MetaProp, a New York-based tech accelerator and venture capital fund focused on real estate, and Enterprise Community Partners, a national nonprofit focused on affordable housing financing, announced a partnership focused on supporting early-stage startups that make housing cheaper to rent and quicker to build.
MetaProp says it plans to invest a total of $5 million in affordable housing startups by 2020, and aim to invest in three new companies by this fall. Enterprise, which has previously invested in startups such as Rentlogic (grading landlords) and Point Digital Finance (a shared-equity solution for saving for a downpayment), has not yet disclosed how much it plans to invest.
“We’re at a point politically where we don’t expect to see changes for the better, in terms of housing affordability, from the government,” Leila Collins, a senior associate at MetaProp who will serve as an investor-in-residence with Enterprise, told Curbed. “We don’t expect to miraculously see cities and suburbs get more affordable.”
The partnership comes out of a desire to try a new strategy to overcome the multiple land use, funding, and political challenges impeding the construction of more affordable housing.
It’s also an attempt to expand what property tech, or proptech, means. As billions of dollars have been invested in commercial real estate companies and construction startups—in 2018, more than $1.38 billion was invested in building and construction startups alone—few investors have specifically targeted affordable housing.
Collins was quick to say that MetaProp doesn’t believe tech investment alone can solve the housing crisis. But she is hopeful an injection of venture capital can start to change the way we access and create housing.
Matt Hoffman, vice president of innovation at Enterprise and managing director of its HousingTech Ventures, agrees that the system needs to change now. Policy tools such as Section 8 and inclusionary zoning are helping to alleviate the issue, but aren’t solving the bigger problem, but the gap in affordable units continues to grow.
According to the National Low-Income Housing Coalition, the nation’s shortfall of affordable units has hit 7.2 million. With an average affordable unit costing between $400,000 and $600,000 to build in large U.S. cities, according to Hoffman, any way tech’s vaunted efficiency can be utilized to lower costs and speed up production would be welcome.
“How do we contrast between the hype and bravado that often comes when applying a tech lens to a certain industry, viewing tech as a savior, with the thoughtful process that tech can enable?” he says.
The partnership plans to focus on a number of different technologies and solutions. Collins wants to investigate ideas for cohabitation and coliving, ways to make community land trusts more efficient, and strategies to increase the capital available for housing and housing payments, such as new platforms that help renters make their monthly payments, or ways to help afford down payments. She also mentioned using data analysis, including new visualization tools, to make zoning rules easier to understand.
Collins said she was aware that tech—which has seen outsized economic gains over the last few decades, and has been blamed as an industry for pushing up housing costs—may be seen as an intriguing messenger for efforts to promote affordability.
But the criticism has made companies like MetaProp hyperaware of the issue, she says, and it only makes sense to direct tech’s wealth towards solving the crisis, similar to what Microsoft and Facebook have recently done with big investment funds meant to support affordable housing construction.