JLL Spark managing partner Raj Singh describes corporate venture as “an unnatural act.”
The corporate venture fund of global property manager JLL, JLL Spark focuses on strategic proptech investments. Its parent company manages a total of about 9.2 billion square feet in commercial properties for schools, universities and government agencies across the world, but it doesn’t own any itself, except through an affiliated real estate investment trust called LaSalle.
The push-pull dynamic between a corporate VC fund and its typically more conservative parent company is familiar to Singh, who was previously the interim co-head and managing director of investments at JetBlue’s corporate VC fund, JetBlue Technology Ventures.
Although colleagues in the corporate organization aren’t trying to stop him from investing in unproven start-ups, they don’t necessarily understand what he’s up to, he says. That’s particularly true when it comes to start-ups whose business models are adjacent to real estate rather than entirely focused on it.
“You’ve got to be able to explain why you’re [investing] and why you’re different from everybody else [in the company],” he tells Venture Capital Journal. “Gosh knows how many divisions there are within JLL. My little division does things quite differently. And if you try to make me look like the rest of the company, then you’ve defeated the purpose of me trying to be innovative and help you move to the future.”
The companies that its VC arm invests in can nudge JLL toward the future in multiple ways. They could be a vendor to JLL, developing a piece of software or hardware that helps the company become more effective. Next, their product or service might be helpful to JLL’s clients. Or a product developed by a start-up may be able to expand JLL’s total addressable market by providing an adjacent service that clients need. Lastly, the start-up may be developing something capable of disrupting a service that JLL already provides.
All four investment rationales are designed in part to drive more revenue to portfolio companies, which Singh’s team is happy to introduce to JLL clients. Some of that revenue reverts to the fund if a commission or reseller agreement has been arranged for the portfolio company, says Singh.
“We typically invest in the Series A,” with checks between $1 million and $5 million, he adds. “Most start-ups are doing half a million to $2 million of [annual] revenue. So, if we offer to find you $3 million of revenue over the next two years, you’re going to be interested. That’s our secret sauce.”
Helping founders with sales
There are two reasons that a great start-up that might be able to secure backing from a leading venture firm like Sequoia would accept capital from JLL Spark. “One, we’re really good to work with. Second, I can bring you revenue because I have almost 120 people worldwide who can potentially be your outsource sales in front of your clients,” says Singh.
For start-ups in the third category that provide a service adjacent to corporate real estate, JLL might arrange something like insurance to its clients for a better rate, in addition to managing their buildings. “Your reaction might be, ‘I’m good with insurance,’ or you might say you’re interested to explore that,” he says. “But hopefully you won’t have the reaction, ‘Why is JLL asking me about this?’”
JLL Spark’s portfolio includes Sertis, which provides property, casualty and burglary insurance for multifamily buildings. In addition to working with multifamily property owners, JLL owns LaSalle, a REIT that owns multifamily buildings, whose owners are prospective customers for Sertis. The company may expand its services to commercial buildings in the future, Singh notes.
One of the fund’s more counterintuitive bets is Aunt Flow, a producer of feminine hygiene products, which are made from organic cotton and are biodegradable, making tampons and pads accessible at no charge through wall-mounted dispensers to building owners’ employees, students and guests.
Several states in the US now require property owners to treat men and women equally, including by offering free feminine hygiene products, says Singh. JLL Spark participated in Aunt Flow’s $8.5 million Series A round in early 2022.
While it was “a very contentious investment” that generated much debate on the investment committee, the founder ultimately charmed everyone and the company is doing quite well, says Singh.
Where the fund invests chiefly to get ahead of potential disruption to services that JLL already provides, “we don’t necessarily expect revenue in that case, at least not initially,” Singh explains. “But we’re interested [in whether] that business model will be one that dominates in the future. Is the product that this start-up has going to eat our lunch?”
An example is Lev, whose debt financing platform uses machine learning and AI to identify the best financing options and lenders for companies’ property transactions. JLL Spark invested in the $70 million equity portion of Lev’s $170 million Series B round, a combination of debt and equity, in May 2022.
“JLL has a big business doing that already, so one thing we’re trying to see is how [Lev’s] model works, because their model is much more automated than ours. [We want to] work out whether we can get our clients to use them or not,” says Singh. “We’d be able to save money, be able to do it more quickly, more equitably.”
While investments like that don’t always work out, “learning what doesn’t work is almost as valuable as learning what does,” Singh notes.
Scope 3 emissions
Property managers are increasingly accountable for their clients’ carbon footprints, which requires reporting their Scope 3 emissions to regulatory authorities. JLL has several science-based sustainability targets that it aims to reach between 2030 and 2050, with Scope 3 emissions accounting for more than 90 percent of its total emissions target. “It’s in our interest to help our clients be more sustainable,” says Singh.
To supplement the work of JLL’s internal sustainability group, which does consulting, runs projects and helps find the best products for clients, JLL Spark backs start-ups that are either focused on sustainability or whose work can have a relevant impact on it.
Reducing clients’ energy usage is a straightforward way to help them become sustainable. JLL Spark bought a company called Hank that is now part of the parent company, which uses AI to manage buildings’ HVAC systems. Hank provides smart logic to help recirculate air so that buildings maintain equalized temperatures throughout.
“We find that landlords are on board with this sort of stuff because it saves them money,” Singh says.
Portfolio company Arbnco has developed an easy method to get energy consumption data from buildings, a pain point historically for property managers, he notes. In addition to providing energy insights and benchmarks for owners and tenants, Arbnco offers retrofit recommendations to make buildings more efficient. The company is active in the UK with many of the largest commercial real estate asset managers, banks and utilities as its clients.
JLL Spark has also invested in Shared Studios, which recently branded as Noro, whose novel video conferencing “portal” occupies an entire wall in a conference room, connects people between offices and aims to enhance team collaboration. Besides enabling geographically distributed workforces to work together more closely, Noro reduces travel and travel-induced CO2 emissions by eliminating cross-country or cross-continent round trips for one meeting and generates cost savings that are part of the service’s ROI, says Singh.
Arbnco raised an undisclosed amount of capital from JLL Spark last August, while Noro raised $3 million in seed funding from JLL Spark and another investor in January 2023.
Out there
Another industry-adjacent category that JLL Spark invests in is robotics, which can help with building maintenance and repairs. That’s probably “at the edge of where my colleagues [in facilities management] are thinking they might be interested,” says Singh. It’s become increasingly “difficult to find people to work in buildings, and also in the typical technology fashion. If you always have to hire a person every time you grow, you don’t scale in the way you might like to.”
The cost of robots has dropped substantially in recent years to the point where achieving a return on investment is possible in less than a year of deploying a couple of them, he notes. Rather than high-tech robots, Singh says most buildings need simple ones on wheels, with an arm that can push an elevator button, a camera that can photograph hallway conditions and equipment dials that can be sent to a management office to determine if servicing is required.
While JLL Spark has yet to invest in a robotics developer, it is evaluating one now.
JLL Spark managing partner Raj Singh describes corporate venture as “an unnatural act.”
The corporate venture fund of global property manager JLL, JLL Spark focuses on strategic proptech investments. Its parent company manages a total of about 9.2 billion square feet in commercial properties for schools, universities and government agencies across the world, but it doesn’t own any itself, except through an affiliated real estate investment trust called LaSalle.
The push-pull dynamic between a corporate VC fund and its typically more conservative parent company is familiar to Singh, who was previously the interim co-head and managing director of investments at JetBlue’s corporate VC fund, JetBlue Technology Ventures.
Although colleagues in the corporate organization aren’t trying to stop him from investing in unproven start-ups, they don’t necessarily understand what he’s up to, he says. That’s particularly true when it comes to start-ups whose business models are adjacent to real estate rather than entirely focused on it.
“You’ve got to be able to explain why you’re [investing] and why you’re different from everybody else [in the company],” he tells Venture Capital Journal. “Gosh knows how many divisions there are within JLL. My little division does things quite differently. And if you try to make me look like the rest of the company, then you’ve defeated the purpose of me trying to be innovative and help you move to the future.”
The companies that its VC arm invests in can nudge JLL toward the future in multiple ways. They could be a vendor to JLL, developing a piece of software or hardware that helps the company become more effective. Next, their product or service might be helpful to JLL’s clients. Or a product developed by a start-up may be able to expand JLL’s total addressable market by providing an adjacent service that clients need. Lastly, the start-up may be developing something capable of disrupting a service that JLL already provides.
All four investment rationales are designed in part to drive more revenue to portfolio companies, which Singh’s team is happy to introduce to JLL clients. Some of that revenue reverts to the fund if a commission or reseller agreement has been arranged for the portfolio company, says Singh.
“We typically invest in the Series A,” with checks between $1 million and $5 million, he adds. “Most start-ups are doing half a million to $2 million of [annual] revenue. So, if we offer to find you $3 million of revenue over the next two years, you’re going to be interested. That’s our secret sauce.”
Helping founders with sales
There are two reasons that a great start-up that might be able to secure backing from a leading venture firm like Sequoia would accept capital from JLL Spark. “One, we’re really good to work with. Second, I can bring you revenue because I have almost 120 people worldwide who can potentially be your outsource sales in front of your clients,” says Singh.
For start-ups in the third category that provide a service adjacent to corporate real estate, JLL might arrange something like insurance to its clients for a better rate, in addition to managing their buildings. “Your reaction might be, ‘I’m good with insurance,’ or you might say you’re interested to explore that,” he says. “But hopefully you won’t have the reaction, ‘Why is JLL asking me about this?’”
JLL Spark’s portfolio includes Sertis, which provides property, casualty and burglary insurance for multifamily buildings. In addition to working with multifamily property owners, JLL owns LaSalle, a REIT that owns multifamily buildings, whose owners are prospective customers for Sertis. The company may expand its services to commercial buildings in the future, Singh notes.
One of the fund’s more counterintuitive bets is Aunt Flow, a producer of feminine hygiene products, which are made from organic cotton and are biodegradable, making tampons and pads accessible at no charge through wall-mounted dispensers to building owners’ employees, students and guests.
Several states in the US now require property owners to treat men and women equally, including by offering free feminine hygiene products, says Singh. JLL Spark participated in Aunt Flow’s $8.5 million Series A round in early 2022.
While it was “a very contentious investment” that generated much debate on the investment committee, the founder ultimately charmed everyone and the company is doing quite well, says Singh.
Where the fund invests chiefly to get ahead of potential disruption to services that JLL already provides, “we don’t necessarily expect revenue in that case, at least not initially,” Singh explains. “But we’re interested [in whether] that business model will be one that dominates in the future. Is the product that this start-up has going to eat our lunch?”
An example is Lev, whose debt financing platform uses machine learning and AI to identify the best financing options and lenders for companies’ property transactions. JLL Spark invested in the $70 million equity portion of Lev’s $170 million Series B round, a combination of debt and equity, in May 2022.
“JLL has a big business doing that already, so one thing we’re trying to see is how [Lev’s] model works, because their model is much more automated than ours. [We want to] work out whether we can get our clients to use them or not,” says Singh. “We’d be able to save money, be able to do it more quickly, more equitably.”
While investments like that don’t always work out, “learning what doesn’t work is almost as valuable as learning what does,” Singh notes.
Scope 3 emissions
Property managers are increasingly accountable for their clients’ carbon footprints, which requires reporting their Scope 3 emissions to regulatory authorities. JLL has several science-based sustainability targets that it aims to reach between 2030 and 2050, with Scope 3 emissions accounting for more than 90 percent of its total emissions target. “It’s in our interest to help our clients be more sustainable,” says Singh.
To supplement the work of JLL’s internal sustainability group, which does consulting, runs projects and helps find the best products for clients, JLL Spark backs start-ups that are either focused on sustainability or whose work can have a relevant impact on it.
Reducing clients’ energy usage is a straightforward way to help them become sustainable. JLL Spark bought a company called Hank that is now part of the parent company, which uses AI to manage buildings’ HVAC systems. Hank provides smart logic to help recirculate air so that buildings maintain equalized temperatures throughout.
“We find that landlords are on board with this sort of stuff because it saves them money,” Singh says.
Portfolio company Arbnco has developed an easy method to get energy consumption data from buildings, a pain point historically for property managers, he notes. In addition to providing energy insights and benchmarks for owners and tenants, Arbnco offers retrofit recommendations to make buildings more efficient. The company is active in the UK with many of the largest commercial real estate asset managers, banks and utilities as its clients.
JLL Spark has also invested in Shared Studios, which recently branded as Noro, whose novel video conferencing “portal” occupies an entire wall in a conference room, connects people between offices and aims to enhance team collaboration. Besides enabling geographically distributed workforces to work together more closely, Noro reduces travel and travel-induced CO2 emissions by eliminating cross-country or cross-continent round trips for one meeting and generates cost savings that are part of the service’s ROI, says Singh.
Arbnco raised an undisclosed amount of capital from JLL Spark last August, while Noro raised $3 million in seed funding from JLL Spark and another investor in January 2023.
Out there
Another industry-adjacent category that JLL Spark invests in is robotics, which can help with building maintenance and repairs. That’s probably “at the edge of where my colleagues [in facilities management] are thinking they might be interested,” says Singh. It’s become increasingly “difficult to find people to work in buildings, and also in the typical technology fashion. If you always have to hire a person every time you grow, you don’t scale in the way you might like to.”
The cost of robots has dropped substantially in recent years to the point where achieving a return on investment is possible in less than a year of deploying a couple of them, he notes. Rather than high-tech robots, Singh says most buildings need simple ones on wheels, with an arm that can push an elevator button, a camera that can photograph hallway conditions and equipment dials that can be sent to a management office to determine if servicing is required.
While JLL Spark has yet to invest in a robotics developer, it is evaluating one now.
