Introducing Real Estate: Broadening access to alternative investments

Posted by Mark Skapinker on Dec 18, 2020

After more than 20 years in Venture Capital and 6 years enabling small investors to participate in the VC asset class, we’re excited to offer a new type of investment opportunity to our network. Early next year, Brightspark Financial (the EMD “fintech” arm of Brightspark) will be launching a fund that will give non-institutional investors access to the coveted Single Family Rental (SFR) residential Real Estate asset class.

Accredited investors can learn more and indicate their early interest in the fund.

Why Single Family Rental (SFR) Real Estate?

An interesting complement to Venture Capital

We always stress the need to diversify – if you are going to invest in a risky asset such as tech startups, it’s strongly encouraged to invest amongst multiple companies. We also encourage diversification into other uncorrelated asset classes, and know that many of our investors invest in the public markets, various financial structures, and of course alternatives.

Last year, we polled our investor network asking about their interest in different types of investment opportunities and many replied with “Real Estate”.

We have all witnessed the consistent and steady growth of residential real estate investment in Canada. Be it in the value of our own homes, or investment properties, real estate remains a consistent growth opportunity – not the same massive upside of tech, but safe and consistently solid growth. In Canada, while condos have slid during COVID, the private single family housing market continues to create solid growth.

Investing in the residential real estate market resembles tech in how you can purchase it – because you cannot access this asset class by investing in the public markets (REITs), you must seek out unique opportunities such as funds, or buy a property yourself. Going the DYI route can be lucrative and it sure keeps you busy - much like traditional angel investing!

But similar to our VC funds, this Real Estate product was created for investors who want to participate in the long-term upside opportunity of the asset class without the hassle of looking for deals and managing the investment. It’s meant to attract individual accredited investors at a reasonable entry point, and invest in a portfolio of houses while providing management throughout the process from beginning to end.

And while this opportunity is a new type of alternative investment from Brightspark, it is closely tied to our VC roots as a leading technology-enabled and data science-focused strategy. Leveraging their proprietary tech stack and vast data analysis, our partners are providing quality access to this sough-after asset class in a scalable manner. 

Professionally managed

The people behind the fund

When our friends at Firepower Capital started talking to us about a creating fund together to invest in single family residential properties, we realized that this is quite similar to our SPV model. Any accredited investor who wants to diversify specifically in the housing market can invest in the fund – the fund managers will worry about all the practicalities like securing mortgage-type financing, renovations, repairs, renting, taxes and utility bills and selling.

The idea is that Brightspark brings its expertise of fund organization and management as well as portfolio management, Firepower brings its financial management expertise, and Konfidis (a subsidiary of Firepower) brings its experience, track record of real estate purchasing and property management, and a proprietary tech platform. 

Konfidis’s tech allows for efficient evaluation of the 40K+ active MLS listings – analyzing 100+ million data points in real-time to provide reliable financial projections. Combined with a human layer of local real estate professionals, this system enables the fund to pick cities, neighbourhoods and properties at scale, and in a manner that aims to deliver long-term outsize risk-adjusted returns.

On the fund management side, the team at Brightspark has been professionally involved in the tech industry for decades. In the late 80’s and through the 90’s (last century!!), we founded and operated Delrina with our WinFax product – one of the most successful Microsoft Windows products ever, leading to our IPO in Canada and the US and eventual exit to Symantec. And through our tech Venture Capital firm Brightspark, we have been investing professionally in some of Canada’s most exciting early stage companies like Radian6 and Hopper for over 20 years now.

And as with all of our investments, we ensured that as fund managers, our interests are aligned with those of our investors. We believe that this is reflected by our fee structure which focuses on carry on the upside.

If you’re interested

We plan to officially launch the fund in early 2021. To ensure that you receive all the info and be the first to know when it starts accepting new accredited investors, we invite you to indicate your early interest in the fund. 

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