Fifth Wall’s Brendan Wallace On the Evolution of Proptech Unicorns

What does a proptech unicorn look like in 2025, and does it matter?

Unicorn growth across all industries yielded 110 new billion dollar-plus valuations globally in 2024, with the U.S. leading the way with 65 — four of them in real estate — thanks to its leadership in artificial intelligence (AI), according to Crunchbase. The global figure was up from 100 in 2023, with the U.S. rising from 42.

Following the announcement last week of Juniper Square’s $130 million Series D raise — valuing the connected fund software and services for private markets company at $1.1 billion — Brendan Wallace, CEO and chief investment officer at Fifth Wall, one of the participating investors and a client firm of Juniper Square, had a lot of thoughts to share on what he sees as the changing nature of proptech unicorns.

Wallace spoke to PropTech Insider on June 17 about the meaning of Juniper Square’s unicorn status, how venture capitalists value unicorns, and whether such valuations matter compared to returns for investors.

This interview has been edited for length and clarity.

PropTech Insider: Why do you view Juniper Square’s recent billion-dollar valuation — your investment in that company, and its work for Fifth Wall — as having such a big impact on proptech, and real estate overall?

Brendan Wallace: We see the company as having an ability to profoundly transform private capital markets, and that is what they’re doing. They’re [demonstrating] transparency and efficiency on private capital markets today. Now, the way that’s typically [represented] is with funds like Fifth Wall, or a venture capital fund, or real estate fund. And the reason I actually view it as very close to real estate, or kind of proptech adjacent, is that real estate is one of the largest capital markets on earth. Real estate debt and equities is larger than the U.S. stock market. So anything about private capital and how it changes hands means you have to be in the real estate business if you’re going to be a disrupter of private capital markets, which Juniper Square is. The company has obviously grown in a really exciting way, and is now the most recent proptech unicorn — the 25th proptech unicorn in which Fifth Wall has invested.

Has Juniper Square entered the proptech or real estate sector in a major way?

They have many major real estate fund managers using the platform. They manage Fifth Wall’s funds. So we’re not just an investor, we’re a client. They’re very much in the proptech ecosystem as well.

I think their position as the latest proptech unicorn is a validation of a few things. One, the imperative to bring transparency to private capital markets. Two, the criticality of real estate capital markets in all capital markets. And three, I think the promise of AI in particular, like the new product they launched, JunieAI. How it has the ability to bring fund flows for limited partners and general partners.

More generally, you view the concept of a proptech unicorn as changing. How so?

Being a proptech unicorn means a lot more today than I think it did during the 2020 to 2022 vintage. And the reason is that valuations are more conservative today. So that means being a unicorn is honestly harder today than it has ever been, and I think a good validation of those companies.

The second thing is that I think we’ve reached a stage of proptech capital markets where you’re seeing more mature companies like Juniper Square and ServiceTitan, as businesses that now have a certain institutional scale. You’re seeing a maturity in the ecosystem and they get Fifth Wall. We’ve been fortunate to be investors in some of the more iconic proptech unicorns, Procore, being one of them, VTS and Blend being others, as well as Bilt, the credit card business.

So your perception of unicorns has changed?

It’s more meaningful than ever today. Historically, there were a lot of unicorns who raised very high valuations that ultimately never matriculated into real valuations. So I’d say yes, the mantle of being a unicorn means a lot more in 2025 than it did in 2020 to 2022.

As you look at the marketplace and you’re placing bets, are you less certain that the investment might become a unicorn?

No. Meaning, of course, we want the company to grow and scale and become as big as possible. I think how I would phrase it is when a company raises at a billion-dollar valuation today, I think it’s a lot more meaningful than when a company raised a billion-dollar value from 2020 to 2022.

If evaluations are looked at more stringently today, are investors less concerned with a company becoming a unicorn and more with early profitability?

Here’s how we have always looked at this, which is that private market valuations are not the same as exits. Fifth Wall just had a massive distribution back to our investors from exiting Service Titan when the company went public. That is a real distribution, a return back to investors. That’s what matters. That’s how we measure our success.

For example, with Juniper Square, even though it’s a great up round for Fifth Wall as an investor, we’re not getting any liquidity. If I were to look back on what I’m most proud of at Fifth Wall, it’s not having invested in 25 unicorns, it’s the fact that as of today we’ve distributed over $700 million of return back to investors. That’s what actually counts.

Are you expecting more exits this year?

I would say that we do expect to see more exits, because I think you’re seeing more activity from incumbents in the proptech ecosystem. Obviously, we started the year with a bang, where we had a big exit with Fifth Wall’s portfolio company Industrious that sold to CBRE. And then we had the Rocket-Redfin deal and Blackstone acquiring Entrata.

With so much investor uncertainty, do you expect that momentum to continue?

Among just those names that I mentioned, that’s close to $20 billion of enterprise value. So that’s a lot of exits. Going forward, I think because of these deals, you’re just going to see more activity. There tends to be a momentum associated with these things.

How is AI affecting valuations and investor interest? Is there the same skepticism about proptech companies using AI as there was a couple of years ago?

No. I would say we don’t see much of that skepticism in the valuations. And I would say we as a firm are, of course, skeptical of all claims about the ubiquitousness of AI. And I think we remain skeptical in a healthy sense around that.

What we do believe is that most AI companies are unlikely to be successful, but a very small number will be immensely successful. So while I’d say we are skeptical and critical, and take a cautious view of the space, we nonetheless just want to bet on certain companies that we think can scale very rapidly because we think AI will be an accelerant to enterprise value concentration and proptech. Meaning the companies that succeed by virtue of or in collaboration with AI are going to be larger than the companies that don’t, kind of the previous generation of pure enterprise software or consumer software, or fintech or marketplace businesses.

Is AI as a foundational component of a startup something that disproportionately affects your investment decision-making?

No, I would say it does not disproportionately. It’s been a part of our investment decision-making for quite some time. I don’t think AI disproportionately affects the real estate industry versus other industries. I don’t think we have evidence of that.

I think AI is going to be an important driver of innovation, change and efficiency in all industries, and real estate is included in that. One of the benefits that the real estate industry has today is that they’ve waited so long to adopt technology. It’s almost like they’re adopting better technology by virtue of having waited, so you get this kind of step function change in efficiency.

What sector do you see producing the most unicorns?

I think construction technology is poised for a lot of growth right now, and there’s a number of reasons as to why. One, obviously, is the undersupply of housing in the U.S. Two is the ongoing inefficiencies that exist across the taxonomy of companies that are involved in construction. And three is because architecture, engineering, design and construction are the spaces where we’ve seen some of the most powerful applications of generative AI to bring efficiency to real estate owners. An example from our own portfolio is called Tailorbird, which uses AI to do renderings and capex recommendations for multifamily owners. It’s  being deployed by a number of Fifth Wall strategic LPs.

How would you summarize your view of the changing nature of proptech unicorns?

In the macro view, venture capital is fundamentally a business that is driven by power law dynamics, meaning a very small number of companies tend to be responsible for the vast majority of value and return that accrue in the entire ecosystem. The same is true for venture funds themselves, meaning a very small number of venture funds tend to capture a very small number of those unicorns that end up creating lots of value.

And I think that the job of any venture investor — and what we’re dead set on doing and proving at Fifth Wall — is that we can identify a lot of those breakout winners, those exceptional companies, very early on. For a while, it was hard to tell if we were succeeding, because not that many unicorns were being made in proptech. What’s been validating or vindicating about our model recently is that — especially with the ServiceTitan IPO, which is worth over $10 billion, and now with the Juniper Square fundraising — we’re starting to see unicorns re-emerge in proptech, and that gives us feedback on how we’re doing as investors.

Philip Russo can be reached at prusso@commercialobserver.com.