Brandon Donnelly
Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly.
Brandon Donnelly
Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly.
When I met with all of the lovely folks from Amsterdam last week, one of the things that I mentioned about intensification is that it is almost certainly a contributing factor towards innovation, agglomeration economies, and the overall startup ecosystem here Toronto.
I don’t know to what extent, but I feel it happening. And there’s lots of research correlating urban density with innovation.
The continued densification of Toronto means it is constantly becoming easier to schedule that morning coffee before going into the office or to pop into that meetup after work. And those sorts of things are hugely valuable in today’s economy.
I talked about a number of local startups in my presentation, including 500px, Wattpad and Wealthsimple. But I didn’t show any hard data. So I’d like to do that today. Below is a chart showing total venture funding (internet/software) and the number of deals (Seed to A/B/C/D) in Toronto since 2009:
It was taken from this Medium post. Supposedly this places us 12th in the world as far as startup cities go.
Again, who knows how much of this venture growth has been helped along by intensification. After all: “Silicon Valley proper is soul-crushing suburban sprawl.” But I would bet money that it’s moving the needle in the right direction.
Here is another relevant post by venture capitalist Albert Wenger where he talks about the great startup ecosystem that Toronto is growing. He posted it earlier today.
All of this is important because some of these deals will spawn big companies. And those companies will the hire lots of people, as well as consume space.
Real estate developers like to talk about how they create jobs. And we do. But we can’t have a city of people just building buildings. People and businesses need to fill that space and that hinges on entrepreneurs who are willing to go out there and forge something new for themselves. Fortunately, Toronto seems to have a growing number of those kinds of people.
Yesterday Andreessen Horowitz announced an investment in the startup Point. They led an $8.4 million Series A round.
Point is an alternative to traditional home equity loans and HELOCs. The way it works is that you actually sell a portion of your property. Here’s an example:
In this scenario, the home is worth $1M. Point makes an offer to buy 10% of today’s value in exchange for 20% of the home’s future appreciation on a 5 year term. You pay a 3% fee when the $100,000 (10%) is paid out, but you don’t make any monthly payments. You just give up potential future appreciation. (If the home doesn’t appreciate, Point doesn’t make money.)
What’s interesting about this model is that traditionally “housing” has meant one of two things. Either you own 0% of the home (i.e. you rent) or you own 100% of the home (usually with the help of a mortgage).
Point is making it easier for you to potentially own 95% or 90% of your home. They are taking an equity stake, which is why there are no monthly payments associated with it.
The investment angle is that homeowners get to diversify their wealth out, and (Point) investors get to diversify in, without having to worry about actually managing the property.
Would you use this as a tool to unlock your home equity wealth?
A new “transparent offer platform” called Haus has just launched in California to serve the residential real estate market. The way it works is that all offers are submitted online. And once an offer has been confirmed, it – along with all of its terms – gets revealed to every other potential buyer. See image below.
I’ve seen a number of different iterations of this same idea, which tells me that this is a well-identified problem in the real estate market. Here’s a snippet from a recent TechCrunch article announcing Haus:
“We think the openness will create a more efficient market and that the number of offers and price will ultimately be dependent on demand,” said Haus GM Sarah Ham. “Bidding wars are a common, almost accepted, part of the real estate process today. But with our approach, buyers know where they stand. Buyers will know what they need to offer to make their offer competitive, but they also won’t negotiate against themselves.”
I completely agree that this is a problem that needs to be solved. It will create a more efficient marketplace. However, in this market, I suspect that the current information asymmetries largely benefit sellers, to the detriment of buyers. So I wonder if the supply-side of the marketplace will be willing to participate at scale. What’s really in it for them?
Side note: Haus is the latest project from Expa, which is a “startup studio” that works on its own ideas, as well as partners with other founders. I am very interested in this approach to creation because I think you have to try and make a lot of things if you want to do truly innovative things.
When I met with all of the lovely folks from Amsterdam last week, one of the things that I mentioned about intensification is that it is almost certainly a contributing factor towards innovation, agglomeration economies, and the overall startup ecosystem here Toronto.
I don’t know to what extent, but I feel it happening. And there’s lots of research correlating urban density with innovation.
The continued densification of Toronto means it is constantly becoming easier to schedule that morning coffee before going into the office or to pop into that meetup after work. And those sorts of things are hugely valuable in today’s economy.
I talked about a number of local startups in my presentation, including 500px, Wattpad and Wealthsimple. But I didn’t show any hard data. So I’d like to do that today. Below is a chart showing total venture funding (internet/software) and the number of deals (Seed to A/B/C/D) in Toronto since 2009:
It was taken from this Medium post. Supposedly this places us 12th in the world as far as startup cities go.
Again, who knows how much of this venture growth has been helped along by intensification. After all: “Silicon Valley proper is soul-crushing suburban sprawl.” But I would bet money that it’s moving the needle in the right direction.
Here is another relevant post by venture capitalist Albert Wenger where he talks about the great startup ecosystem that Toronto is growing. He posted it earlier today.
All of this is important because some of these deals will spawn big companies. And those companies will the hire lots of people, as well as consume space.
Real estate developers like to talk about how they create jobs. And we do. But we can’t have a city of people just building buildings. People and businesses need to fill that space and that hinges on entrepreneurs who are willing to go out there and forge something new for themselves. Fortunately, Toronto seems to have a growing number of those kinds of people.
Yesterday Andreessen Horowitz announced an investment in the startup Point. They led an $8.4 million Series A round.
Point is an alternative to traditional home equity loans and HELOCs. The way it works is that you actually sell a portion of your property. Here’s an example:
In this scenario, the home is worth $1M. Point makes an offer to buy 10% of today’s value in exchange for 20% of the home’s future appreciation on a 5 year term. You pay a 3% fee when the $100,000 (10%) is paid out, but you don’t make any monthly payments. You just give up potential future appreciation. (If the home doesn’t appreciate, Point doesn’t make money.)
What’s interesting about this model is that traditionally “housing” has meant one of two things. Either you own 0% of the home (i.e. you rent) or you own 100% of the home (usually with the help of a mortgage).
Point is making it easier for you to potentially own 95% or 90% of your home. They are taking an equity stake, which is why there are no monthly payments associated with it.
The investment angle is that homeowners get to diversify their wealth out, and (Point) investors get to diversify in, without having to worry about actually managing the property.
Would you use this as a tool to unlock your home equity wealth?
A new “transparent offer platform” called Haus has just launched in California to serve the residential real estate market. The way it works is that all offers are submitted online. And once an offer has been confirmed, it – along with all of its terms – gets revealed to every other potential buyer. See image below.
I’ve seen a number of different iterations of this same idea, which tells me that this is a well-identified problem in the real estate market. Here’s a snippet from a recent TechCrunch article announcing Haus:
“We think the openness will create a more efficient market and that the number of offers and price will ultimately be dependent on demand,” said Haus GM Sarah Ham. “Bidding wars are a common, almost accepted, part of the real estate process today. But with our approach, buyers know where they stand. Buyers will know what they need to offer to make their offer competitive, but they also won’t negotiate against themselves.”
I completely agree that this is a problem that needs to be solved. It will create a more efficient marketplace. However, in this market, I suspect that the current information asymmetries largely benefit sellers, to the detriment of buyers. So I wonder if the supply-side of the marketplace will be willing to participate at scale. What’s really in it for them?
Side note: Haus is the latest project from Expa, which is a “startup studio” that works on its own ideas, as well as partners with other founders. I am very interested in this approach to creation because I think you have to try and make a lot of things if you want to do truly innovative things.
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