?

We announce new studies and how you can get involved on Twitter (@alpacavc), LinkedIn and in our newsletter, The Rundown (subscribe here or subscribe on LinkedIn).

Shoot us a note at hey@alpaca.vc. We’d love to hear from you.

Subscribe to our newsletter for tech updates, events, open roles, and portfolio news. Follow Alpaca on Twitter, Instagram, or LinkedIn.

Disclaimer:

Alpaca VC Investment Management LLC (“Alpaca VC”) is a U.S. SEC registered investment adviser. Nothing in this article should be considered investment advice or an offer or solicitation of investment advice; this article is for general awareness purposes only. There is no guarantee that Alpaca VC will continue to source deals from Field Studies or in the methods or sectors described in this article. Quoted individuals are not Alpaca VC investors or portfolio companies, and are not associated with Alpaca VC in anyway.

Sources:

• Field Study: Making Sense of the NFT Wave | by David Goldberg | Alpaca VC | Medium
• Field Study: Virtual Real Estate & The Metaverse | by Daniel Fetner | Alpaca VC | Medium
• Field Study: DAOs and Tools for DAOs | by Aubrie Pagano | Alpaca VC | Medium
• DAO raises millions in ETH to bid on copy of US Constitution (cnbc.com)
• CityDAO
• Beeple sold an NFT for $69 million — The Verge
• El Salvador looks to become the first country to adopt bitcoin as legal tender (cnbc.com)
• NFT sales hit $25 billion in 2021, but growth shows signs of slowing | Reuters
• Axie Infinity blockchain Ronin hacked for over $600M (forkast.news)
• Bitcoin lost over 60% of its value in 2022 (cnbc.com)
• How the fall of Three Arrows, or 3AC, dragged down crypto investors (cnbc.com)
• The Merge | ethereum.org
• Sam Bankman-Fried and the Collapse of FTX — The New York Times (nytimes.com)
• Venture capital funding for crypto firms has plummeted in 2023 (qz.com)
• Web3 Funding Plummets As AI Steals The Show (crunchbase.com)
• The SEC sues crypto exchange Coinbase for breaking US securities laws — The Verge
• TVL Rankings — DefiLlama
• The Pace of Technology Adoption is Speeding Up (hbr.org)
• Axie Infinity Live Player Count and Statistics (activeplayer.io)
• OpenSea (dune.com)
• Earning on Roblox | Documentation — Roblox Creator Hub
• Developer Exchange — Help and Information Page — Roblox Support
• Azuki Elementals NFT Drop Yields $38 Million in Just 15 Minutes — Decrypt
• How Streaming Has Rewritten the Script for Movies — The New York Times (nytimes.com)
• Writers Strike Deal: WGA & Studios Reach Tentative Agreement — Deadline
• Shrapnel Web3 Shooter Looks and Plays Like a AAA Game — Decrypt
• GTA owner joins Web3, Bitcoin casino, Sunflower Land review: Web3 Gamer (cointelegraph.com)
• Minecraft Still Hasn’t Officially Banned NFTs — But It’s Coming — Decrypt
• Gabe Newell explains why Steam banned NFTs | Eurogamer.net
• Web3 On The Go | Solana Mobile
• MW2 players say increased microtransaction sales are why COD won’t improve — Dexerto
• Sorare: Own Your Game
• Cryptocurrency Ownership Data — Triple-A
• SEC.gov | Crypto Assets and Cyber Enforcement Actions
• SEC.gov | SEC Charges Coinbase for Operating as an Unregistered Securities Exchange, Broker, and Clearing Agency
• Judge says some XRP sales did not constitute a securities offering (axios.com)
• Explainer: Understanding Grayscale’s victory in spot bitcoin ETF case | Reuters
• Markup of H.R. 4763, H.R. 1747, H.R. 3244, H.R. 4768, H.R. 4765, H.R. 2969 | Financial Services Committee (house.gov)
• SEC.gov | Framework for “Investment Contract” Analysis of Digital Assets
• Howey Test Definition: What It Means and Implications for Cryptocurrency (investopedia.com)
• SEC v. W.J. Howey Co. :: 328 U.S. 293 (1946) :: Justia US Supreme Court Center
• U.S. SEC Chair Gensler calls on Congress to help rein in crypto ‘Wild West’ | Reuters
• SEC’s Gary Gensler Had Crypto in His Sights for Years. Now He’s Suing Binance and Coinbase. — WSJ
• Committees Introduce Financial Innovation and Technology for the 21st Century Act | Financial Services Committee (house.gov)
• Cryptocurrency Regulation Tracker — Atlantic Council
• The competing priorities facing U.S. crypto regulations | Brookings
• McDermott And Chamber of Digital Commerce File Amicus Brief In SEC V. Coinbase — McDermott Will & Emery (mwe.com)
• A Call To Action: Mobilizing 52 Million Crypto Owners Into An Army of One Million Advocates For Change (coinbase.com)

What’s Next for Web3? Alpaca’s Thesis on Venture’s Most Controversial Space was originally published in Alpaca VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

Today marks a major milestone for Alpaca.

We planted the seed by publishing our thought leadership on the topic, hosting webinars such as The Great PropCo Opportunity, and educating founders and real asset allocators on how to bridge the gap and facilitate connections. And of course, this year Alpaca launched the inaugural 30/30 PropCo Summit.

Today we are proud to announce the official launch of Alpaca Real Estate. I am beyond excited to share that Dan Carr and Peter Weiss have joined Alpaca to co-found and lead this new platform. I also want to extend our thanks to GCM Grosvenor and their group of investors for their continued support and anchor capital to the business. We are also grateful for PERE’s exclusive coverage of this news.

Alpaca Real Estate will seek to make attractive investments in two distinct ways:

Direct Investing

Investing directly in real estate assets that are intended to benefit from the team’s underwriting and structuring experience.

We will be targeting a few strategies, including the ability to reposition and recapitalize properties, provide deploying capital to the right size property investment structures, bifurcating platforms into OpCos/PropCos, and/or developing in supply-constrained markets. We also believe that partnering with forward-thinking allocators to capitalize on real estate investments will be our advantage.

Technology and Operating Overlays

Leveraging technology and/or operating overlays to enhance efficiencies with the goal of generating additional alpha across our real estate holdings.

The team created “Landlord Overlay Stacks” for major property sectors which will showcase the initial list of opportunities we plan to incorporate into each investment’s strategic business plans.

What’s Next

Our dedicated focus on the creation of real value at the intersection of the physical and digital worlds through investments in real estate and 10+ years of PropTech investing has come to fruition.

It has been an exciting journey to get here, though the journey has only just begun. If you are an organization looking for joint venture partnerships, platform capital, or a collaborative technology-forward allocator, please don’t hesitate to reach out to Dan Carr or Peter Weiss.

Subscribe to our newsletter for tech updates, events, open roles, and portfolio news. Follow Alpaca on Twitter, Instagram, or LinkedIn.

Disclaimer:

Alpaca VC Investment Management LLC (“Alpaca”) is a registered investment adviser with the U.S. Securities and Exchange Commission (“SEC”). Alpaca Real Estate Management LLC is a relying adviser of Alpaca. Alpaca solely advises private funds and such fund interests have not been registered under the U.S. Securities Act of 1933, as amended, or under any applicable state or foreign securities laws, nor have such interests been approved or disapproved by the SEC or the securities regulatory authority of any state or foreign jurisdiction. Statements contained herein do not constitute an offer to sell or a solicitation of interest to purchase any securities or investment advisory services in any state or in any other jurisdiction in which such offer or solicitation is not authorized.

Welcome to the Herd, Alpaca Real Estate was originally published in Alpaca VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

At Alpaca, our Field Study program is a cornerstone of our approach to investment. But first, what is a Field Study?

Field Study: Alpaca’s proprietary process for deeply researching a particular theme or topic to understand the investable (and non-investable) areas within a space of interest.

Built internally by our team, the program has steadily grown and proven itself to be a repeatable, thesis-driven engine for deal generation. It has become a hallmark of the Alpaca way of doing business. In fact, several firms have asked us to help them replicate the process internally.

We’re excited to share how and, more importantly, why the program works.

Proof in the Pudding

Across funds, our Field Studies program consistently drives new leads to all our sourcing channels:

In 2022, half of the investments we made were directly related to Field Studies.

Looking at our last 40 deals, 23 were driven by Field Studies. Along with tracking this internally, Alpaca’s David Goldberg publishes an annual Where Do Deals Come From? rundown of each deal we’ve done in the previous year and how it came to us.

Why does it work? Each Field Study conducted by our team drives the following outcomes:

• First and foremost, helps us to take time to get smarter on spaces where we find interest and we think there is potential investment opportunity
• Gets us to a clear point of view in an organized manner, where we can map a market, potential headwinds, tailwinds, risks and opportunities. This way, we have a lucid, prepared mind when speaking with any company
• Gives us research-based conviction on the areas we ultimately believe are non-investible
• Builds our network of potential founders, investors and customers along the way, in areas we want to spend time
• Helps us plant a flag in a particular space and build a reputation as thought leaders that, in turn, generates inbound deal flow through referrals from VC ecosystem partners who know we’re spending time on that particular topic
• Uncovers deal opportunities before they’re in market
• Informs and prepare us for future investment opportunities so we’re armed and ready to move aggressively when something crosses our desks
• Allows us to get to conviction faster and win deals more often, as we’re able to have a third- or fourth-level conversation with a founder on a first call and prove our value

The Alpaca Field Study Playbook

So how do we conduct one of these? A new Field Study begins with a partner identifying an interesting, potentially investable area of the market. By focusing on a specific theme, we are able to be very targeted around the deals that we look at and the strategic networks that we build. This allows us to not only uncover opportunities through our research and outreach, but also to establish a reputation as experts.

Once we’ve identified an area of interest, we spend three to four months speaking with investors, founders, customers and incumbents in that space to understand the dynamics of emerging technology, adoption and what the future holds. The Alpaca MBA Associates program is a key component to this stage in the Field Study process. Selected from top programs such as Wharton and Harvard to work closely with our general partners and investment team, each MBA Associate contributes significantly to at least one Field Study during their tenure with the firm. Along with secondary research culled from industry sources, our team conducts in-depth primary research by speaking to founders, VCs and other leaders.

This research phase typically runs 90–120 days into the identified market, which can be on a macro or micro topic. For example, Alpaca’s Global Supply Chain Field Study led by Aubrie Pagano was actually a multi-year investigation encompassing five distinct, but closely-related studies into different aspects of the supply chain.

From this research, and speaking with dozens of industry players, customers, and startups, we produce an extensive deck (20–40+ pages), market map, and deep analysis outlining our market insights and findings about the investable opportunities we believe exist in the space. We then publish the completed Field Study to the broader market via our digital channels (see below for examples).

Next, we amplify the reach and visibility of each Field Study online and offline by hosting dinners, virtual panels, and branded events on our conclusions that bring together our community around focused conversations. The result: founders and co-investors alike know they can reach out to us about the specific areas featured in our Field Study program.

While timing does vary from study to study, here’s a week-by-week rundown of our typical Alpaca Field Study process:

Week 1: Plant Flag

Objective: attract and engage founders, investors and thought leaders in the space.

Actions: announce new topic to our networks through a blog post, social media, firm newsletter, personal networks and word of mouth.

Weeks 2–3: Engage Ecosystem

Objective: get educated and build relationships.

Actions: reach out and schedule calls with thought leaders, investors and entrepreneurs to conduct a high level macro-overview and uncover industry trends. When speaking with incumbents to determine industry dynamics, we ask things like:

• How is technology being used in the industry today?
• Where are the areas most prone to disruption?
• What is the relationship between incumbents and emerging startups? (i.e. M&A, willingness to partner, incubation, etc.)

Weeks 4–6: Intensive Research

Objective: conduct intensive research.

Actions: build data sets using both a bottoms up analysis and a top-down approach to identify all startups in the space, break down existing processes to determine which parts of the workflow startups are tackling, understand the solutions at play and hypothesize which types of technologies can play a role in changing the market dynamics. We find that hypothesizing at this stage results in less prone confirmation bias later. We also define the Total Addressable Market (TAM) by asking:

• What is the size of the market?
• Which part of the market is most susceptible to change?
• How fragmented is the market?
• Who are the public comps and what types of multiples are they trading at?

Weeks 7–8: Market Map

Objective: categorize companies by “modules” or by business model and understand the pros/cons of varying business models as part of the Market Map creation process.

Actions: document modules and business models in the sector and build out handful of company profiles to show varying examples of what’s at play in the market. Use these findings to build out a comprehensive Market Map. Next, we ask:

• Which models are more/less scalable?
• Which models require multiple stakeholders to adopt the technology
• Which models increase/decrease TAM?

Weeks 9–10: Analysis & Opinion Forming

Objective: take learnings and form opinions.

Actions: as a team, we work to use what we’ve learned thus far in the process and translate them into opinions. Both internally and to industry experts, we aim to test our original hypothesis to determine wither it’s valid or invalid. We ask:

• Which business models will be effective given industry dynamics
• Which module(s) are necessary for adoption?
• Does the solution need to be full-stack or is there a point solution?
• Do industry dynamics and TAM allow for multiple winners?
• Do network effects come into play and, if so, how and when?
• How important is founder-market-fit (i.e. category expertise) for this industry?

Weeks 11–13: Finalize & Publish

Objective: publish our findings.

Actions: we format, design, edit and finalize Field Study content in preparation for publications. An Alpaca Field Study includes three deliverables:

• Research Deck or White paper (e.g. The Intersection of Construction and FinTech)
• Blog Post (e.g. Field Study: Landlord Technology Facilitating Rent Collections)
• Presentation (e.g. The Future of DAOs Roundtable)

Weeks 13–14: Polish & Present

Objective: present findings in a “traditional presentation” format to key audiences of interest. The format differs some depending on the research, findings and sector. In each case, we aim to curate an event that will put our research in front of the right audience at the right time.

Actions: organize, host and promote an event for a key stakeholder audience. The event could take the form of a virtual fireside chat featuring industry experts, a private presentation for our LPs or an in-person gathering bringing founders, operators, investors and experts together to connect. For example:

LP Event: Many Field Studies are driven by interest from our LPs. In order to provide them thought leadership and insights, we present our Field Study research to them by hosting an exclusive in-person dinner or hosting a virtual presentation.

VC Community Event: In some cases, we present our findings to the VC community through a live networking event. This further builds our connection to and reputation in the space. Co-investors, founders and experts in the ecosystem know where we are spending time and will keep us top of mind for relevant opportunities in the space.

Weeks 15+: Monetize & Leverage Research

Objective: leverage research for ‘highest and best use.’ Field Studies can be monetized in four forms:

1. Pre-seed and incubation opportunities either via an Alpaca Fund or through collaboration with other firms
2. Seed investing via an Alpaca ‘core’ Fund
3. Mid stage (Series B and beyond) investing into breakout winners via the Alpaca Built World Fund
4. Strategic thought leadership delivered to LPs to further justify and add value to their LP investment

Other Benefits

By the time of publication, our team has often identified immediately investable opportunities. Other times, we keep this research in our back pocket. When that killer deal comes across our desk, we are more apt to move quickly and potentially win the deal.

Deals are not the only investment outcome of this work. Sometimes, a Field Study’s value is the opposite: we build research-based conviction around the areas where we do not want to invest. When this happens, our team is primed to pass quickly and early on new deals instead of spending time evaluating opportunities that are ultimately unbackable.

We also see additional leverage and value in continuing to promote Field Study content as part of the brand-building process. In addition to publishing our findings and sharing them with key stakeholder audiences through presentations and live events, we promote our Field Studies through additional ongoing outreach. This includes:

• Social media promotion and distribution via our newsletter, The Rundown
• Media/PR
• Speaking opportunities for our investment team
• Thought leadership pieces and contributed articles authored by our team

At each stage of the process, we endeavor to reinforce our team’s standing as potential thought leaders in the Field Study’s given sector and continue to build connections and generate inbound leads as a result.

Field Studies in the Wild

The best way to keep up to date with Alpaca Field Studies is to subscribe to our newsletter, The Rundown, or follow Alpaca on LinkedIn. For a deep dive, you can find all Alpaca Field Studies here. Below, we share a few recent and notable Field Studies.

The Potential of Generative AI

Led by David Goldberg

Generative AI is one of the hottest topics on the block. Every day hundreds of startups are launched in this space. We launched this study to unpack what the generative AI landscape looks like — and how we intend to evaluate opportunities.

Brand Discovery

Led by Aubrie Pagano

Brand discovery is broken, and yet more crucial than ever for companies to crack in order to stay competitive. Starting with an industry survey, we’ve cataloged trends — and solutions — in our first Brand Discovery Report.

ESG Data & Reporting in Real Estate

Led by Daniel Fetner and Ryan Freedman

We investigated the Environmental, Social, and Governance (ESG) standards that

are tightening across the Real Estate industry. We believe the sector will require innovative data capture, analytics and reporting tools to meet them. We continue to

actively monitor the space.

Global Supply Chain: A 5-Part Field Study Series

Led by Aubrie Pagano

This five-part study, spanning more than a year, ultimately honed in on three key areas: enabling Amazon Prime-like delivery for emerging brands (Part 2), end-to-end software solutions that enable cross-border sales (Part 3), and end-to-end solutions for e-commerce returns and circularity (Part 4). We invested behind two of the three themes so far as well, with investments into a cross-border, asset light global 3PL, Mayple; and the returns-to-recommerce platform, Arrive. More potential deals are in the works.

Read the entire Global Supply Chain Field Study Series: Part 1: Global Supply Chains, Part 2: Delivery, Part 3: Cross-Border, Part 4: Returns, Part 5: Conclusion

More Select Field Studies

• DAOs and Tools for DAOs
• Sustainable Building Materials 2.0
• Rooftop Solar Energy
• EV and the Future of Mobility
• Virtual Real Estate & The Metaverse
• The Rise of Recommerce

What’s Next

As a firm, the Alpaca team is continuously conducting Field Studies.

• Do you have a great idea for a Field Study thanks to a pain point you can’t figure out?
• Do you know an expert we should talk to for upcoming studies?

We announce new studies and how you can get involved on Twitter (@alpacavc), LinkedIn and in our newsletter, The Rundown (subscribe here or subscribe on LinkedIn).

Shoot us a note at hey@alpaca.vc. We’d love to hear from you.

Subscribe to our newsletter for tech updates, events, open roles, and portfolio news. Follow Alpaca on Twitter, Instagram, or LinkedIn.

Disclaimer:

Alpaca VC Investment Management LLC (“Alpaca VC”) is a U.S. SEC registered investment adviser. Nothing in this article should be considered investment advice or an offer or solicitation of investment advice; this article is for general awareness purposes only. There is no guarantee that Alpaca VC will continue to source deals from Field Studies or that the percentage of sourced deals from field studies will increase or remain the same. Referenced companies in this article are Alpaca VC portfolio companies.

Alpaca VC’s Field Study Program: A Repeatable, Thesis-Driven Approach to Investment was originally published in Alpaca VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

The honeymoon period is over — let’s make this official. After two years working part-time with the Alpaca team throughout grad school, I’m thrilled to join the firm full-time as a Senior Associate.

I first started working with Alpaca in 2021 while pursuing a dual masters from Harvard Kennedy School and Wharton. It took a cold email to Daniel Fetner, no response, and another, better email three months later, and eventually we were in business.

That summer, the word metaverse was just starting to gain traction among consumers and investors, and one of my first jobs was to build out the fund’s metaverse and virtual real estate thesis. I credit that Field Study with kickstarting my VC career: in an early draft, I speculated that Facebook was the most likely tech incumbent to rebrand to a metaverse company. A couple weeks later, they did just that. That Field Study ultimately led to investments in The Sandbox, Animoca Brands, and Venly.

While hype around the term “metaverse” has died down (for probably good reasons, honestly), many of the underlying fundamentals remain as strong as ever. Continued trends in gaming, 3D enablement, digital economies and virtual communities means there is still a lot to build.

Outside of that, my primary areas of focus at Alpaca are PropTech and construction tech. The real estate industry is a dinosaur in both age and size — but generational trends and shifting consumer behaviors are creating new opportunities in the information, transaction, and ownership of real assets. My goal is to enable these startups to bring profound change to the market.

Finally, I also lead our Asia strategy, where we partner with Asia-based real estate allocators and owners. In this role, I build partnerships with Asian real estate and PropTech firms to act as a bridge and connective tissue between Asia and the US. Our thesis: Asia is the largest real estate market in the world, but dramatically lags behind the US and Europe in PropTech adoption.

Before Alpaca and grad school, I worked in traditional real estate and economic development. I started my career consulting for public sector entities across a variety of development issues, from housing and transportation to fiscal policy and broadband infrastructure. Most recently, I worked in acquisitions at a DC-based real estate fund, where I helped close over $1B in deals across urban asset classes. I’ve also published white papers on microunits, small-scale manufacturing, and greyfields (distressed mall assets). My work has actually brought me to 43 of the 50 states — still no Hawaii or Alaska, which I plan to fix.

After three jobs, two masters, and one cold email, I’m excited to finally dedicate full-time effort to Alpaca and continue growing in my role. If you’re a founder or investor, feel free to hit me up at andrew@alpaca.vc or on LinkedIn.

To keep up with the latest from Alpaca, connect with us on Twitter, Instagram, and LinkedIn @alpacavc, subscribe to our bi-weekly newsletter The Rundown here, or by reaching out directly to hey@alpaca.vc.

Disclaimer:

Alpaca VC Investment Management LLC is a U.S. Securities and Exchange Commission registered investment adviser.

Meet Alpaca’s “New” Senior Associate — Andrew Peng was originally published in Alpaca VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

I. Introduction

Rent collections have become a major pain point for landlords in recent years as collections rates have consistently declined and property managers have become increasingly burdened by inefficient and manual processes. While plenty of exciting technology solutions and platforms have flooded the property management space, we believe there is still significant need for targeted point solutions that address specific steps in the rent collections process flow.

In this Field Study, we conducted dozens of conversations with founders, industry experts, operators, and investors to better understand the current trends in rent collections, identify deficiencies in the traditional processes, and ultimately uncover exciting products that are bringing innovative, technology-powered solutions to the subsector.

II. Defining the Problem

Multifamily operators have experienced two glaring issues of the past few years which led to the origination of this Field Study:

1. Collections rates have consistently decreased

2. Property managers lack the right tools and processes to effectively manage the collections flow.

Landlords have witnessed a steady decline in national collection rates from pre-COVID levels of 96–98% to 92–95% in 2021 (NHMC), creating outsized aged delinquency balances and preventing property managers from hitting their pro formas. While some recent reports suggest an uptick in collection rates in 2022, it’s been a persistent issue. Landlords need to be better prepared for future economic shocks that may have adverse effects on collections (RealPage). Then, as a tenant falls behind, operators face an increasingly uphill battle in navigating the operational, legal, and financial aspects of collecting from problem tenants. We began the study by exploring the primary factors that are contributing to the problem on a macroeconomic, operational, and legal level.

The U.S. has experienced steady declines in apartment vacancy rates and unprecedented increases in rental prices over the past 20 years. These trends have only accelerated as rents have increased 25% from 2 years ago and national vacancy rates dropped below 6% for the first time in 2022 (FRED St. Louis Economic Data). We are now estimated to be 6.5 million housing units short of equilibrium levels as the housing shortage crisis continues to deepen (Realtor.com).

The two main sources for rent payments are wages and savings. However, it is estimated that the average American spends 40% of their paycheck on rent, while 40% of renters have less than $400 saved (Pew Research). When you add persistent inflation of the past 24 months and an approximately 3% decrease in real wages (U.S. Bureau of Labor), it becomes clear why renters feel exceptionally burdened today and are struggling to make rent. The housing shortage has been a major tailwind for rental landlords the past 20+ years, but as tenants continue to deal with macroeconomic shocks, rental rates have reached unsustained levels. Landlords are experiencing this in the form of decreased collection rates.

Transitioning to some of the micro factors at play, landlords and property managers are grappling with a myriad of operational challenges. Key among them are outdated and manual operations. Property management is hampered today by the inability to bulk communicate, non-collaborative platforms, rigid systems, and the constant need for human interaction in the rent collection process. These inefficiencies significantly slow down their operations and make it harder to find the right tenants, collect rent on time, deliver notice letters, and evict bad actors.

Lastly, a critical component of maintaining collection rates is getting the right tenants into the building. But recent macro trends have also attracted the attention of both national and local policy makers, leading to a flurry of ordinances the past 3–5 years that make it harder to screen prospective tenants. For example, in Portland, Oregon, property management can no longer deny an application based on a tenant’s income and ability to pay (RentPortlandHomes). Several other cities like Seattle and Minneapolis have limited the scope for when landlords can consider criminal records in the tenant screening process (e.g. MinneapolisMN.gov and Seattle.gov). Meanwhile, fraud is prevalent and growing in the backdrop. Research shows 97% of owners and operators experience fraud in the properties managed, and 95% report difficulties in presenting and mitigating fraud (Rental Housing Journal).

In conducting this Field Study, the following have become abundantly clear to our team:

Owners and operators are facing significant headwinds that are hindering their ability to collect rent.

Meanwhile, tenants are suffering from financial hardship and a poor customer experience.

We believe the need for better solutions in the marketplace is urgent.

III. Industry Overview

We continued our research by surveying the current industry landscape in order to understand shortcomings of existing offerings and formulate criteria for an effective solution. It was clear from our conversations with property managers and operators that major Property Management Software (PMS) platforms controlled a large share of the rental market and thus acted as gatekeepers to innovative solutions in the marketplace. All building files, billing systems, and tenant data are generally integrated with these PMS platforms. The switching costs are therefore incredibly high due to the depth and complexity of their integration and a common consequence is that PMS platforms aren’t incentivized to add new services or features to their offering. This leads to a highly commoditized product among the major players. When a new start-up in the space starts to reach scale, these platforms often acquire the new player or imitate and launch a similar product within its suite of offerings. In either option, integration is difficult, and the end consumer suffers from a clunkier and less effective product or feature. Property managers consistently expressed dissatisfaction with the availability of targeted point solutions for a niche problem like rent collections.

We took these key learnings about the industry and formulated three main criteria for a potential start-up/solution in the space:

1. Point solution

2. PMS integration

3. Attractive return on cost

As discussed, major landlords and property managers are heavily reliant on major PMS platforms for storing tenant info and data and processing payments. Therefore targeted point solutions are needed to fill gaps in the current offering, enhance productivity, and improve the resident experience. Enterprise PMS platforms rely on a network of embedded service providers for clients to achieve customization and specialization they need. An integrated solution is therefore necessary to limit complexity while maintaining high levels of accuracy and security. Lastly, we developed a framework for evaluating potential solutions on a return on cost (ROC) basis. The goal is to increase collections and decrease operational time and costs; therefore the total value capture of a service is a function of the increase to bottom-line profit less the cost of the service (example below).

We believe there is significant value capture available to landlords in the rent collections subsector, with internal Alpaca estimates totaling $45 billion (calculated as $1.7K average rent * 12 months * 44M rental housing units * 5% of residents never paying; sources: NHMC, RentCafe, & U.S. Census Bureau). This represents a massive opportunity for operational technology to add value and capture a share of this under-the-radar corner of the proptech market.

IV. Solutions

Extrapolating our key learnings and research thus far, we created frameworks for different types of solutions in the marketplace and identified some exciting start-ups. The three categories of solutions that we identified are as follows:

1. Tenant Screening

2. Communication & Data Tools

3. Fintech, Credit & Rewards

Tenant Screening

Tenant Screening contains all upfront solutions centered on the tenant underwriting and lease approval process with the goal of getting the right tenants in your building to prevent future issues down the line. This underwriting process primarily includes ID verification, background checks, and financial due diligence. The first step in preventing fraud is verifying identity and thus it’s the aspect that is most susceptible to bad actors. If a tenant forges their identity at step one then the rest of the approval underwriting process is compromised. Thus we believe that start-ups in this space with the most advanced and innovative identity verification processes are going to be winners in the space.

Communication & Data Tools

In the Communication & Data Tools category, we are focused on a company’s ability to optimize the collection process and maximize property manager efficiency. In our view there are five main pillars to this type of product: bulk communication, conversational AI, predictive dialing, tenant relationship management, and data analytics and reporting.

Bulk communication will enable PM’s to send mass notices at the click of a button. Next, the ability to interact with tenants throughout the rent payment process via conversational AI can take some of the mundane two-way communication between managers and the tenant out of the hands of the PM (i.e. a tenant requesting further information about their ledger or asking why they were charged a late fee). When the problem is more complex or a tenant is unresponsive it’s imperative that PM’s have the ability to personally contact a tenant — predictive dialing can automatically connect PM’s to live calls with tenants so they can listen, negotiate, and provide a human touch to the collection experience. Next, PM’s need the ability to easily track interactions between management and tenants, so the next time an agent connects with a tenant they can build off previous communications. An integrated Tenant Relationship Management system, similar to a CRM, is not readily available to PM’s today but something like that is sorely needed.

The last piece is data analytics and reporting, where we believe there is significant opportunity for artificial intelligence and machine learning to identify risks and forecast performance by analyzing the vast amounts of data that rental properties and tenants produce. A successful solution would include accurate reporting and dashboard flexibility allowing the manipulation of KPI’s, parameters, and views to present the data in an easily digestible manner. There are several exciting start-ups operating within each of these five pillars, but we believe that due to overlapping data units, integration, and tech capabilities, there is a significant opportunity for a single provider to cover all of the above and deliver a one-stop-shop tech tool for property managers.

FinTech, Credit & Rewards

Another exciting category is FinTech, Credit & Rewards, which encompasses two main subcategories: rent incentives and rent guarantees/payment programs. The rent incentives sub-category includes credit card rewards, credit score reporting, and other benefits programs. The idea is that by offering additional incentives for a tenant to pay rent, you can start to change tenant behavior and increase collection rates. While this is still a relatively new and unproven theory, there is potential for a flywheel effect as tenant’s continue to reach their financial goals and build loyalty to a property. Meanwhile, rent guarantees and flexible payment programs revolve around shifting the risk of nonpayment from the tenant to a 3rd party provider in exchange for a fee. For example, the tenant will pay rent to a 3rd party under a unique structure or payment plan and the 3rd party guarantees full rent will be paid to the landlord on the 1st of every month. Tenants benefit from the added flexibility and landlords benefit from certainty. Both of these innovative business models can be valuable add-on services for landlords that are looking to boost collection rates.

V. Conclusion

This Field Study has shed light on the pressing challenges faced by landlords and property managers in the current landscape. The decline in collection rates and operational inefficiencies have created a significant problem in the industry. We identified four main categories of solutions and each category presents opportunities for innovative start-ups to address specific pain points and provide value to landlords and property managers.

With a total value capture available to landlords of approximately $45 billion by our estimates, there is immense potential for technology companies to make a substantial impact in this segment of the proptech market. We ultimately believe that the start-ups focused on targeted point solutions, PMS integration, and attractive ROC metrics for their customers will win out in an increasingly competitive but exciting subsector.

For more, the slide deck below accompanies our research and offers a closer look at our team’s findings:

Alpaca Field Study: Landlord Technology Solutions Facilitating Rent Collections

Please Reach Out

Are you an entrepreneur or an industry expert exploring this space and actively working with landlord technology solutions facilitating rent collections? Please reach out to Daniel@alpaca.vc. We’d love to speak with you.

To keep up with the latest from Alpaca, connect with us on Twitter, Instagram, and LinkedIn @alpacavc, subscribe to our bi-weekly newsletter The Rundown here, or by reaching out directly to hey@alpaca.vc.

Disclaimer:

Alpaca VC Investment Management LLC is a U.S. Securities and Exchange Commission registered investment adviser.

Field Study: Landlord Technology Solutions Facilitating Rent Collections was originally published in Alpaca VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

In unpopular opinion news, here’s a hot take: passing on an investment opportunity in a Canadian business simply because it lacks U.S. traction is a cop out.

Imagine this scenario: you’re a founder building an early-stage company based in Canada. Maybe you’ve raised capital previously, maybe you haven’t. You’ve commercialized a product and are starting to show traction. You have real customers and real revenue. You’re on your way towards finding the elusive ‘product market fit’ and it’s time to raise money. You prepare a list of investors that focus on your industry and stage and begin the fundraising process. In conversation after conversation, one question is consistent, especially from the U.S. based investors you speak with.

What has your traction been in the U.S.?

Why do investors care about Canadian companies proving U.S. traction? It’s a good question — and one we decided to get to the bottom of. Through numerous conversations with investors based in both geographies and founders of early-stage Canadian companies, we’ve gleaned some insights about the border banter.

For many startups, proving traction and commercialization in the U.S. is indicative of a company’s ability to build a venture scale business. There are few sectors where a company can sell only to Canadian customers and generate a fund-returning exit in our opinion. In our case, this typically means reaching upwards of $75M USD of revenue over an investment period of 8–10 years.

There are business models where proving U.S. traction isn’t as straightforward as, for example, selling into the U.S. division of Walmart instead of the Canadian division. We’ve identified five of these situations where a U.S. presence is important for a Canadian company. In these instances, it’s logical that investors may want to de-risk that growth channel prior to making a bet. Below, we share and unpack each in the context of an investor:

Companies operating in a highly regulated environment: pharmaceuticals or cannabis, for example.

Investors want to understand how a company navigates the regulatory requirements in each jurisdiction. This can include whether a business model is even viable in markets necessary to achieve venture scale. Not only is this relevant at a federal level, but also in provincially in Canada and by state in the U.S.

Companies operating in an environment where underlying architecture is fundamentally different: tech leveraging payments infrastructure, for example.

Payment and settlement infrastructure built for the Canadian banking system doesn’t always have the same functionality in the U.S. This isn’t an insurmountable challenge but requires investment of time and money. An investor may want to participate only once it’s been solved.

Companies where the competitive landscape is materially different between geographies: consumer products, for example.

The product mix in any given consumer category can vary heavily between the U.S. and Canada. Product differentiation in Canada may not exist in the U.S., or vice versa. Not only can the competitive landscape be substantially different, consumer buying behavior can also be driven by different factors between the two regions. Strong sales data from Sobeys in Toronto, ON doesn’t mean your product will succeed at Whole Foods in Los Angeles, CA.

Companies where scalability is dependent on efficient consumer acquisition: a direct-to-consumer brand, for example.

Customer acquisition costs have skyrocketed since Google and Apple changed their privacy permissions, effectively ending third-party cookies and first-party data. As of 2023, 47% of retailers estimate their customer acquisition costs have increased over 15% since the privacy changes. Companies have had to develop creative strategies for customer acquisition and optimize digital ad spend. Locating and acquiring density of consumers can not only supercharge scalability, but also make order fulfillment more straightforward (and cheaper). When you consider Canada’s entire population just barely exceeds that of California, it’s understandable that investors want the focus on higher ROI geographies.

Companies that exist on a regional basis: a geographically based marketplace, for example.

Investors want a marketplace to operate in regions where acquisition of supply and demand can be done efficiently and with scale. Density is key. It is important to note different regions may have unique supply and demand dynamics impacting the replicability of a growth strategy. For example, just because a company has unlocked supply and demand in NYC doesn’t mean the model can be copy and pasted to Chicago. Building on this, I would make the case that even though a geo-based marketplace may eventually need to enter the U.S. to achieve venture scale, success in one U.S. location isn’t enough to prove repeatable U.S. traction.

Constructive feedback is crucial in any investor conversation. It is not rare for an investor to ‘pass’ or decline an investment opportunity strictly based on a lack of U.S. traction. If a company isn’t impacted by any of the above dynamics, yet investors are pushing for U.S. traction, it’s important to ask — and understand — ‘why?’. Upon further investigation, the investor may not understand the dynamics of building a business in Canada and the U.S. is a more familiar environment. Perhaps a market is big enough to become venture scale existing solely in Canada, and the investor doesn’t understand the size and opportunity.

The reality is it can be tough to substantiate the requirement to show U.S. traction if a company is not impacted by one of the above geographic factors. The importance of entering the U.S. market early in a company’s life cycle — where we invest at pre-seed and seed, for example — may be overstated. Prioritizing U.S. traction may cause a team to overlook crucial early-stage business fundamentals.

As a U.S.-based fund with a Canadian presence, the team at Alpaca understands the value we can provide to founders building in Canada as they expand to the U.S. market. We focus our efforts to support founders on introductions to capital, customers and talent. As led by a team of former founders, we’ve built deep earned networks in the U.S. across these functions. We feel focusing on these areas of support can supercharge founders’ early growth, especially if that means working with a Canadian business as it expands to the U.S.

If you’re a founder building a Canada-based company and raising a Pre-Seed or Seed round, we encourage you to reach out to alex@alpaca.vc. Whether your business operates with geographical nuances or is regionally agnostic, our diligence endeavors to look beyond the U.S. traction data point.

To keep up with the latest from Alpaca, connect with us on Twitter, Instagram, and LinkedIn @alpacavc, subscribe to our bi-weekly newsletter The Rundown here, or by reaching out directly to hey@alpaca.vc.

Disclaimer:

Alpaca VC Investment Management LLC is a U.S. Securities and Exchange Commission registered investment adviser.

Beyond the Standard Litmus Test: Here’s When U.S. Traction Really Matters for Canadian Startups was originally published in Alpaca VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

We’re excited to announce the launch of our next Field Study: Real Estate’s Adoption of AI. Through this Field Study, the Alpaca team will dive into the dynamic place where artificial intelligence meets real estate.

At Alpaca, we are continuously exploring tech-focused solutions with the potential to alleviate major pain points and inefficiencies in the built world. Conversations about AI (artificial intelligence) companies and the high-flying valuations that follow are everywhere today. Through this Field Study investigation, we will endeavor to cut through the noise to understand the ways in which we believe AI will empower stakeholders to efficiently manage their vast data sets, more effectively underwrite, and manage their real estate operations. At the outset, we’re asking the following key question:

How will real estate harness the power of AI to unlock new potential?

To unpack the answer, it’s important to call out a few factors at play in our current landscape. First, real estate sits on huge repositories of big data. However, the data has traditionally been siloed, unstructured and unactionable. Analysts spend countless hours cleaning and coalescing information in order to build descriptive analytics that show snapshots of properties. In contrast, AI has recently turned the corner in terms of both cost and intelligence. As the global embrace of AI continues, we believe there is potential for more streamlined processes, intelligent decision-making and significant opportunities awaits those at the forefront of innovation. As we’ve observed the technology evolve, we see indicators that AI likely holds the key to unlocking new levels of efficiency and growth.

According to Pitchbook data, VCs have invested $461.4B in AI across +40K deals since 2017. In Q1 2023 alone, there was $22.7B allocated across 1,497 deals. Double clicking into the AI/ML investments, only 301 deals were focused on real estate. The industry’s cautious approach to innovation has resulted in a sluggish adoption of AI. However, at Alpaca, we hold a strong belief that this trend is about to change rapidly. In the coming years, we foresee a paradigm shift in real estate as startups leverage AI to tackle industry challenges head-on, empowering cost reduction and revenue growth like never before.

As we begin our deep dive into this Field Study, below are the initial thoughts and theses that we’ll look to prove or disprove as we dig in:

• Initial Investment (company): implementing a new tool requires training and time for effective adoption. Tools with minimal friction to existing infrastructure and impressive UI/UX are critical to quickly reap the benefits.
• Initial Investment (investor): investors need to be wary of subsidizing a startup’s CapEx with venture dollars; and in particular funding processing power or data storage. The cost curves that have led to the recent explosion of AI will continue, and therefore we are aiming out focus on the underlying solution, not the startup’s expensive infrastructure.
• Data Privacy: The effectiveness of AI models hinges on the quality of the data they are trained on. However, many companies have invested significant time and resources in accumulating proprietary information and are understandably cautious about the risk of open-sourcing their competitive advantage to rivals. Striking the right balance between data sharing and safeguarding proprietary insights is a critical challenge we believe companies face in the era of AI-driven innovation.
• Quality: It’s our view that the quality and accuracy of input data play a vital role in determining the effectiveness of algorithms. Consequently, startups face a delicate balance between leveraging the advantages of intelligent automation, such as natural language chatbots, while also being cautious of potential pitfalls like the risk of biases or negative customer experiences.

Over the next few months, our team will explore this exciting and important market. As with every Alpaca Field Study, we will focus on gathering insights and data, as well as engaging with thought leaders, founders, and investors in the space. We hope to contribute to a better understanding of the opportunities and challenges at the intersection of real estate and artificial intelligence, and we’re eager to share our findings when the study is complete.

If you’re a founder, investor or expert on the topic, we encourage you to reach out and connect with us. You can email Kevin Grathwohl at kevin@alpaca.vc.

To keep up with the latest from Alpaca, connect with us on Twitter, Instagram, and LinkedIn @alpacavc, subscribe to our bi-weekly newsletter The Rundown here, or by reaching out directly to hey@alpaca.vc.

Disclaimer:

Alpaca VC Investment Management LLC is a U.S. Securities and Exchange Commission registered investment adviser. Alpaca VC Investment Management LLC is committed to diversity and inclusion in the workplace. We prohibit discrimination and harassment of any kind based on race, color, sex, religion, sexual orientation, national origin, disability, genetic information, pregnancy, or any other protected characteristic as outlined by federal, state, or local laws.

New Alpaca Field Study: Real Estate’s Adoption of AI was originally published in Alpaca VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

Ready to join the Herd? Alpaca is seeking a Real Estate Associate to join its team in New York, NY.

Alpaca is a real estate technology and climate investment management firm that has invested in nearly 100 companies since 2012. This provides a unique opportunity to pair expertise in technology and sustainability with institutional real estate investment and execution capabilities. The strategy seeks to opportunistically invest in high-quality commercial real estate with strong operating fundamentals and market tailwinds and layer in a forward-thinking technology and sustainability driven approach and the strategy endeavors to generate additional alpha.

The Associate will be an integral member of a small, focused team and will work directly with the two founding Partners.

Main responsibilities of the role include:

· Creating and maintaining investment-level Excel models to capture complex capital structure and waterfall calculations including sensitivity models

· Developing market research and data tracking for trend analysis and forecasting

· Joining, note taking and organizing operational, development and leasing calls to drive the strategy of the investments

· Updating quarterly investor communications and reporting

· Managing ownership documentation including debt and venture agreements to ensure compliance and covenants and terms

· Calculating quarterly asset and equity valuations and preparing documentation

· Assisting the investment team with transactions related activities such as exits/dispositions, major lease analysis and recapitalizations

· Helping Partners organize fund raising efforts

Candidate requirements include:

· A bachelor’s degree in finance, economics, accounting or related degree from a top tier University with a cumulative GPA of 3.5 or higher

· Minimum 1–3 years of experience in commercial real estate or other financial analysis

· Advanced Excel skills, you must be able to create models from scratch

· Argus is a plus, but not necessary

· Strong drive to succeed and work in a team-oriented, rewarding environment

· Commitment to high standards of organization, excellence, and integrity

· Strong attention to detail and ability to meet deadlines

· Passion for commercial real estate and desire to grow with an entrepreneurial team.

Please Reach Out

If you are interested in the role, please complete the Alpaca Real Estate Associate Google intake form here.

To keep up with the latest from Alpaca, connect with us on Twitter, Instagram, and LinkedIn @alpacavc, subscribe to our bi-weekly newsletter The Rundown here, or by reaching out directly to hey@alpaca.vc.

Disclaimer:

Alpaca VC Investment Management LLC is a U.S. Securities and Exchange Commission registered investment adviser. Alpaca VC Investment Management LLC is an equal opportunity employer that is committed to diversity and inclusion in the workplace. We prohibit discrimination and harassment of any kind based on race, color, sex, religion, sexual orientation, national origin, disability, genetic information, pregnancy, or any other protected characteristic as outlined by federal, state, or local laws.

Alpaca VC Seeks Full Time Real Estate Associate was originally published in Alpaca VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

Optiversal uses generative AI to help enterprise retailers create content and drive revenue at scale. Optiversal’s solution discovers missed content opportunities and fills the gaps with AI created landing pages, blog articles, and more. Their platform integrates with product catalogs and UGC to create on-brand content at scale for enterprise SEOs and content marketers.

The Elevator Pitch

Enterprise retailers today struggle to create content that accounts for the breadth of product offerings and customer driven search attributes. Product detail pages often contain gaps or lack relevant details. Customer search queries have a very long tail and landing pages are not curated to reflect this. While well-funded copywriting tools with e-commerce features exist, none are specifically focused on enterprise retail applications. Creating the immense amount of content required to capture the long-tail of search and reviews is labor intensive and costly, at times requiring a whole content team.

Optiversal offers three specific product offerings, including specific curated landing pages responding to the long tail of customer queries, marketing content creation, and distillation/summarization of content (ie., customer reviews).

Optiversal uses generative AI to scale content across large product catalogs. For retailers such as Best Buy and Sephora, Optiversal supports the full life cycle of content, from finding opportunities to create content shoppers are already looking for via search and creating that content to managing and optimizing the content over time.

Part of their secret sauce: identifying untapped demand for product-related content and using AI to produce search engine-optimized landing pages that fill in the gaps and increase discoverability — at a fraction of the cost in a fraction of the time.

“We can look at the catalog and see that people are looking for a laptop for their college dorm room, and that you don’t have a page for that. The AI can automatically create content to fill in that gap,” says CEO and Co-Founder William Underwood.

The It Factor

The Co-Founding team has in-depth entrepreneurial, AI/ML and commerce expertise. Will Underwood and Jarrod Wolf previously founded AddStructure, a review summarization and conversational commerce tool, which was acquired by BazaarVoicein 2018. The third Co-Founder, Lucas Tieleman, was previously Chief Product Officer at BazaarVoice and led the Corp Dev team through the AddStructure acquisition. After working closely together in the consumer generated content space for a number of years, the team saw the opportunity to leverage content as generative AI came onto the scene.

The Optiversal team is very knowledgeable on the technical components of the language models they’re using, as well as how they’re addressing the pain points for enterprise retail customers. They’ve proven early product market fit via multi-year, paid contracts with major retailers (currently driving 7% of Best Buy’s traffic, for example) and they’ve done so in a capital efficient manner (no capital raised to date). The team has played successfully in the enterprise marketing space for several years. We believe this will allow them to leverage existing relationships and learnings. They have also worked together to a successful exit prior to this startup, which gives us further confidence in the ability of the team.

For more on Optiversal, read the company’s official funding announcement here.

Connect with Optiversal

Optiversal on LinkedIn

Careers at Optiversal here and on the Alpaca Job Board

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Welcome to the Herd, Optiversal was originally published in Alpaca VC on Medium, where people are continuing the conversation by highlighting and responding to this story.