Moderne Ventures Nets $230 Million Betting Corporate Connections Offer Leg Up

Moderne Ventures has raised roughly $230 million for its third fund, tapping investors in part on the thesis that relationships with companies in the real-estate industry give the firm a leg up in spotting promising technology. 

Chicago-based Moderne targets seed- to Series B-stage deals with a particular specialty in backing startups in real-estate and related sectors such as finance and insurance. Roughly 30% of investors in Moderne’s new MV Core Fund III are companies in the real-estate sector or related industries, giving the firm insight into problems the industry seeks to tackle and potential customers for its portfolio companies, said founder and managing partner Constance Freedman. 

“This is how we can supersize our returns,” Freedman said. “They’re helping us find things that customers actually want since they are the customers.”

Venture firms typically raise most of their capital from sources such as institutional investors, endowments and public pensions.

Freedman said Moderne’s team spends time with its corporate limited partners to understand their real estate-related challenges.

“They’re some of the largest owners and operators globally in those sectors. And so when they tell me about some problem, it’s generally indicative that the industry is trying to solve that problem,” Freedman said.

Freedman said the approach is proving especially valuable in helping Moderne decide which artificial-intelligence technology to back. Moderne has ongoing discussions with real-estate companies about how generative AI could improve their business and what technology should be ignored.  

Moderne targets real-estate technology that can be applied in other industries to hedge against swings in the real-estate market affecting startup bets. 

“What I learned in 2008 is that if you just focus on [real-estate sectors], your companies aren’t going to fare well when there’s a downturn and of course these industries always have downturns,” Freedman said.

Moderne began raising its new fund in early 2023 and finished roughly midway through this year. The collapse of Silicon Valley Bank, a slowdown of LP commitments to venture and a paltry exit environment made for a tough and longer than expected fundraising process, Freedman said. 

Moderne previously raised a $200 million fund in 2020.

In addition to strategic LPs, Moderne tapped institutional investors, which Freedman said offer a more reliable commitment to the firm’s funds. Corporations can waver on venture fund commitments for various reasons, including shifting strategy, allocation to research and development, and company performance.  

Moderne’s exits include residential real-estate startup Homesnap, which was acquired by property-data company CoStar Group, and the public offering for Porch, a home service and repair-management company. Porch went public via a special-purpose acquisition company deal in 2020. 

Before founding Moderne in 2015, Freedman launched and managed real estate-focused Second Century Ventures with the sole LP being the National Association of Realtors.

Write to Marc Vartabedian at marc.vartabedian@wsj.com

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Moderne Ventures Raises Second-Largest Women-Led Fund this Year

Moderne Ventures l1as held a final close 011 1nore than $230 1nillion for its third flagship fund, maki11g it the second-largest women-led venture fu11d raised this year.

The Chicago-based firm, fou11ded in 2015 by ma11aging partner Co11sta11ce Freed1nan, has shown significant growth with eacl1 fund. It raised $43 millio11 for its debut vehicle in May 2018, then closed on $200 million for Fund II in August 2021, according to fundraising data fro1n affiliate title Buyouts.

MV Core Fund III began fundraising i11 August 2022 a11d held a first close on $117 million from 74 investors on October 4, 2023, a regulatory filing shows. The fir1n has not filed an updated Form D for Fund III, but it said in a statement that the fu11d held a fi11al close on 1nore tha11 $230 million.

"Notable institutional investors i11clude GCM Grosve11or a11d the Illinois Growtl1 and Innovation Fu11d, and so1ne of the world's largest strategic part11ers like AvalonBay, Essent, and leading real estate co1npanies of the world," Moder11e said i11 the state1nent.

The new fund is the second-largest women-led fund raised this year, according to Venh1re Capital journal research. (See our exclusive list of more than 200 women-led VC funds.) The year's largest fund so far was raised by Engine Ventures, a 1nulti-stage i11vestor targeting compa11ies across deeptech, healtl1care and AI. It closed its third fu11d at $398 million onJu11e 17, above its target of $350 millio11.

Overall, 48 won1en-led funds raised a combined $1.44 billion in the first half of this year, putting them 011 track to raise close to the $3 billion they raised in 2023 and 2022, as VC]previously reported.

REandmore

Moderne backs technology compa11ies i11 real estate, fina11ce, i11sura11ce and sustainability.

The fir1n is led by Freedman, wl10 is listed i11 regulatory filil1gs as the "sole member of the general partner" for Fund ITT, with support fro1n part11er Liza Benson, who joi11ed Moderne as a venture part11er i11 April 2018 a11d was promoted to partner i11 October 2018, according to her Linkedln profile.

Prior to founding Moderne, Freedman lau11ched a11d 1na11aged Second Century Ve11tures i11 partnership with the National Association of Realtors, where she led early investments in and was a board me1nber of companies like DocuSig11, Updater a11d August.

"Moderne's ve11h1re platform, imn1ersion program and 1nassive corporate network co11siste11tly generate synergistic value for our portfolio co1npa11ies a11d industry partners whicl1 leads to top-tier retur11s for our investors," Freed1nan said in the state1nent. "MV Core Fund III is an expa11sion of our existir1g strategy where we apply decades of vertical specialization experience to curate custo1ners for our companies and advance entire industries, producing outsized returns for our investors."

GCM Grosvenor vice-chairman Derek Jones said of the 11ew fund: "011 behalf of our clients, we are thrilled to participate in Moderne's Core Fund III, given the firm's impeccable track record, robust value-add strategy, and strong team. We value the opportunity to back a differe11tiated manager who brings customers to portfolio compa11ies."

Moderne Ventures Raises $230 Million Venture Fund

Constance Freedman has raised a $230 million third fund at Chicago-based venture-capital firm Moderne Ventures.

Freedman is one of a handful of women leading venture funds in Chicago (or anywhere else, for that matter) and one of the earliest. PitchBook estimates women make up the majority of decision-makers at just 11% of venture firms.

Rarer still is raising a third fund. It gets harder to raise each successive fund. Moderne’s first fund in 2015 was $43 million. It raised $200 million in 2021.

Moderne is one of the few relatively recent Chicago-based venture funds over $200 million, including S2G, Valor Siren Ventures, Energize Capital, Jump Capital and Baird Capital. Large pools of capital are critical to a vibrant startup scene, and the number of funds over $200 million has slowly expanded.

Raising money for a venture fund — big or small — has been a tougher sell the past two years. After a reset in venture-backed valuations two years ago, exits, such as IPOs and acquisitions, have been hard to come by. Without returns coming in, it’s hard for all but the most dedicated venture investors to justify putting out more money.

The amount of venture capital raised last year was about half the recent peak set in 2021, according to PitchBook data. It’s on pace to fall further this year.

Freedman, who ran the Second Century venture fund for the National Association of Realtors before setting off to launch her own fund, says Moderne benefits from a strong base of strategic investors such as corporations.

“About 40% of the capital comes from strategic investors,” she says. “But they were harder to get because they’re having their own challenges. Almost all of them came in. Many doubled or tripled down. There's also a bunch of new financial investors.”

Among the new backers are several institutional investors, such as GCM Grosvenor, which are critical to raising larger follow-on funds.

“Constance and her partners have a strong team, a value-add strategy and a great track record,” says Michael Sacks, chairman of GCM Grosvenor.

Freedman has roots in real estate, but she says Moderne has deliberately sought deals with broader appeal.

“We look for companies that are broad, and we use our sector expertise to bring companies into verticals,” says Freedman, who leads the fund with partner Liza Benson. "What you find is any company that is dependent on a cyclical industry, they’re not going to fare well when they experience a downturn."

Moderne recently invested in Qloo, a Chicago-based startup that uses artificial intelligence to help companies understand and predict consumer preferences. Its customers include Starbucks, Netflix and PepsiCo.

“They’ve started to go into real estate and finance, and that’s where we’re helping them,” she says.

Venture-capital deployment is still depressed, down 40% from where it was two years ago, giving an advantage to those willing to invest their cash.

“I am so happy to have dry powder right now because it’s the best investor environment I’ve seen in two decades,” she said.

By John Pletz

John Pletz is a senior reporter covering technology, aviation and cannabis for Crain’s Chicago Business. He joined Crain's in 2007 and previously covered technology for the American-Statesman in Austin, Texas.

Proptech and Fintech Investor Moderne Ventures Raises $230M Fund III

Moderne Ventures, a VC and growth equity firm specializing in proptech, fintech, insurtech and sustainability, raised over $230 million for its Core Fund III.

Why it matters: VCs and LPs are back on the prowl for startup investments, after two slow years of dealmaking.

How it works: Chicago-based Moderne's third core fund will focus on Seed to Series B investments, with a typical first check between $4 million and $8 million.

• The firm plans to make 15 to 20 investments from the new fund, eight to 10 of which will be core deals and the rest smaller, opportunistic seed bets.

• "We are generalist investors with a vertical focus, where those verticals are real estate, finance, insurance and sustainability," managing partner Constance Freedman says.

• "But every deal we do is more generalist of nature, meaning that it has a focus on those verticals but also serves the broader markets."

By the numbers: Moderne has made over 35 investments and backed over 150 Passport companies across its three funds to date.

• Freedman's previous investments include companies like DocuSign, Porch, Homesnap and TaskEasy.

Between the lines: In addition to its venture investments, Moderne runs a six-month program called Moderne Passport to connect companies with a network of about 1,500 executives and corporates.

• "It's a way to bring companies into the industry and connect them with our network, who are all potential customers... and help create value for the portfolio with that business development loop," Freedman says.

Flashback: Before founding Moderne, Freedman launched Second City Ventures in partnership with the National Association of Realtors as its sole LP.

• She spun out Moderne in 2015 with a broader LP base and a $43 million Fund I, then closed a $200 million Fund II in 2021.

Zoom in: The firm's LPs include GCM Grosvenor, the Illinois Growth and Innovation Fund, AvalonBay, Essent, and LeadingRE.

What's next: In addition to the latest core fund, Moderne plans to raise a new growth fund to double down on existing investments and place bets on later-stage companies outside its portfolio.

• "About half of it will go towards the highest growth companies in the existing portfolio... and then 50% of the growth fund capital will be net new deals," Freedman says.

Constance Freedman Ranks 1 of 200 Most Powerful and Influential Executives and Leaders for 2021

The Swanepoel Power 200 (SP 200) ranks the 200 most powerful and influential executives and leaders in the residential real estate brokerage industry every year (given that some roles have two or three leaders, the list includes a little over 200 leaders). The 2021 list, our eighth annual, as of December 31, 2020, can be found here. Read on to learn more about the process of how we determine the rankings.

We do not establish the ranking of leaders on the SP 200 solely by company size. In fact, it is just one of several key eight components of our methodology. Any reference to size and sales volume listed are shared for framing the companies the executives on the company lead; generally, 2019 numbers are used (unless a major event disproportionately may have changed the numbers) as those are the current audited numbers available across the board for all companies. Most companies are still busy with their 2020 financials and 2020 audited numbers will only be released by T3 Sixty in April or May (known as the Mega 1000) as soon as audits have been completed.

The Power 200 takes approximately 500 hours, uses eight criteria and follows a deliberate detailed procedure to determine who is included and acknowledged every year. The methodology can be reviewed here.

Porch valuation soars to $1B after IPO

After merging with a blank-check company, Porch.com is now a billion-dollar company.

The home-services startup made its stock market debut on Nasdaq, with shares opening at $15.37.

The company’s merger with PropTech Acquisition Corp. closed on Wednesday, 12/23. The special-purpose acquisition company was formed last year by Thomas Hennessy and Joseph Beck, former Abu Dhabi Investment Authority execs. After trading around $10 per share for several months, the SPAC’s stock jumped nearly 25 percent after shareholders approved the Porch merger on Dec. 21.

Prior to the IPO, Porch had raised $120 million from investors including Valor Equity Partners, Lowe’s Cos., Founders Fund and Battery Ventures.

Porch hopes to generate up to $500 million in revenue in five to seven years by growing its core business.

The company said it received $322 million in gross proceeds from the IPO, including a $150 million investment led by Wellington Management. Other investors include Scopus Asset Management and Steve Cohen’s Point72 Asset Management, which acquired a 6.4 percent stake that’s now valued at $17 million.

CoStar to acquire Homesnap for $250M

WASHINGTON--(BUSINESS WIRE)--CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces, announced today that it has reached an agreement to acquire Homesnap, Inc. for $250 million in cash.

Homesnap is an industry-leading online and mobile software platform that provides user-friendly applications to optimize residential real estate agent workflow and reinforce the agent-client relationship. Over 300,000 agents nationwide use the application an average of 30 times each month. Those 300,000 agents are also the nation’s most productive, selling the majority of homes in the US. The platform enjoys high growth and engagement as the number of active monthly users has grown at a compounded annual growth rate of over 40% since 2016, while marketing product sales have risen over 75% per year over that same period. Supported by a consortium of hundreds of the country’s largest multiple listing services (MLSs), over 1.1 million real estate agents have access to Homesnap Pro. These agents represent over 90% of the residential real estate agents and listings in the United States. With the support of this impressive consortium, Homesnap’s public residential real estate portal showcases 1.3 million active property listings. Tens of millions of home shoppers use the Homesnap website and app to look for a home.

“The acquisition of Homesnap will enable us to enter a new space and expand the total addressable markets in which we can compete,” said CoStar Group founder and CEO, Andy Florance. “The estimated value of commercial real estate assets in the U.S. is $16 trillion. With the new addition of clients and information covering 90% of the estimated $27 trillion dollar U.S. residential real estate market we are almost tripling the size of our addressable markets. Over the past thirty years, CoStar has become the leading real estate technology platform by working in partnership with commercial real estate brokers to serve their needs for data, analytics and advertising exposure for their property listings. Similarly, Homesnap works in very close partnership with residential agents to serve their needs for data, analytics and advertising exposure for their property listings. We will continue to differentiate our residential real estate portal and solutions by working solely to help agents market their listings and their brands, which is in sharp contrast to other portals that increasingly advertise on top of agent listings and offer brokerage services directly.”

The addition of Homesnap’s complementary offerings will quadruple the number of professional, paying brokers and active agent users on the CoStar Group U.S. platforms from approximately 100,000 today to over 400,000. The number of U.S. property listings available across CoStar’s brands will double from approximately 1.35 million today to over 2.6 million.

“Homesnap has great relationships, data, software, and tools for residential real estate professionals that are complementary to our existing offerings,” continued Florance. “The tools and functionality developed by Homesnap for residential property agents, such as lead generation, client collaboration, and digital advertising, have direct applicability to commercial brokers. Our goal is to make these enhanced capabilities available to all of our audiences. Combining forces with Homesnap is also expected to enable us to expand and deepen our collaboration with MLSs nationwide. A very large percentage of CoStar’s clients such as investors, banks, government agencies, appraisers, suppliers, and brokerage firms are active in both commercial and residential real estate, so we believe that they would welcome a more comprehensive solution for their needs across all real estate segments.”

“Homesnap has spent years building tools that reinforce the agent-client relationship and arm both home buyers and agents with the data and software they need to find homes and do their jobs,” said John Mazur, CEO of Homesnap. “In addition, residential property agents spend an estimated $10 billion every year on software and marketing, while influencing a further $21 billion of spending in adjacent markets, such as lending, insurance and relocation services. We are excited to join CoStar Group and leverage their 30 years of knowledge and experience in property data, software and marketing to take advantage of this significant growth opportunity.”

Homesnap is also headquartered in the Washington, D.C. area, employs approximately 150 people and is projected to achieve approximately $40 million of revenue for the full year 2020, representing revenue growth of approximately 45% compared to the full year 2019. The transaction is expected to close in 2020, subject to customary closing conditions and regulatory review.

The preceding forward-looking statements reflect CoStar Group’s expectations as of November 22, 2020. We are not able to forecast with certainty whether or when certain events, such as acquisition-related costs, the exact timing of the closing of the acquisition, or the exact amounts or timing of any investments related to the acquisition will occur. Given the risk factors, uncertainties and assumptions discussed above, actual results may differ materially. Other than in publicly available statements, CoStar Group does not intend to update its forward-looking statements until its next quarterly results announcement.

About CoStar Group, Inc.

CoStar Group, Inc. (NASDAQ: CSGP) is the leading provider of commercial real estate information, analytics and online marketplaces. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. STR provides premium data benchmarking, analytics and marketplace insights for the global hospitality sector. Ten-X provides a leading platform for conducting commercial real estate online auctions and negotiated bids. LoopNet is the most heavily trafficked commercial real estate marketplace online with over 7 million monthly unique visitors. Realla is the UK’s most comprehensive commercial property digital marketplace. Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, Westside Rentals, AFTER55.com, CorporateHousing.com, ForRentUniversity.com and Apartamentos.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. CoStar Group’s websites attracted an average of approximately 69 million unique monthly visitors in aggregate in the third quarter of 2020. Headquartered in Washington, DC, CoStar Group maintains offices throughout the U.S. and in Europe, Canada and Asia with a staff of over 4,300 worldwide, including the industry’s largest professional research organization. For more information, visit www.costargroup.com.

About Homesnap

Based in Bethesda, MD, Homesnap was founded in 2012 to provide residential real estate agents and consumers with an intuitive technology that facilities buying and selling homes. Homesnap’s flagship product, Homesnap Pro, is a free software application for real estate agents to view and manage property listings, communicate with clients, receive market alerts and schedule showings on their mobile devices. Homesnap collects data from over 500 data sources and has subscription service agreements with approximately 240 MLSs who provide data and subscription revenue to Homesnap in exchange for free agent access to Homesnap Pro. Homesnap also provides marketing products through its mobile application that agents can use to promote their listings, as well as a premium product called Homesnap Pro+, which provides agents with enhanced functionality and business intelligence through individual subscription agreements. The Homesnap platform contains approximately 1.3 million active property listings, including residential, commercial, land and other property types, covering approximately 90% of active listings. The company also aggregates information on property taxes, mortgages, individual property parcels, neighborhood schools and other property data elements.

This news release and the Company’s conference call contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about CoStar Group's plans, objectives, expectations, beliefs and intentions and other statements including words such as “hope,” “anticipate,” “may,” “believe,” “expect,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential” or the negative of these terms or other comparable terminology. Such statements are based upon the current beliefs and expectations of management of CoStar and are subject to many risks and uncertainties. Actual results may differ materially from the results anticipated in the forward-looking statements and the assumptions and estimates used as a basis for the forward-looking statements. The following factors, among others, could cause or contribute to such differences: the possibility that the acquisition of Homesnap does not close when expected or at all; the possibility that the parties are unable to obtain regulatory approval, or the risk that any actions required to be taken in order to receive regulatory approval may impact the expected benefits of the transaction; the risk that the businesses of Homesnap and CoStar may not be combined successfully or in a timely and cost-efficient manner; the risk that business disruption relating to the Homesnap acquisition may be greater than expected; the risk that the acquisition does not produce the expected benefits or results for CoStar, Homesnap or their customers and advertisers, including expanded and deeper collaboration with MLSs nationwide and as otherwise stated in this release; the risk that Homesnap revenues and revenue growth for 2020 will not be as stated in this press release; the risk that the combination and integration of Homesnap will disrupt CoStar Group's or Homesnap’s operations or result in the loss of customers or key employees; uncertainty surrounding the impact of the COVID-19 pandemic, including volatility in the international and U.S. economy, worker absenteeism or decreased productivity, quarantines or other travel or health-related restrictions; the length and severity of the COVID-19 pandemic; the pace of recovery following the COVID-19 pandemic; and government and private actions taken to control the spread of COVID-19. Additional factors that could cause results to differ materially from those anticipated in the forward-looking statements can be found in CoStar Group’s filings from time to time with the Securities and Exchange Commission, including in CoStar Group’s Annual Report on Form 10-K for the year ended December 31, 2019, and CoStar Group’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020, each of which is filed with the SEC, including in the “Risk Factors” section of those filings, as well as CoStar Group’s other filings with the SEC available at the SEC’s website (www.sec.gov). All forward-looking statements are based on information available to CoStar Group on the date hereof, and CoStar Group assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

ICON secures $35 million in a Series A led by Moderne Ventures

3D home-printing startup Icon raises $35M

August 20, 2020

Icon has secured $35 million in a Series A led by Moderne Ventures. Other backers in the round include Citi, Vulcan Capital and CAZ Investments. The Austin-based startup uses 3D printing technology to build houses and printed its first home in 2018. To date, it has raised $44 million in total funding.

Select Additional Investors

Ironspring, Next Coast Ventures, Oakhouse Partners, Wavemaker Partners