Toronto-based real estate venture builder R-Labs has raised another $3.5 million CAD for its evergreen fund to co-create more startups alongside industry players.
This funding was provided by new investor Hatch, which joins R-Labs as a limited partner (LP) and an ecosystem partner, and existing LPs across Canada’s real estate sector, including Oxford Properties, Dorsay Development, and LandSure Systems.
In an interview with BetaKit, R-Labs founder and CEO George Carras said this capital will help the firm launch new startups tackling pressing challenges in areas of housing like affordability, climate resiliency, and sustainability using technology.
“We’re in an environment here where the traditional business models are not functioning.”
“These are big problems, and we’re in an environment here where the traditional business models are not functioning,” Carras said, citing the pre-sale condominium market, which helped provide affordable home supply for over a decade, as just one approach that has proven less viable amid current macroeconomic conditions.
“What do we do about that?” Carras asked. “We either wait for the environment to come back, [we] blame people, or [we] innovate. This is great evidence of a community of innovators in Canada that are coming together in this Canadian crisis-tunity moment,” he said, making a portmanteau of the words crisis and opportunity.
Founded in 2018, R-Labs partners with founders and corporations to build and back new companies with tech-enabled business models targeting specific issues in real estate. Carras said the firm aims to take some of the risk out of this process by forming these startups with the aid of experienced entrepreneurs and established real estate industry players.
“When you bring multiple corporations [to bear], each with unique capabilities, corporate innovation becomes industry innovation,” Carras said.
He expressed excitement about Hatch’s involvement. “It expands the capabilities of the lab to add in this very important engineering innovation dimension,” he said.
Including this capital infusion, R-Labs has now raised a total of $28 million from a group that includes Co-operators, Empire, the Ontario Municipal Employees’ Retirement System (OMERS), and Rennie.
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R-Labs has so far co-created 43 “ventures”—which Carras called “basically companies that are missing a few bits”—and five startups. This second group includes mass timber construction firm Assembly, property flood-risk assessment platform Noah Intelligence, and real estate industry operating system RIOS. According to Carras, startups created by R-Labs have gone on to raise a total of $27 million collectively from R-Labs LPs and other sources.
Carras argued that over the past seven years, R-Labs has brought together Canada’s real estate industry, which he described as “somewhat siloed.” He said he believes the firm has found the “right structure” and the “right partners” to make a difference in this space.
Going forward, Carras argued that as Canada looks to solve issues pertaining to housing affordability, supply, and climate impact, the country needs to focus on the industrialization of housing—meaning factory-built or off-site housing construction, which can be a more affordable and faster way of building homes. Carras noted that prefabricated and modular housing, for instance, can reduce construction times, costs, and emissions compared to traditional construction methods.
Last month, R-Labs announced the second cohort of its eight-week REALFounders program, which it launched earlier this year to help exited founders build companies or refine existing startup ideas related to real estate and housing. Applications to join are due July 16.
Feature image courtesy R-Labs.