Moderne Ventures, the newest fund in the NVNG portfolio, shares our belief in the power of building and fostering strong networks to ensure venture success. We had the opportunity to talk with Moderne partner, Liza Benson, recently about venture, real estate, the Midwest and what Matthew McConaughey and Lululemon have in common.
Q: Tell us a bit about Moderne.
LB: Moderne Ventures is a strategic venture capital and growth equity firm Investing in technology companies in and around real estate, finance, insurance, and sustainability – multi-trillion-dollar industries ripe for innovation and disruption. The Fund takes a generalist approach to vertical investing, focusing on companies that pertain both to these verticals and that can also expand beyond these industries to capture larger markets and top-tier venture returns.
What differentiates us is that a many of our limited partners are actually native to the real estate industry. They’re large multifamily owners, brokerages, or private equity investors and all these people are looking to not only invest in a venture fund but to bring innovation into their own organizations.
We like technology companies that we call “outside in,” which means bringing technologies from outside the real estate industry into the real estate industry. We like these companies because they have multi-vertical applications so, not just real estate applications but applications in other industries as well. This gives them protection against the cyclicality of real estate while also giving them the ability to have a larger addressable market.
An example of that is a company in our portfolio called Proof. Proof offers e-notary services which is obviously very important for the real estate vertical for title and other things, but also really important for automotive and financial services. So, we love an innovative company like Proof that can innovate in real estate while serving all those other verticals.
The predecessor fund was founded by my partner, Constance Freedman, in 2015, but the strategy was born in 2008. Constance had a fund at the National Association of Realtors, and when she originally formed that fund, it was, needless to say, a very difficult time in real estate. A lot of the thesis for Moderne comes out of that recessionary mindset. We always look at investments from the perspective of “what’s the recessionary risk?” and that’s why we like to focus on companies that have multi-vertical applications.
That 2008 fund did almost 20X cash on cash, and after that Constance left and formed Moderne. I came on in 2018 after a 20-year career at other venture firms. In 2018 we had about $40 million under management, and today we have almost $500 million.
Q: What makes NVNG and Moderne a good fit?
LB: The team at NVNG is super thoughtful and detailed in their in their diligence. They really dug into our strategy which is not as simple as some on the surface. We really appreciated the fact that they understood that we’re not like the other top tech funds out there. We’re very differentiated in how we view the world, and we appreciate partners like NVNG that will be thoughtful about our strategy and take the time to understand it.
We’re also aligned in our approach to the idea of the power of networks. With NVNG’s +Venture North conference, I think they’re trying to harness the power of network within their LP base, within their group of GPs that they invest in, and we appreciate what they’re doing. I think there is a huge power in connecting all these parties throughout the Midwest and beyond and we’ve really appreciated that.
Moderne is unique in the fact that we have a business development team called Passport which has five full-time people whose job it is to take our companies and help them get as much out of our LPs and network as possible from a customer and pipeline perspective. So, we’re very involved on an operational level with our portfolio companies.
We’re excited for the partnership together and all the network effects that we’re going to get from the partnership.
Q: What trends are you seeing in venture right now?
LB: It’s hard not to mention artificial intelligence and robotics as hot trends that everyone will see in the news. At Moderne, we view them from the perspective of “how can we apply them to real estate?” – which is not something that’s completely obvious. What we’re trying to do is bring the best-in-class technologies into somewhat of an anachronistic industry.
One example is a recent investment for us, called Qloo. They’re working on something really interesting called “Cultural AI” which makes correlations between different cultural tastes. For example, if you like Lululemon, you probably like Blue Bottle Coffee and Matthew McConaughey. Qloo layers locations onto those cultural tastes and a lot of our real estate partners are now using that to figure out which retailers should go into their storefronts. We’re bringing something that’s generally used by companies like American Express and Netflix to do correlations on taste into the real estate industry.
Q: What’s your take on the Midwest venture ecosystem?
LB: The Midwest venture ecosystem system is still emerging and that’s a good thing. It’s definitely producing a lot of companies; the cost of operating is lower, and the valuations are lower. The number of deals is much lower than the coasts and Texas but we’re always looking for things in the Midwest because we do see value there.
Q: What gets you most excited about what you do every day?
LB: It’s such an exciting job to be involved with all these different founders across our portfolio companies and we pride ourselves on being a true value-added partner with the ability to be impactful for our investments.
