Some venture capital firms are hands-off generalists, funding good business plans in any industry. Some take smaller equity stakes but provide networks and mentorship to help startups grow.
D.C.-based Camber Creek not only combines those two VC concepts, but also narrows down its scope to one industry: real estate.
The company looks to disrupt the real estate industry in every vertical it can reach by investing in top-performing startups solving specific problems, ranging from administrative software to lease management to appraisals.
Launched eight years ago by Casey Berman, Camber Creek’s search process has been straightforward: It chooses a real estate vertical to go after and finds the one tech startup with the most potential to disrupt it.
In 2010, Berman said, investments in real estate tech totaled $60 million across the board, but his company anticipated a windfall.
"When we started, there was much more hesitance to take on new tech... Now it's grown exponentially – the real estate industry companies are adopting tech faster than ever before."
But its model goes beyond the traditional VC playbook. Camber Creek will send advisors to potential portfolio companies that help assess and improve their value for investors – before putting in a dime. Once the business-improvement process runs its course, it thinks about signing a term sheet.
“During due diligence we try to add value to a company, see if they can close, when and at what price, and in doing so learn a ton about a company,” Berman said. “If they execute at a high level we’ll invest money and put our network behind that company.”
A majority of Camber Creek’s limited partners own and operate real estate, giving it a network of 2,000-plus properties to test and tweak the potential portfolio company’s services during due diligence. After it invests, the VC can help startups roll out services with that same network as potential clients.
“Because of our experience in real estate, we know how to speak the language of the operators, leasing depts, etc. of these companies, so we can say, ‘These are the best products for these apartments, we invested in that company,’” Berman said.
Camber Creek’s investments range from $1 million to $3 million, and are concentrated around but not limited to Series A rounds. Its second fund closed for $30 million earlier this year.
On its list of local portfolio companies is D.C.-based WhyHotel, which operates pop-up hotels in just-built apartment buildings. Berman said Camber Creek did due diligence on all the fast-growing companies in short term rentals and invested in one: “In that founding team we saw a dramatic difference in how they plan to go to market and can scale really quickly.”
