The Future of Venture Capital in Proptech with Nima Wedlake, Managing Director at Thomvest Ventures

Nate Smoyer (00:01.496)
Neema, welcome to the show.

Nima (00:04.014)
Thanks for having me, Nate.

Nate Smoyer (00:06.16)
I'm glad to have you back. It's been, it's, it's had to been what four years since you've been on the show. Definitely before. I hate the fact that we have this before COVID. It's, it's a, it's a real thing. You know, I still think, I still think back to my trip to San Francisco, when Drew organized a, Drew of Geek Estate.

Nima (00:12.206)
Yeah, pre -COVID for sure, since we last chatted.

Nima (00:20.142)
Hehehe

Nate Smoyer (00:35.216)
organized a breakfast meetup. It was the day after, I believe, an Inmin conference and the rebar, I think it was like the last rebar for those who know about what rebar is and knew about those days when we had an opportunity to meet. And so I just kind of think about sometimes to those early forming moments from my journey in PropTech.

And so it's just an honor to have you back on the show. So I appreciate you taking the time to join. And then for those who are listening, if you don't know Nima, Nima Wedlake, he is now managing director at TomVest Ventures. He focuses on their investment opportunities across real estate and financial verticals. TomVest is a San Francisco based fund. They're an interesting fund in that they're solely funded by

Peter Thompson, Thomson Reuters, and they've led some, some very prominent, I would say in some significant prop tech company investments, Baselane, Blend, OBI. And of course, very recently in the news, of course, this list will come out, you know, some weeks down the line and a company called Mind, which just announced a merger with Roofstock. So you've been busy.

And I know earlier this year, you guys announced a $250 million fund, as well as a promotion for you. So congratulations on the promotion. But tell me about that fund. What's the activity been like? Have you made any bets out of that fund already this year?

Nima (02:10.52)
Thank you.

Nima (02:17.966)
Yeah. Well, first of all, thanks. Thanks for having me, Nate. And it's been great to see you evolve since we met up in San Francisco and all of the things you've accomplished and the burgeoning media empire that you're building with this podcast and other things you're up to. And yeah, excited to talk a little bit about the fund. It's really a continuation of what Peter and the team.

at Tom Best have been doing for over 20 years now. I think what's changed is that we can sort of talk more publicly about how we operate, where we focus, the verticals we like, the stages we like. And that was really sort of the intention of the fund announcement.

And so to get a little bit specific on where we're sort of deploying capital out of this new fund, you know, I would say FinTech and real estate tech have always been core to what we do, particularly FinTech. We were early investors in some of the first FinTech companies out there, like Lending Club and Cabbage. And we think we're still probably an inning three of

of the FinTech opportunity, particularly with when you think about the intersection of financial services and AI and some of the opportunities that that enables to pull more cost out of the finance ecosystem, deliver that back to consumers or businesses, and then also drive just better experiences overall. There was a good...

I think anyone who's interested in FinTech, New Bank is a public company, like studying that business, I think is a great, it's a great example of what you can do by building a de novo bank and how you can outcompete the incumbents. They're focused on Brazil, Mexico, and Columbia. In the U .S., there's just a nice article about Chime and how meaningfully they've scaled over the last couple of years, and they're sort of on the precipice of profitability, and we'll go public.

Nima (04:43.246)
either this year or next. So, you know, we're still very early. So, so FinTech continues to be sort of a core focus of ours. And then of course, you know, I lead our investments across real estate technology. And, you know, I would say if anything has changed in terms of where I focus, it's that the aperture within, within real estate has expanded. So we're looking at opportunities in construction, in design.

at the intersection of real estate and finance like Baseline, which is a portfolio company of ours you mentioned. We've done a lot of mortgage tech. And then increasingly I'm looking at how home service businesses, how contractors, subcontractors can sort of enhance what they're doing by using software. And so there's...

Nate Smoyer (05:20.238)
Mm -hmm.

Nima (05:43.192)
No shortage of interesting companies to look at. It's been a really exciting year so far.

Nate Smoyer (05:49.136)
Yeah, I would agree. And it's also been exciting because, well, to some degree there's a little bit uncertainty. We saw, you know, one of the things, and we're gonna dig into it for those of you who don't already subscribe to either the Tom Vest blog or Nima's newsletter called The Appraisal. And I'll link those in the show notes for people if you want those links directly on how to follow them or find them.

But the venture capital invested in real estate tech by year chart that you shared, basically 2023 ended around 2017 numbers. And I mean, that's a, we're not just talking about pre -COVID, we're talking like several years prior to. And so like I said, when I say a little bit of uncertainty, it's like, wait a minute, is this like, are we going to bounce back? Cause it's just a wall? Is it, this is just some sort of like,

pull back, hey, let's wait and see how things are, and then we're going to go from there. How do you interpret that data and what it means moving forward?

Nima (06:53.55)
Yeah, yeah, it's a good question. I think, you know, first of all, there is inherent cyclicality in real estate. And we're experiencing that firsthand, right? The transaction volume in Rezzi is down, transaction volume in commercial is even more sort of a more pronounced downward shift from 2022 and 2021. And that inevitably has downstream impacts on

the sort of set of software companies and service providers that sell into the real estate ecosystem. So I think you're seeing natural headwinds for a lot of, particularly later stage companies in sort of prop tech generally. And the reason I sort of launched the appraisal newsletter and track public real estate technology companies is sort of to...

to give folks a visual guide into the performance of those companies and track them with some granularity because there was this sort of overabundance of optimism in 22 that's come back to earth. But if you look at 23, there was actually a pretty, we had a pretty nice year from a lower base and 24 we're off to a good start in terms of performance of public real estate.

Nate Smoyer (08:06.736)
Mm -hmm.

Nima (08:18.614)
technology companies. So, you know, I think I don't believe it's a new normal in terms of the volume of venture dollars flowing to real estate technology opportunities. I think we're just sort of in the middle of a bit of a nadir in terms of volume just because of where we are in the real estate cycle.

Nate Smoyer (08:31.952)
Mm -hmm.

Nate Smoyer (08:43.184)
Yeah, we should still point out it was still over four and like almost four and a half billion dollars invested. So it wasn't like, no, there's no money. It's still four and a half billion dollars. So, so it's a very significant amount.

Nima (08:54.478)
Totally. Yeah. And I think there were, yes, absolutely. And there, if you look at deal specific data from prior years, there were some uniquely large financings that drove up the aggregate dollars invested in the vertical. Like WeWork took up a big portion. Yes. Yes. We worked in a big portion.

Nate Smoyer (09:15.76)
I was gonna ask, was we work included in those early numbers? Okay, so vision fun one and two basically drove. We need to put asterisks, vision fun one and two active during these years.

Nima (09:22.894)
Exactly. If you remove.

Nima (09:28.75)
I should put like a red bar for them in the next version of this.

Nate Smoyer (09:33.936)
That would be interesting to see, yeah. And the other thing that I took note of though, but okay, so yeah, grossly the numbers are down, but when we look at the number of sub $10 million rounds, it's quite a normal year. Greater than 10 million rounds was down. And I think that in my opinion, the way I read this is probably more of a reflection of companies who had to go out and raise again.

had miscalculated or overinflated valuations in prior rounds. Maybe you had a tougher time getting the amounts they wanted. And so they're either doing extension rounds versus a full C stage or B stage. They're doing extension of the prior versus a full round. And that's because that's what people were willing to put into it. And last year was a little bit of a...

Hey, let's wait and see how some things go. Can you get through some tough times here? Let's see how things pencil out before we just keep dumping, you know, more fuel in the fire. That's how I interpret it.

Nima (10:40.462)
Yeah, that's a really good observation. I'll also say in between 2019 and 2022, roughly, there was this expectation that a company would raise every 12 to 18 months, assuming they were performing well. And that timeline has lengthened. And so you're seeing a lot of companies get fitter.

Nate Smoyer (10:58.064)
Yes. Right.

Nima (11:08.942)
You know, they're, they're thinking more thoughtfully about burn monthly burn, how much they're spending every month, and what the path to profitability looks like trading, trading off, profitability targets for growth targets. So, so, preferencing profitability over growth. And I think naturally as the time between rounds gets longer,

Nate Smoyer (11:17.168)
Mm -hmm.

Nima (11:38.67)
you're seeing less deal activity. But, you know, I check in with a lot of these later stage companies pretty often and, you know, like many are doing well, you know, it's just a different definition of well in 2024 than in prior years, I would argue.

Nate Smoyer (11:54.616)
Yeah.

Nate Smoyer (11:58.512)
Yeah, yeah, it does seem like there's a little bit more of an acceptance of, okay, you weren't growing at 100 % year over year, but you dramatically reduced burn, profitability is closer, your CAC is in a better shape, you've got a higher ratio, your LTV to CAC, so we know that the viability is there. Now it's a matter of a little bit of sustainability. If we can improve or maintain and go up to the right a little bit, hey, actually this makes a case.

you know, for further investment down the line if necessary. That seems to be some of the consensus that certainly I picked up. I don't think I have all the conversations you're having here, but it certainly seems like one of the things I'm hearing here. I want to jump into some of the themes that you extracted. There's three very like pronounced themes that you focused on. And for everyone listening, so Nima penned an article. I think I sent you an email.

back on this, because I thought this was a really solid article. Real estate tech themes that they're tracking for 2024. And of course, we'll link to it in the show notes. But I want to just kind of jump through these one by one, have you unpack it a little bit. And I've got some follow ups here. The first one you make the point here of something that you're going to be following is Control Point software. And admittedly,

I might be, I might just be an idiot. Cause I've never heard control point. Let me just admit my ignorance here. I've never heard anyone use that. So talk to me through a little bit of control point software. What's this and why this is something relevant to prop tech is a theme that you're tracking.

Nima (13:45.198)
Yeah. Yeah. I, so I lifted borrowed that, that term from another venture fund called Tidemark. And I think it's a great articulation of, of what it takes to build a durable vertical software business. Durable meaning the company has an ability to sort of grow at a

you know, at a meaningful growth rate and scale past 100 million in ARR, deliver customer satisfaction and loyalty. And there are some characteristics of companies that are that are control point companies versus those that are not. And, you know, I would say a canonical example of a control point is a CRM. Like it's the

customer relationship management software, like Salesforce. It is the sort of the system of record that is used to manage all sales activity. And so that I, you know, I would say Salesforce is an interesting example because it, you know, it is a, I would say it's not the most beloved software tool out there, but it is been a compounding business for the last 20 years.

because of how important it is to an organization. It's, you know, it's difficult to switch off of Salesforce after you've implemented it. On the back office side, that's it, yeah. Right, like it's interesting. Has there been a, like besides HubSpot, has there been a real meaningful challenger to Salesforce in the last couple of decades? I'd argue there hasn't been. Maybe like there are some vertical specific,

Nate Smoyer (15:22.32)
It's difficult to switch on to.

Hahaha!

Nate Smoyer (15:38.858)
No.

Nima (15:42.582)
CRM tools that have scaled like Vivo on the healthcare side.

Nate Smoyer (15:47.184)
But I mean, even still, and I know this is a tangent, but Salesforce is so flexible and powerful that there are add -ons that are industry specific that create what a specific company would need. We went through this at OBI, transitioning to Salesforce. I mean, it's very difficult, but then you have companies like Veruna, which is that insurance add -on, and my wife is a Salesforce admin.

She works at the National Kidney Foundation. So able to power a national nonprofit and an insure tech startup. I mean, how do you challenge that? I mean, they've built the incredible machine.

Nima (16:28.398)
Yeah, I think I totally agree. They've built an ecosystem, a developer ecosystem around the core product that is hard to replicate. And there is also a universe of people like your wife who are experts in using Salesforce. And so when they go to a new organization, they are primed to, to lean on the tool that they know most.

Nate Smoyer (16:36.304)
Yes.

Nima (16:57.454)
And I'd argue that in the real estate space, that's sort of the position that the property management systems have earned over decades. Like Yardi, for example, is dominant, not because it's the best property management system out there, but because it has a core set of users that are familiar with the product. And...

Nate Smoyer (16:57.68)
Yes

Nate Smoyer (17:09.966)
Mm -hmm. Mm -hmm.

Nima (17:26.958)
for any real estate fund that has been active for five plus years, it's extremely difficult to switch off. And so part of what I was trying to do when sort of talking about control point software is be a little bit more specific around the opportunities within real estate software that I think could lead to venture scale outcomes. And I think a...

Nate Smoyer (17:34.51)
Yes.

Nima (17:56.622)
rough way to define a venture scale outcome is investing in a company early that can get to 100 million plus in recurring revenue and continue growing.

Nate Smoyer (18:07.728)
Yep. Yeah, yeah. And I thought you made that case pretty well in your article. And of course, you cited, you know, the property management service vendors, your IntraDoc, OIL, Yardi, MRI. And I think they're probably what we have in PropTech as the as a best case and, you know, a comparison for that. But you kind of talked a little bit about you break this down into like some different segments. And you got a little bit into like,

to like home services. So, as far as like how this works into some of the home services businesses, and I think there's been a little bit of, home services has been kind of lumped into PropTech. I don't know if it should be or not. That's a debate for another story and day. I'm certainly not gonna gatekeep what is PropTech or not. But I wanted to talk about something here, because I know we talked about it pre -show a little bit. There are the vendors,

who are just purely software. So you mentioned roofers and I have some familiarity with the space. So there's roof R, right? And they're purely software for roofing companies, estimation tools, smart calculators, workflow systems, automations, right? And then you have attempts at doing vertically integrated. I think for PropTech, the most we've seen with this is in the property management space. But there's some other plays out there that are doing it in different services.

Where do you draw the distinctions here on like, should you ignore the vertically integrated with the tech? Is it just the software as a service? That's the attractive value. Do you see them as equal or do you see some distinguishing differences between those two? Other than obviously one does the service and builds the tech versus the other that's just the tech.

Nima (19:56.43)
Yeah. Yeah. Yeah. In the, in the post, I sort of split those two models and I call the tech enabled service version of what you're describing as selling the work. So you're not, you're not selling software to roofing companies, but you are a direct to consumer or direct to property manager, vertically integrated roofing business.

Nate Smoyer (20:13.166)
Right.

Nima (20:23.278)
And then the other is sort of, is the opposite. Like it's, it's your selling, you're selling software as a service to businesses that are utilizing that to run their business. Like, like Rufor with an R. This is, this is a, this is a really interesting distinction. And I would say the historical preference in the venture community was to invest in.

Nate Smoyer (20:32.334)
Mm -hmm.

Nima (20:53.198)
vertical software businesses, not vertically integrated tech enabled service businesses. Why? Because it's, it's frankly really difficult to scale those tech enabled service businesses. I would, I would argue that, you know, the expectation in a venture backed company is that you are to grow at hyper scale, you know, 200, 300 % year over year.

you know, for, for, for several years in the beginning. And that level of growth can sometimes break companies, especially when in order to grow, you need to add people like you need to add the service providers, the roofers, the plumbers, the HVAC technicians. It's much easier to, to sell high margin software and then, and then sort of go, go to the next prospect.

So I think in most cases that is still true. It's still easier to sort of scale a pure software business. What's interesting is that there are emerging exceptions to that rule. And the thing that I'm working through now is understanding how...

Nate Smoyer (21:49.902)
Yeah.

Nima (22:17.454)
some of these emerging AI opportunities or like AI enabling technologies, change that math a little bit too. So, you mentioned earlier that we are investors in Mind. Mind's just announced a merger with Roofstock. Mind is a tech enabled property manager. And I would say the characteristics that got us over the fence with Mind, one, the

Nate Smoyer (22:23.918)
Mm -hmm.

Nima (22:46.702)
It was the team. It takes a very unique team to scale a tech enabled service. Doug Brian, the founder of and CEO of mind, head was a found was a one of the sort of first founders of an institutional scale, single family rental company built a first party property management team within it. Two is the customer relationships that they have. They were the first one of the first.

tech enabled property management systems to work with large institutions like Invesco. And I think that, you know, that allows you to sort of grow at the rate I mentioned. And then three, you just need to build like operational tenacity within the organization. And so we spent a lot of time talking to sort of not just the management, the, you know, the executive team, but the...

Nate Smoyer (23:28.081)
Mm -hmm.

Nima (23:43.054)
second and third line and field level management of the company and sort of understanding the culture that had been built and the scalability of that culture. So, you know, it's very unique. I would say they're one of the only examples of being able to effectively scale a property management business and achieve venture like growth and returns. There are other examples I can get into also, but it's a very interesting topic and...

Nate Smoyer (23:46.83)
Mm -hmm.

Nate Smoyer (24:04.112)
Mm -hmm.

Nima (24:12.494)
I'm very curious to see if entrepreneurs rise to the challenge of building those sell the work businesses by leveraging some of the generative AI tooling that's out there now.

Nate Smoyer (24:20.152)
Yeah.

Nate Smoyer (24:24.016)
I think we're at the right time because the SMB roll -up interest has obviously been, I mean, it feels like to me it's at peak. And I don't know that that's like peak is in like, it's about to come down. I think it's still a peak interest of like, hey, there's this idea like you can just buy a business that's operating moderately and improve things. And suddenly you've just added a whole bunch of equity. And so then every acquisition is basically buying it.

below retail, right? And the model sounds good on paper. I think we'll get an opportunity to see how well this plays out across the board. I think you hit on one thing that can't be overlooked and which is execution, which comes down to your team and your operational excellence. It just by no means is that can that be a secondary objective internally that has to be something that's at the forefront.

I do want to shift here to the second theme. You talk about AI's impact on construction productivity. Obviously, lots of talk about we need more housing. We've got to build. We've got to figure out ways to build more efficiently, cost effectively. There's many ways you can take that, but I kind of want to take a little bit of an aside here. How come construction always seems like a nice add -on to PropTech? Do you know what I mean by that?

Nima (25:45.774)
Yeah, it's a good question. So I came into PropTech from a financial services lens. Like I mentioned at the beginning of this, we've historically focused a lot on FinTech. And most of the early opportunities I looked at in real estate were at the intersection of finance and real estate. And one of the themes that I was sort of obsessed with initially was the

Nate Smoyer (25:55.95)
Mm -hmm.

Nima (26:15.31)
housing affordability challenge in the US. And that was, you know, five years ago, it's, it's only gotten worse since then. And yeah, it's, it's insane. Wow. It's, you know, it used to be like a very, the San Francisco used to be this like canonical example of a high cost market. And now, you know, Austin and like across the US, it's, it's pretty insane. The,

Nate Smoyer (26:23.054)
Yeah, so say it hasn't gone any better.

Nima (26:44.59)
And I would say a lot of the startups were trying to make access to home financing easier, more efficient, lower cost. But that doesn't solve the fundamental supply, demand imbalance in our, in our country of housing that actually exacerbates it. If you make it easier to get financing. and a lot of.

Nate Smoyer (26:58.928)
Mm -hmm.

Nate Smoyer (27:05.456)
We can look at college education as a perfect parallel here. Make it easier to get the loans. It has done nothing for the cost of education.

Nima (27:10.35)
Yeah. Yeah.

It just leads to inflation. Yeah. And so for me, that was my reason for spending time in construction tech. I think fundamentally, if we are to help abate some of the affordability pressures in this country, it will be because we...

Nate Smoyer (27:15.95)
Yes.

Nima (27:40.994)
have some big supply unlocks. And it's not something that tech alone can solve at all. There are regulatory issues that are at a state or city level that need to be resolved. I think there's a lot that the federal government can do to create incentives for building.

Nate Smoyer (27:48.56)
Right.

Nate Smoyer (28:09.456)
I think...

Nima (28:09.518)
And one interesting tailwind is sort of post -COVID migratory patterns have shifted in this country and people are more willing to move to lower cost, higher affordability markets than they were before. And so there is, I think, an opportunity for developers and builders to continue building in lower cost markets.

and see like demand shift towards them. So that's my reason. I would say it's a tough nut to crack from a tech investing standpoint. We've looked at a lot of companies here. We haven't made a ton of investments yet, but it's something that I'm super interested in.

Nate Smoyer (28:46.094)
Mm -hmm.

Nate Smoyer (29:04.432)
This is something I think that actually like somehow, I don't know if it's one of the construction associations or maybe a few of them. I almost feel like you really want to drive innovation and construction. It's got to get to the high schools. you know, the idea of like, you're just always going to swing a hammer. I think there's actually future beyond that. and developing different skillsets that can be in, they can be in tandem with higher education and pursuit of.

trades. And I think it you know, because that's some of the challenges here, you have lots of technically savvy people. But it's very difficult to find the cross intersection of like truly understanding the trades. And so then you have this, I mean, that's a big part of friction in those industries. And I think that the you know, somehow shape or form if that if that education can get all the way down into the high schools of like what that looks like, and there's potentials.

Carpenter means all kinds of different things now. Electrician means all different kinds of things now. There's many ways to take that. It's not what you may have been envisioned or seen always played out in the movies. But the last thing I wanted to touch on that, you had a little bit of a mention of robots being used for like drywall finishing and commercial landscaping. Should we expect in the, and I mean that very near like.

two to three years? Should we see more robots? Is it going to be more drones? Or are we still kind of going to be similar to where we're about right now?

Nima (30:40.654)
I think we're, I think it's more like five years out from, from wide scale adoption of robots on job sites. It makes right now, it makes sense in a subset of construction projects, you know, like for example, the robotic drywall installers, it makes sense on large industrial ground up development.

where, where there's sort of where it's, it's not, it's not high rise. It's, and it's this repetitive task and you have space for, for sort of the robot to do its thing. It doesn't work well, like in tight spaces or where there's, there's lots of corners.

Nate Smoyer (31:19.822)
Mm -hmm.

Nima (31:27.182)
I think there's a lot of excitement around general robotics. My view is that construction is one of the best sort of initial use cases for robotics. And so as you see more funding activity occur at the intersection of AI and robotics, I think.

Nate Smoyer (31:35.696)
Mm -hmm.

Nima (31:53.998)
And these are more generalist or general robotics platforms. I think you'll see a lot of those entrepreneurs look to construction as a lucrative potential vertical to focus on. So it still feels like we're three to five years out from anything meaningful though.

Nate Smoyer (31:58.126)
Mm -hmm.

Nate Smoyer (32:08.142)
Yeah.

Nate Smoyer (32:14.926)
Yeah.

All right, we're gonna move on to theme three, residential real estate in a post NAR world. I wanna read the quote that you had included here, cause I think that this is a great setup. Redfin CEO, Glenn Kelman saying the NAR settlement was like a quote, asteroid hitting the industry. You know that killed the dinosaurs. An asteroid killed the dinosaurs. Are we saying the ages are dinosaurs here? What are we saying?

Nima (32:41.064)
Thank you.

Nate Smoyer (32:46.16)
What do you think Glenn was really trying to get at?

Nima (32:50.094)
I would not be surprised if there are fewer agents in the industry, far fewer agents in the industry 12 months from now than there are today. I'd be curious for your take, Nate, on this, if you agree with that statement. As a former agent, I remember, yeah, we talked about that in San Francisco, but.

Nate Smoyer (33:12.528)
One of the worst there ever was, but let me tell ya. I -

Nima (33:18.638)
What's your take on the agent universe?

Nate Smoyer (33:19.376)
Look, I remember, I distinctly remember, we used to do these late night calls, call nights. It was like once a month, we would come in, we would get pizza, and we would have some like Trulies and some beers and whatever. And everybody, all the sales reps in the bullpen, we would say, how many calls, contacts we're looking for, how many appointments? That was our goal that night, what we're gonna do. And I remember when we wrapped up that night,

talking to my buddy Brennan, he was also a first year agent. And I just said to him, I like, Brennan, do you really think all of us in here need to be in here? Like I was looking at the room and this is before I even heard the term PropTech. And it was because Ben, so Ben Kinney was who have recruited me into the business. And Ben is very well known throughout real estate tech, all on the residential side.

And I've talked about him a handful of times on the show because he had painted the vision. He was like, you know, if you want to be a more successful agent, you leverage the tools so you're not working as hard on the mundane stuff. You can better service your clients. You can do more deals. Ultimately, you make more money. You may not make as much on every deal. And that was the benefit of the team model. He was, of course, selling the team's model, which came with the tech. And I just kept looking at him like you have to get more efficient. It has to get better, which means.

We're not all necessary. So yeah, I do not think that agent count has to stay where it's at. It doesn't seem to make sense to me. So I think that it only makes sense as the number of deal sides declines. And you can't go from historically averaging five and a half million residential deals in a year, right? So that gives you 10 million sides.

or 10 .5, whatever sides, whatever it comes out to, 11 million sides, down to 4 .1, 4 .2 last year, you just can't do that. It's not enough to feed everybody. And the reality of it is those who have built a presence, they have long standing relationships, they have strong referral businesses, their businesses are gonna do fine. They're gonna adjust, they're gonna adapt, and they're gonna continue to win.

Nate Smoyer (35:42.256)
It's everyone else who's the average agent and below. It just doesn't make any sense. Like you've got to do something else. And if you couple that with other economic forces at play here, we're not even talking about the fact that, you know, as a commission only, so you're 1099. So healthcare hasn't gone down in price. Food hasn't gone down in price. Housing hasn't gone down in price. The average new car payment is over $400 a month. So.

None of it makes sense. And I Googled, so as of February 2022, according to HousingWire, 1 .5 million members, according to the trade group's monthly report released on Monday, that's down 2 .1 % from the year prior. So the reality here is we haven't seen a dramatic drop. And I think that people called that it would drop sharp. They were like, we're gonna see half the agents fall. I think a lot of people will keep their license.

Nima (36:40.91)
Mm -hmm.

Nate Smoyer (36:41.04)
So it's an inflated number because it doesn't mean they're actually active in the business. But in my opinion, it just makes sense that it will drop. However, that being said, I actually think the role of the agent only continues to maintain or increase over time. I don't think the agent goes away. I actually think the consumer still wants that agent.

Nima (36:56.846)
Yeah.

Nima (37:01.39)
Totally. I mean, real estate transactions are complex, even a, even a home sale. And I think you need an advisor. I think Ben was right when he said the industry needs to get more efficient and the settlement in addition to headwinds and transaction volume, feel like feels like the catalyst for that drive towards efficiency. I think you can't just throw a bunch of Nates into a room.

Nate Smoyer (37:22.096)
Mm -hmm.

Nima (37:31.404)
and tell them to cold call. Like you need to be more sophisticated than that because you can't sell Nate on the vision or the dream of becoming this high producing agent now because it's sort of, there's a zero sumness to it if there's pressure on commissions, which I think there will be to a certain extent. It might be over exaggerated, but even if there's downward,

Nate Smoyer (37:36.688)
If you want your leads and never call you back, that's good idea.

Nima (38:01.23)
pressure of 20%, that's still enough to make an impact. So I think you'll see in a lot of ways, efficiency means relying more on tooling to do the work instead of throwing bodies at a problem. And so, you know, that's where I was trying to go with that third point. And, you know, still looking at opportunities here, we haven't sort of made a bet yet.

Nate Smoyer (38:21.646)
Mm -hmm.

Nate Smoyer (38:30.864)
Yeah, yeah. Let me ask you this. So I think I brought this up in someone else's interview. There's a TikTok account called the Older Millennial. And I don't know why this guy has a following, because some of his stuff, I just, I can't believe people agree with it, but whatever. That's another day for another discussion. But he had one, he was like, I got the trillion idea for all you big investors out there. Why don't you just build the home buying app? Like it shouldn't be that hard.

Like why couldn't I just have a home buying app where I just press, I want to buy this app. I want to buy this home. And then it just walks me through step by step. And I'm like, in theory, that makes sense. And others have tried this, right? And it hasn't succeeded. Now, let's say we enter a new era where buyers have to pay the commission out of pocket, lenders won't finance it. Could the portals, could that finally be the time where...

portals become like the interface for deals and the parameters for the deal are syndicated via MLS and then buyers could just buy based on the terms or preset. It's already pre -negotiated contracts. Would you like like just like TurboTax, would you like the advice and an advisor for an additional 80 bucks to sign your tax return?

Would you like that for an additional $500 to have a verified real estate agent review the terms of your contract agreement? It seems like it could be the right pairing. I'm not saying it's gonna happen, but what do you think? Is that possible or is that kind of too crazy?

Nima (40:08.43)
I'm a little bit skeptical. I think homes are...

there's enough variance in home quality and condition, and there is enough of an information asymmetry between a prospective buyer and an agent who does this for a living that you'll continue to see value in having someone with you saying, Hey, you know, I looked at the inspection report for this house and their, their foundation issues.

Nate Smoyer (40:28.72)
Mm -hmm.

Nima (40:45.294)
like it's not worth it or hey, you know, this one is a hidden gem. Here's I'll give you my great contractors contact information. And this is what this is how I would bid on this property in order to sort of maximize value for you. There's still enough nuance in in residential real estate to support.

Nate Smoyer (40:58.768)
Mmm.

Nima (41:13.614)
the advisory role that an agent plays. I think there have been lots of companies, many of which don't exist anymore, that have tried to create a button for buying and selling homes. And it just, I don't think it reflects the actual process. Yeah.

Nate Smoyer (41:16.75)
Yeah.

Nate Smoyer (41:35.984)
Every deal is different. Even if you have a somewhat standardized deal, and I'll give it like a clear cut example, like I know how to buy a house. I know, I know some of the tools that I can use that are baked into contracts. And I know some of the, not to say tricks, but the flexibilities of the rules and how I can use things to my advantage. But with my agent, we were able, when we bought the house that I'm in, they were able to.

kind of like learn more about the buyer or the seller than I was going to be able to learn. One, because I bought remotely. We were able to get several repairs negotiated into the price of the house post inspection, so post contract. So that added value. But then we also actually, because we understood the situation of the sellers a little bit better, we got pretty much a furnished house. Because we moved from a one bedroom apartment to a

a four bedroom house. And we walked into a nearly furnished whole house. And we were doing the sellers a pretty significant favor, but it also worked out to our benefit. And I looked at it like the cost of furniture amortized over 30 years. This is the financing deal of the century. So I'll take it. And so it's stuff like that, that a button doesn't solve for. And you find that...

Nima (42:41.464)
That's awesome.

Nima (42:54.446)
Thank you.

Nima (43:02.582)
I'll leave it at that.

Nate Smoyer (43:04.304)
pretty frequent in deals, whether it's just a lawnmower or like details like the washer, dryer and microwave or other things that are unique features or things that are attached or not attached. The agent does play a role in those things that a button has not yet learned to solve for.

Nima (43:22.222)
Yeah, agreed. Agreed for sure.

Nate Smoyer (43:24.08)
Yeah. All right, Neba, we're gonna move on to the final segment. You might remember this from your first time on the show, but it's gonna be a little bit, it's got one little, maybe little differences from when you were on the show. This is for the future, for the futures when I get to ask each guest who comes on a show to give their best predictions based on the following four questions. Are you ready to do this?

Nima (43:45.678)
Let's do it.

Nate Smoyer (43:47.214)
All right, number one, let's talk about the new fund. When I say, what does Tom Vest look like? What does Tom Vest Ventures look like one year from now?

Nima (43:58.766)
I think we will be, you know, close to two thirds through deploying the fund and thinking about what comes next for us, whether that's, you know, doubling down on real estate and financial services, thinking about new verticals. I also think the world is going to look a lot different in a year. Just the pace of technology change.

Nate Smoyer (44:27.342)
Mm -hmm.

Nima (44:28.27)
in the last 12, 18 months has been insane and I think it's just accelerating. So no shortage of fun investable opportunities out there. And so we'll be busy in a year, that's for sure.

Nate Smoyer (44:43.152)
All right, number two, what's your estimate of the total funding for PropTech by end of year of this year, 2024?

Nima (44:53.838)
good question. I think I was going to say on a year over year basis, I think we'll be okay.

Nate Smoyer (44:56.24)
Do you need a refresher with the number? So the number last year.

Let's give three year prior 2021 18 .8, 2022 12 .3 and 2023 was 4 .4. Where does 24 land?

Nima (45:13.23)
Okay. Yeah. I think we'll be between five and six. but yeah, you know, anecdotally, I'm already seeing just a ton more activity, both companies raising and then deals getting announced. So you're going to see an uptick from, from last year for sure.

Nate Smoyer (45:17.68)
Five and six.

Nate Smoyer (45:31.696)
Number three here, what's one industry trend you think will continue but you wish would go away?

Nima (45:37.822)
.ai domain names. Every company is an AI company.

Nate Smoyer (45:41.488)
Hahaha!

Nate Smoyer (45:46.832)
didn't even just stick to real estate, it's like everyone, please stop, don't call it a .ai. If you have no other option, I understand, really on, but get it .com if you can, it still works.

Nima (45:49.294)
Yeah.

Nima (45:59.15)
Yeah. Agreed.

Nate Smoyer (46:02.532)
Yeah. All right. Last one. What's one thing you believe will dramatically change or fade away in real estate as a result of tech advances?

Nima (46:12.846)
good one.

Nima (46:18.125)
I think the, I mean, let's just, let's just talk about the agent. Like I think the agent will persist, but the,

Nate Smoyer (46:25.328)
Mm -hmm.

Nima (46:29.294)
The idea of 1 .5 million agents for 4 .1 million transactions is going to be a thing of the past.

Nate Smoyer (46:38.704)
Yeah. Neema, thanks for coming on the show. This was a lot of fun to catch up. And also thanks for writing that article and putting it together. For everyone, if you don't know or have this marked on your calendar, of course, TomVest known for the market map they publish every year. Look out for that later this year. In the meantime, for those who want to get in touch with you and or learn more about TomVest, where did they go and how do they do that?

Nima (47:04.078)
Send me an email, nema at TomVess .com.

Nate Smoyer (47:07.696)
Boom, easy enough. If I don't see you beforehand, I'm sure I will see you at Blueprint. But until then, take care.

Nima (47:14.286)
for sure. Always good catching up.

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