Who are we and why are we doing this?
LAB Ventures is a venture studio which was born in 2017 out of The LAB Miami, the first coworking space dedicated to tech entrepreneurs in South Florida. Since its launch in 2012, The LAB quickly became the focal point for the region’s emerging technology ecosystem, bringing together entrepreneurs, ideas and capital. Countless startups were born at The LAB, including LiveNinja, Kairos, Wyncode Academy, and even Miami Angels, now the largest angel investor network in South Florida. The LAB has also been a workspace for established tech companies like Lyft, Wix and Stripe, and local food & beverage icons like Zak The Baker, Veza Sur and the Dirty Rabbit; a meeting place for corporate innovation teams from Visa, ESPN, Google, Discovery, Perry Ellis International; and an event venue for a multitude of public and private meetings including The Future of Real Estate, SIME Miami, Brainfood, Miami Blockchain Week, and countless meetups, hackathons, and other gatherings.
After five years, the natural evolution for a co-working space would be to multiply its space and expand into different locations. However, The LAB and its founders were more interested in building and supporting early-stage technology startups, and so instead decided to launch the LAB Ventures Studio. The studio creates new companies from scratch and guides them through ideation, MVP development, venture funding, scaling, and eventually exit. This new endeavor was funded by a group of local tech investors that had a close relationship with The LAB's founders and could foresee the value creation potential. After years of working together as angel investors, Thomas “Tigre” Wenrich joined forces with the other partners of The LAB (Marco Giberti, a serial entrepreneur from Argentina; Juan Pablo Cappello, a prominent Miami venture lawyer originally from Chile; and Eduardo Barco, an ex-investment banker from Morgan Stanley and Deutsche Bank now an investor) to launch LAB Ventures and become it’s CEO.
Although his parents were both from Michigan, Thomas Wenrich was born in the Dominican Republic, where he picked up the nickname “Tigre.” Tigre grew up in California and attended Stanford University. His first career was in Management Consulting, working for the Boston Consulting Group in the US, Spain and Latin America. After 16 years he left Mexico and his partnership at BCG to move to Miami. In 2009 he met Andrés Moreno who was building an EdTech startup. Tigre became a co-founder and CFO of Open English and helped Moreno move the company from Venezuela to Miami. The duo raised over $120M of venture capital in four years, making Open English the largest venture-funded company in Florida at the time. Wanting to help other up and coming entrepreneurs, Tigre became a full-time angel investor and startup mentor with groups like Endeavor, Venture Hive and Founder Institute. He was an original member of Miami Angels, where he met the founders of The LAB Miami and where he continues to serve on the Board of Directors.
The LAB Ventures studio team created seven new companies: two were sold to strategic investors; two continue to grow fast; and three are in their early stages, proving product-market fit, prototyping and piloting users. In keeping with the studio’s mission of connecting start-ups and large corporations for the benefit of both, LAB Ventures launched a successful tech conference called The Future of Real Estate (since sold and re-branded as Blueprint), which opened their eyes to the massive potential of the PropTech segment and built the foundation for a strong network of PropTech startups, investors, and users (e.g. real estate industry insiders).
The know-how developed while building successful new businesses from scratch gave the LAB Ventures team valuable insights which could be applied in screening other early-stage opportunities. At the same time, LAB Ventures began to receive a growing number of inbound requests from early-stage PropTech startups looking for strategic advice and financial support. The original Studio model did not contemplate minority investment in third party startups, but the opportunity was clear.
“Rafa” Valdivia was born and raised in São Paulo, Brazil, where he earned his undergraduate and master’s degrees in business, but Miami has had a special place in his life since the 1980’s. Rafa’s professional career began in Finance and Trading, working for many years as a partner at Hedging Griffo, a highly successful hedge fund and asset management firm which eventually was sold to Credit Suisse. He first got involved with Real Estate investments in Florida during the financial crisis, and after leaving Credit Suisse and Brazil back in 2011, Rafa moved his family to Miami, where he focused on value-add and ground-up real estate development projects. Rafa has been interested in technology since his childhood and he led some venture investing pilots at Hedging Griffo during the DotCom era, so he found his way to Miami Angels and began investing into early-stage startups once more, this time with Tigre and the founders of The LAB.
With that connection, at the end of 2019 Tigre and Rafa agreed to work together full time to support the LAB Ventures Studio companies and begin raising a new, early-stage VC fund with the support of the LAB Ventures board and team. The investment thesis was developed using a top down approach and several assumptions unexpectedly aligned pretty early in the process: 1) the largest investment class in the world is Real Estate, representing over $17 Trillion in US only; 2) both Real Estate and Construction industries are interrelated and lagging behind almost every other industry in terms of new technology adoption; 3) Miami/South Florida is an important hub and headquarters for several global Real Estate and Construction players. Following what has happened with Telecommunications, Media, Financial Services and other industries, a new generation of startups is beginning to disrupt the Real Estate and Construction industries and LAB Ventures is in a unique position to be the liaison between these new innovators, investors and traditional industry players, and in the process to capitalize on the explosive growth in PropTech.
Tigre invited Tom Roth, a 30+ year Commercial Real Estate veteran and former Senior Vice President at Hines, to join the fund as an advisor. After moving to Miami in 2003, Tom later left Hines and joined Grass River Properties, a prominent developer in Coconut Grove who is redeveloping the iconic CocoWalk shopping center and launching the Grove Station mixed-use development. He is also a vice chairman of ULI South Florida. Tom had been doing angel investing for a few years and immediately understood the value proposition of the fund. Tom’s role is to help evaluate new technologies and to facilitate introductions from the fund’s portfolio companies to real estate users in Florida and across the country.
COVID-19
The LAB Ventures PropTech fund had originally scheduled its first closing for April of 2020, and several LPs from the US and Latin America were aligned for that date. However, COVID-19 became a pandemic in March, throwing financial markets into chaos and forcing the fund to postpone its plans.
Ironically, the longer-term impact of the pandemic has been to accelerate the adoption of new technologies across a broad swath of industries, and real estate is no exception. e-Commerce, tools for remote work, technologies that facilitate remote transactions are all growing faster than ever. And the macro-environment for early-stage investing is better than ever— liquidity is back, the IPO market is hot, interest rates are down and tech valuations for later stage companies are up. Yet, there has been a squeeze on the capital supply for early (seed and pre-seed stage) startups and early-stage valuations have not increased in the same way as for late stage private deals and public equity markets.
Perfect Storm
Recently, the Miami tech scene has been heating up with several high-profile VCs moving to the city and promoting it as the next Silicon Valley. The buzz reached a crescendo when Mayor Francis Suarez tweeted his now famous four word reply to a Venture Capitalist pondering why not just move the entire Silicon Valley to Miami: "How can I help?"
Successful entrepreneurs and investors alike have been moving to Miami from California and New York for years now, trying to escape high taxes and low quality of life, but the pandemic and the recent Tweetstorm have accelerated things, bringing Miami’s dream of being a legitimate tech hub much closer to becoming a reality.
At the same time as the Miami tech scene is coming of age, so has an important innovation in the fund management world. Early in 2020 AngelList, the world's largest startup and investor network, launched a new type of investment vehicle called a Rolling Fund, which is a perfect fit for LAB Ventures. In this new model, investors commit to a predetermined recurring investment amount each quarter (no capital calls) and any funds not invested during that quarter “roll” into the next one. This means the fund can start investing right away and can grow over time as investors increase their commitments or new investors are added. Both the fundraising and the investing processes are ongoing— no more stopping everything every three years to work on a new fund, then scrambling to replenish the deal flow pipeline—thereby allowing LAB Ventures partners to do what they do best: continuously support founders of exciting startups to succeed on their journeys.
Because of their many advantages, rolling funds have become incredibly popular and AngelList has developed a long waiting list of fund managers wanting to adopt the platform. Based on our track record and the strong LP interest from last year, we were able to secure a place on the platform to launch April 1st and are currently setting up the fund. For investors, this means:
- Clear and transparent funding requirements, no last-minute capital calls,
- Can increase or decrease commitments in subsequent quarters,
- A well-organized investor portal where LPs can access all the information about the fund, manage subscriptions and wire transfers, and access tax documents and quarterly reports.
Investment Focus
The LAB PropTech Fund will invest in early stage technology companies that serve the Real Estate and Construction industries. The fund will invest globally, but intends to invest a majority of its capital in US-based startups, especially those where it can add value by helping with introductions to the customers in Florida and in Latin America. Most investments will be in the $100K - $500K range. When we find opportunities to make larger investments that would not be appropriate for the fund, we will make them available to our LPs through a dedicated syndicate.
Prior to the start of the pandemic, the LAB Ventures partners have already invested in six companies as a way to test the value proposition and generate early access to interesting deals. Each of these investments have follow-on opportunities, and we will be giving our pro-rata rights to the fund:
- Two deals have already raised additional capital at higher valuations,
- Three of the six are currently preparing for their next round of funding during Q2 2021
The LAB Ventures Studio also creates proprietary investment opportunities. Two breakout projects (Expetitle and Beycome) each individually have the potential to return a multiple of the total cash invested across the initial studio portfolio. Each is preparing to raise capital in mid-2021 and the fund will have the option to co-invest. The team continues to research other company building opportunities, and plans to give the fund the right of first refusal to invest at the earliest stage and the most attractive valuations on all of these projects.
Benefits to Investors
Investors in the LAB Ventures PropTech Rolling Fund will get access to the best early-stage startups through a diversified portfolio that would be difficult if not impossible to assemble on their own. The fund targets above average investment returns based upon the team’s deep experience selecting and working with early-stage entrepreneurs, extensive deep network and advantaged access to proprietary deal flow, and a strict focus on the real estate and construction vertical, where outsized returns are expected. LAB Ventures' diligent investment process focused on the quality of startup founding teams, deep understanding of the technology benefits to its customers, and expanding markets, is actively seeking Alpha amongst its peers. LPs will also have priority access to co-investment opportunities.
For investors who are active in the real estate and construction sectors, investment in the fund also brings strategic value. Although many prominent real estate players receive inbound leads from PropTech starts, the majority have neither the expertise nor the bandwidth to review these opportunities in any depth. As LPs in the fund they can leverage the LAB Ventures team to screen early stage startups and identify those with which they might like to work, as well as invest in. LAB Ventures can act as an outside R&D arm for real estate professionals looking to deploy new technologies and will share its knowledge of the market and research on specific startups with interested LPs.
We hope you will consider joining us on this exciting new stage in the evolution of LAB Ventures. More information is available on the AngelList website.
