At an investor conference last fall, Redwood Trust Inc. CEO Christopher Abate outlined the company’s strategy to expand its reach in existing markets while also seeking out strategic investments in new markets.
Those new investments include venture capital plays, particularly in the financial-technology arena. Abate described technology as being key to “building efficiencies” to accomplish the real estate investment trust’s goals. The Mill Valley, California-based REIT operates as a specialty finance house that invests in, acquires and securitizes residential loans.
Redwood is not backing away from its venture capital pursuits. RWT Horizons, the venture investment arm of Redwood Trust, announced that five new VC investments were finalized during the first quarter of this year.
RWT Horizons, according to the company’s announcement, “targets early and mid-stage companies that are transforming financial and real estate technology and that have the potential to enhance scale and efficiency of Redwood’s businesses.”
To date, RWT Horizons has made 21 investments in 18 companies. The Q1 2022 deals including the following:
- Dwellsy, an online home-rental platform featuring some 13 million listings. This is RWT’s second investment in the platform.
- FutureProof Technologies, which is an “insurtech” company that uses AI technology to measure climate and weather risk to project asset-level losses from hurricane wind and flood damage.
- LeaseLock, another insurtech platform that provides a low-cost solution for tenants to cover their security deposit without the upfront cash outlay.
- Oasis Pro Markets, a U.S.-regulated high-tech trading system that allows subscribers to trade securities digitally, via secure blockchain technology, and make payments in digital cash (such as stable coin, a type of crypto-currency). “The Oasis Pro platform can be used to potentially distribute both residential and business-purpose loans and securities, adding an incremental distribution channel for both of Redwood’s operating platforms,” RWT’s announcement of the deal states.
- Vesta Equity, another blockchain-enabled marketplace for tokenized home-equity investments. “As home equity continues to grow to record levels, Vesta Equity provides a solution to unlocking home equity by connecting homeowners to investors and ultimately enabling homeowners to sell a portion of their home while retaining their residency,” RWT’s said in the statement announcing the deal.
The amount of the investments was not revealed. The Vesta Equity and Dwellsy investments were made in partnership with Frontiers Capital.
RWT Horizons in early September 2021 inked an investment-partnership deal with Silicon Valley-based Frontiers Capital — which is focused on investing in companies developing leading-edge technologies in areas such as artificial intelligence, quantum computing and blockchain.
Minneapolis-based investment bank and financial-services firm Piper Sandler revealed in a report issued last fall, soon after the Redwood investor conference, that the REIT planned to quadruple capital allocated to its venture capital segment to $100 million by the end of 2022. The analyst report also indicated that Redwood is willing to commit up to 10% of the REIT’s total capital to this venture capital strategy.
“During the first quarter of 2022, RWT Horizons made several exciting new investments to complement our existing portfolio,” said Ryan McBride, chief investment officer of RWT Horizons. “These innovative companies have a direct strategic nexus to Redwood’s operating businesses and also align with Redwood’s corporate mission of supporting housing accessibility.”