What is Taronga Ventures’ mission in the context of the real estate market and the green transition?
Taronga Ventures was established in 2015 and was designed to act as a bridge between the real asset sector and all of the emerging tech companies that were now targeting the sector. We would describe ourselves as a collaborative corporate venture fund backed by a pool of investors, that own significant portfolios of real estate across the globe. Our role is to help them navigate and select the right opportunities for their portfolios. As we began investing we saw incredible traction from asset owners and operators when we invested into emerging technology companies where there was some level of measurable ESG (environmental, social and governance) outcomes. Companies like CarbonCure, Spacecube, Allume Energy and Powerstack have a clear ESG impact and many of our investors have become long term customers. It was clear this was the right direction to steer our activity, even if large scale real asset owners tended to move at a slow pace.
Within this context, we created RealTechX – an innovation program through which we have supported 33 emerging tech companies with access to customers, mentorship and perhaps more importantly, investment worth circa $50 million in total. In our current ESG Impact Innovation Program, we have a further 12 companies that all have a direct and measurable ESG footprint. Our investment thesis is based on selecting best-in-class technology companies from across the world, and we have recently moved beyond environmental companies into areas such as cyber security, data management and ESG reporting where there is a lot of current demand. Our investors and partners are keen on supporting a diverse selection of ventures, but it is very important that real value is identified either through ESG Impact, financial saving or additional revenue.
Being indeed an industry moving at a slow pace, where have you noticed the highest appetite for novel technologies and sustainability in the global real estate space?
There are different pockets of strength in different markets. For example, Israel is extremely focused on construction technology and AI, and we have actually been tracking some worthy businesses there since 2016. In Australia there is an institutionalized real estate market, with 70% of assets being owned by foreign or listed capital, which has high ESG reporting standards. In the US, the key markets like California or New York are quite competitive but smaller markets are less open to ESG. We tend to look to Europe as the market leader – especially the Nordics, where many governments have a strong commitment to environmental issues and that is driving a huge change in the market. This creates a fertile ground for us to step in and partner with companies that need support to scale into this important subset of the market.
What would be some of the most interesting companies that are making waves at this moment?
Ampd Energy is a Hong Kong based energy company that has created a solution that replaces polluting and noisy diesel generators on construction sites with large-scale battery storage systems to provide cleaner, quieter and data-rich power. Thanks to its lower cost, this piece of tech is now being adopted in Singapore and Australia, showing how sustainability can easily find a way if it is cost competitive. In the social space, we are an investor in Allume Energy which developed a behind-the-meter energy distribution hardware that enables a single rooftop solar system to be shared across multi-tenanted assets such as social houses, multi-family and built-to-rent. CarbonCure, in which we co-invested together with Microsoft's and Amazon's clean tech funds, embeds CO2 into concrete during the cement production process to reduce the carbon footprint and actually creates a product that is stronger due to the chemical reaction that occurs as a part of the process. From a biodiversity standpoint, we are working with a bee company (Alvéole) from Canada, using urban beehives in commercial assets to track the the environment and engage occupants with community tours and asset branded honey - which is a creative way of starting a discussion about the importance of biodiversity.
What did you perceive as being the most prominent challenge that you had to deal with in the past few years?
Our greatest challenge lies in implementing these solutions into the real asset sector. We spend an incredible amount of time bringing our investors and partners on the journey, supporting each emerging technology company to navigate the corporate entity, by identifying technology that will improve their assets and supporting the integration of this across their portfolio. We try to mitigate this challenge by keeping the cost as neutral as possible or by presenting the immense long-term benefits and by investing into slightly later stage companies where the technology is tried and tested.
Redeveloping or repurposing existing assets is vital to transforming the sector, and can be a more cost effective and sustainable solution to new development.
The social component is more difficult to measure but there are some key areas (health safety, equity diversity and inclusion) that real asset owners and operators are willing to change. In many of our markets there is a dire need for the more efficient delivery of high-quality social housing and often a greater use of technology and modular construction will help to drive that change.
An issue that cannot be immediately addressed is the major weather events that are now having a dramatic influence on the market. In Australia there have been bushfires, floods and even a wild mice plague. Across Asia we have more floods and tropical storms. In Europe and Canada, we have seen intense heat and bushfires. These uncontrollable disruptions have led to Taronga Ventures having a greater focus on investments that lead to resilience and allow for our communities to quickly recover after natural disasters.
What would you like to achieve with priority in the next two to three years?
Our vision is to build a global ecosystem that continually supports emerging technology companies to scale, especially those that have a meaningful and measurable ESG outcome. So far we have invested more than $50M into these emerging technology companies through our RealTechX program. Over the next few years, we expect to broaden our partnerships and relationships in Europe and the US to allow us to support more earlier stage companies with an even greater level of investment.
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