There are large investment firms, and then large investment firms. Brookfield Asset Management, a Toronto-based, 122-year ensemble with a current market cap of $ 63 billion and overseeing $ 600 billion in assets, clearly falls into the latter camp. Think real estate, infrastructure, renewable energy, private equity and credit. If it falls into a defined asset class, Brookfield probably has it in its portfolio.
This is also true of venture capital, although the venture is fairly new to Brookfield, the founders who may prefer their capital are still receiving memoranda. Indeed, it was a little less than four years ago that Brookfield Technology Partners started investing from the company’s balance sheet and soon joined Josh Rafaeli – a Stanford MBA who worked with Draper Fisher Jurveston as principal He cut his teeth, then spent another five years together. Silver Lake – to lead the practice.
Its existence actually came as a surprise to him. “I’ve been a tech investor in Silicon Valley,” Raffaelli says. “My entire professional career has been a 15-minute drive [Bay Area] Home I grew up and I had never heard of Brookfield before because they started this practice because it is in the businesses. It is in real estate. It has done things that are not usually technically capable. “
Until recently, which is not. Not only has Raffelli and his 11-man team made dozens of bets since then, but they are currently investing out of a pool of capital that is the third-party capital in addition to Brookfield – a first. As for what they are looking for, the idea helps Brookfield how many of its office towers, malls and other real estate can be used or developed or leased or insured. This is to make Brookfield better, better prepared and more profitable. In return, the startup gains industry expertise – and a major clientele in Brookfield.
To date, its bets have varied widely, as with Armis, an IoT startup focused on unmanned device security; LonPal, a ready-to-sell platform for solar and other domestic efficiency products; And Carbon Health, a primary care company that blends real-world and virtual visits. “We’re effectively getting our subject from the Brookfield ecosystem,” Rafaelli says.
Pulling the curtain a little further, Rafaeli said his team writes checks ranging from $ 25 million to $ 50 million and they look for companies with revenues of $ 10 million that exceed 100% year-over-year. Seeing growth. In terms of pacing, they make about one new deal per quarter.
The fund is also independent and has its own custom committee, but this committee is composed of senior managing partners from each line of Brookfield businesses. (“These are the people who really help us translate our investment themes that we are producing here,” Rafaelli notes.)
To shed light on how the operation works, Rafaeli, a smart access software business, announced last month that it was using a blank-check company, publicly traded by real estate giant Tishman Spear. Points to Brookfield has about 70,000 multifamily units in North America, “so we have a lot of doors that require a lot of locks,” Rafaeli says. The latch, of course, is not the only smart access lock there, so Brookfield ran “What was almost like a mini [proposal process]To reach all the different companies in the market to understand how they compete, ”he says.
It was a “six-month practice”, but eventually, his group led Lach’s Series B round in 2018 and since then, Brookfield has been bought by about 7,000 blocks from the business. This is a meaningful difference, given that when Brookfield first invested, the company had less than $ 20 million in bookings and brought in an additional $ 10 million to $ 15 million in revenue since those 7,000 locks. Gone, says Rafaeli. “When we buy a lot of things at that level of a company,” he says, “we’re meaningfully increasing their trajectory.”
This is not a silly strategy, a doubling. If Lach’s locks turned out to be lemons (they’re not), Brookfield would be a big check with that capital expenditure. Rafaeli said, “Brookfield takes its time, if they did their job right, with their team picking up a round before engaging well with a company and has already shown it to be a” strategic partner Has one more lever. “
Either way, Rafael says that since the commercial real estate market was in the grip of an epidemic, it has, countertenetically, been a productive time for his group and given the strong impetus it has led the real estate world to boom Technical tools to adopt. The bets that Rafale is most excited about right now are VTS, for example, a leasing and asset management platform that can show assets remotely, and Deliver, an e-commerce fulfillment startup called Rafaeli Describes it as “Amazon Prime” for all others. “
In fact, Raffaele argues that while the use case for a lot of real estate is changing, the so-called Remain World remains Brookfield’s strongest competitive advantage, given the size of its footprint. The way he sees it, there are plenty of options to pursue. “You are seeing retail spaces that are becoming ghost kitchens; You are seeing retail locations turning into distribution and logistics facilities. We can change physical locations for health services [our portfolio company] Carbon Health, and our malls are in locations for urgent care and primary care clinics for testing and vaccination. “
It will never be a completely spontaneous transition. Brookfield needs to be “thoughtful” given the epidemic and its devastating effects. But as Raffaelli nonetheless comes across as upbeat in conversation. The idea of turning physical real estate into a “mechanism for change in technology businesses”, Raffelli says, “is a very important place to be.”