Investor Series #2 ft. Luke Graham: "These are the times when the best startups are founded and funded"

In the second episode of the PropTech Talks Investor Series, I spoke with Luke Graham . Luke is the Head of Research at Pi Labs , the first-ever VC to target early-stage strategic investments in the built environment in Europe and currently the most active VC in the PropTech space.

Luke’s relationship with the built environment started “as quite a romantic one”. Luke first invested in property while focussing on the field of engineering in the Australian military. After pursuing further education in the built environment, Luke shifted his professional journey to the investment field and ended up starting his journey as an entrepreneur with First Link Property and he became increasingly inclined towards innovation and change. After exiting his start-up and moving to the UK for his Sa?d Business School, University of Oxford MBA, Luke was onboarded by the university’s Future of Real Estate Initiative and later joined Pi Labs as their Head of Research.

In this interview, Luke shared invaluable insights into the hidden opportunities of economic shakedows for venture, the startups that will succeed as the industry matures, leveraging research and industry connections to effectively drive innovation, future-proofing buildings beyond 2050, and much more.

Special mentions in this interview: HqO , Hugo Concei??o Silva , Wouter Merkestein , laiout , Bright Spaces , 仲量联行 , Dr. Tony Hayek .

You can access the full interview through the link below:

https://proptechtalks.buzzsprout.com/share

Interview Highlights

Matthew: How would you say the culture of working on your own business differs from being part of Pi Labs?

Luke: "The criticism that's often levelled towards VCs broadly is when there isn't much entrepreneurial experience within those firms. What I’ve found through my own entrepreneurial experience is that our startup founders are not just dealing with their fundraise, but also with other challenges such as personal development and needing to be a semi guru in marketing at the beginning of the business. My personal experience has helped me get a useful gauge of how these challenges uniquely affect each entrepreneur, and empathy is always useful in business. You need to understand the other side of the table."

Matthew: Tell us about your role as the Head of Research at Pi Labs.

Luke: "It's an unusual job title, only now becoming a little bit more common in venture. You've got to take your hat off to the people that hired me at Pi Labs and those who were doing this role before me, because Pi Labs was a very early mover when it came to having this function within the organisation. Essentially, the role of the research department is to work in tandem with all the other functions within our business to add a layer of strategy. You'll regularly hear that less strategic VCs take a shotgun approach, where they make a hundred investments out of their fund and just hope and pray that five perform well. A monkey could do that job. But that's not very useful to strategic investors in the real estate sector who want more value than solely a financial return on their investment. So the role of the research function is to add that strategic layer between the investors, the real estate firms, and the innovators developing these technologies."

Matthew: What are you seeing deployment-wise and how is Pi Labs reacting to the slowing investment market?

Luke: "Some of the best startups are founded and funded during these periods of time for multiple reasons. Number one, as you've kind of pointed out already, the terms tend to be more realistic. VCs aren’t throwing money at anyone who's got some crazy idea, so the heat is taken out of that speculative style of investment and there's a bit more frugality, meaning that investment returns are more favourable into the future.

You've also got this factor of, through no fault of their own, a lot of very talented people end up out of their jobs. They have to choose between competing with thousands of others for the one job in their space, or using this as an opportunity to create something on their own. Obviously, it's not too pleasant if it's coming from a place of difficulty, but something that we find quite positive and what may buck the trend of the perceptions of the market."

Matthew: Which companies are going to make it? Are we going to start seeing a lot of companies disappear?

Luke: "Something that we've spoken about internally and with our stakeholders is the concept of the maturation of PropTech. I think it's safe to say that the proliferation of PropTech point solutions, so solutions looking at targeting a specific problem, is quite significant over the last few years.?

Now, there's a good thing around that, which is that specialised products naturally are able to hyper focus in one area and solve that problem well. The downside is that we are hearing repeatedly from innovation managers at real estate firms that they can't have another tab open in their web browser. And so, we're seeing this transition where there are increasing numbers of examples of geographic-oriented M&A, for example. There are also real estate firms wanting to bring some of that knowledge in house, and doing strategic acquisitions in those ways. You've also got vertical integrations, where you end up having a more holistic platform.

You see this all the time in innovation waves, so what we expect to see in the coming years is that some firms that don't really speak to a significant pain point in the sector will fall over."

Matthew: What are your future plans?

Luke: "As an early stage venture capitalist, you're at the frontier of innovation, and you see things when they first emerge, when the technology is first being developed. With the maturation of the sector, moving with that is going to be quite important for Pi Labs. Something that's been really exciting for us has been the data and the relationships that we've been able to make use of. This puts us in an unique position in the market, where we are sitting between different players and have useful data which can be deployed strategically for firms, so that we can be a key part of this transition in the sector.?

Personally, having studied quite a few different academic disciplines and therefore knowing the psychological and the civil benefits of biodiversity, I think that's going to be a really interesting one to see how tech can facilitate biodiversity in the built environment. Also, everyone's talking about pre-2050 and there are many topics that need to be addressed here as immediate concerns. But something that's going to be important for the built environment and that us at Pi Labs will have to address, is what needs to be done to address concerns beyond 2050. How can a lot more adaptability be built into every piece of real estate that we're building and retrofitting? There are massive demographic transformations ahead that I don’t think the built environment is prepared for."

It was a pleasure interviewing Luke and learning about his personal journey to date. Stay tuned for the upcoming Investor and Founder Series interviews, as well as for the launch of the Executive Series!

You can access the Pi Labs research reports mentioned in the podcast through the link below:

https://pilabs.vc/insights