The dichotomy between innovation in the US and Europe is no small irony.
In the UK, venture capitalists gripe over valuations and never compete to fund the future. It’s a major reason why the next Facebook or Google won’t come from the UK: the funding isn’t here.
Insufficient funding has a knock-on effect in that the best, most talented people gravitate to where they are treated best.
Those who believe in ripping up and replacing with new and better don’t thrive in the UK.
In the US, they’re celebrated and backed with large amounts of cash. And on the off-chance someone else built something better, they are given the resources to just go and acquire the competition.
Back when Airbnb was a start-up with no presence in the UK, we had our own in the form of Stephen Rapoport’s Crashpadder. Airbnb saw the goodwill Rapoport had built up and decided the best way to enter the UK market would be to acquire our best attempt at the new business model.
Imagine if venture capitalists in the UK had backed Rapoport. It could have ended in tears, but at least they would have taken part in one of the greatest industry changes we’re ever going to witness.
The very concept of having strangers in your home just for a few days was terrifying at best.
What else in the property industry terrifies people today that technology, ingenuity and a lot of money couldn’t solve?
Well, Jared Kushner (married to Donald Trump’s daughter Ivanka, and senior adviser to Trump himself) and his brother Joshua are asking the very same question.
Except in their case, they back up those words with hundreds of millions of dollars in the form of their venture capital business, Thrive Capital.
They’re a quiet pair – you won’t find them giving interviews online – but here’s an excerpt from the single post on the Thrive Capital blog:
“Our reach is broad, but our goal is focused: to build or invest in what we believe to be the most transformative businesses of the next decades. To achieve this, we are focused on opportunities rather than a prescribed investment stage, sector or geography.”
The geography point is important as they came and took a large stake in British mobile bank Monzo – which incidentally just had their full banking licence come through. The amount they put in was £19.5m.
Who in the UK would have been so bold?
But it doesn’t stop there, with the brothers having started their own version of the UK’s Property Partner (where people can crowd-fund the purchases of individual properties).
Called Cadre, the site is invite-only and has ambitions to transform the way real estate investing is accessed.
In typical Kushner style there are no other publicly available details – I have access to the platform but believe that access would be revoked if I were to divulge what I can see there.
Cadre isn’t just an investment for the Kushners, but is a company they co-founded.
This role as entrepreneurs has helped them get a place at the table of all the big US proptech start-ups, without exception: Compass, VTS and Hightower (yes, they invested in both – the companies subsequently merged) and Opendoor.
Just to be clear: Compass is the fastest growing residential brokerage in the US, Opendoor is the biggest proptech start-up in the world and VTS is widely recognised as the winner when it comes to commercial real estate software.
Each of these companies is likely – eventually – to be bigger than both Rightmove and Zoopla.
The Kushner wealth comes from real estate in the north-east US, controlled via their headquarters in New York.
However, their bets on venture capital have so far proven even more successful: Thrive Capital was part of a $50m investment in Instagram mere days before Facebook acquired the photo app for $1bn.
They doubled their money in a week.
The biggest win to date is Oscar Health, which Joshua Kushner co-founded and named after his great-grandfather: a Forbes article recently valued the Kushner stake in Oscar Health at $240m.
If you’re groaning at this, thinking US company valuations are inflated, consider this from Oscar Health co-founder and CEO Mario Schlosser: “The U.S. healthcare market alone is worth $3tn every year. That’s higher than Germany, the UK and Switzerland.”
He’s not talking about our healthcare – he’s saying US healthcare as an industry is bigger than our combined GDP.
The same can’t be said about real estate: we aren’t as big, but we’re still seen a world centre for all things real estate.
With some ingenuity and capital, the tech we build here has a ready-made customer segment that is both large and forward thinking.
If we don’t back our own companies, I can think of at least one US family who will swoop in to back the best proptech.
Here’s a rare video interview with a then 26-year-old Joshua Kushner – the one not married to a Trump – talking about investing as a venture capitalist: