Started out his journey like any other but learnt at every step of the way the importance of technology in the real-estate industry. Kunal Lunawat built his own empire, the venture fund, Agya Ventures by investing in what he believes to be the next big thing, proptech! Read the interview below to get to know Kunal’s journey and his insights.
Q.1 Tell us about your journey to co-founding Agya Ventures.
A.1. Agya in its current form was not a dream I had at the outset of my career. Through a series of experiences and learning, we as a team have shaped Agya to where it is today.
I grew up in India and was influenced by my father who is a first time entrepreneur and started his own real estate and construction business. Post high school, I came to college in the United States and was exposed to investment banking and private equity for the first time during my time at Yale College. After a summer at Morgan Stanley’s real estate investment banking team in New York, I joined Blackstone’s real estate private equity group, in what was an exciting time for the desk.
Subsequent to my time at Blackstone, I went to Harvard for my MBA and worked a couple of semesters at early stage technology companies, picking up valuable learnings on how things are run at venture backed startups. It also made me realize my gaps in knowledge that many business school candidates face – how does one syncretically build an institution where engineers, product managers and large enterprises understand each other, while speaking fundamentally different languages?
Guided by that, I decided to immerse myself in something I thought I’d never do, in an industry I had little background in – building product and tech for a large German reinsurance carrier, as they were looking to build their internal innovations team. It was an amazing learning experience and showed me first hand the advantages and challenges faced by legacy institutions in truly embracing technology: the resources were brilliant but the sense of inertia was real. It also taught me something else: how startups leverage this same sense of large enterprise inertia to win, bringing energy, hustle and resourcefulness to the table, in a manner that fundamentally advances society.
After a year of travel, exploration and angel investing in a few real estate technology companies, I was connected to a large Japanese real estate developer that was looking to better understand technology trends in the United States. We hit it off, and I started consulting for them, conducting tech audits across their portfolio, authoring research and making specific recommendations on where they could embrace tech to induce operational efficiencies.
Soon, I started getting more inbounds from Japan, and at that point, it was time to give Agya more tangible shape. After a few months of back and forth, I convinced my now co-founder, Nobu, who grew up in Tokyo, to leave his hedge fund job, and join the team, and together we started growing this consulting business of ours. We went after real estate developers, general contractors, home builders, mortgage firms, property managers and real estate brokers in Tokyo and Osaka with the same value proposition – we truly wanted to understand their portfolio requirements, and give them specific inputs on technology trends and accretive partnership opportunities with venture-backed startups in the United States.
We continued to build trust and reputation as a young firm among the Japanese, and in 2020, we went back to a few of them, with an intent to launch an early stage technology fund. Some of the leading institutions in Japan – Mitsubishi Estate, Tokyu Fudosan, Obayashi Corporation and Hitachi Solutions came on board as limited partners, and we made our first close in the beginning of 2021.
As things stand today, we are actively investing in early stage technology companies, focused on real estate and construction, and love working closely with founders of our portfolio companies, opening pathways for expansion, initially across the US, and over time helping them think about growing in Asia. We are a lean team, focused on research, driving value for our limited partners, and doing the best by our founders, in what we consider is a closely knit family.
Q.2. Can you tell us more about Agya Ventures and how it helps founders differently as compared to others?
A.2. As real estate technology investors, our sector focus and LP base sets us apart in some distinct ways:
- We create pathways for our founders to scale their companies across the US, and more pertinently tap into Asia, when they are ready
- We recognize the limitations of venture capital and oftentimes help our founders consider alternative sources of debt and equity capital for the more asset heavy parts of the business, such as leases, home sales and tenant improvements
- We understand what it takes to sell to large enterprises – while making one off introductions is good, we help founders through the sales process. Our constant dialogue with industry – real estate developers, funds, general contractors, consultants, government experts – both in the US and Japan allows us to further contextualize market appetite, and share more distilled learnings with our portfolio companies
- We combine both research and resourcefulness in working with founders – to this point, we have authored more than 1,000 pages of research on real estate and construction technology trends, and leverage these learnings to work with our founders
- We take what we do seriously but don’t take ourselves too seriously. Founders like this perspective and want to work with us.
Q.3. What trends in proptech incumbents should be aware of?
A.3. We believe the ongoing pandemic will change our understanding and interaction with the built world in deep ways. Starting with how we think about work and office, to our notions of engaging with hotels for recreation, and community as a centerpiece for residential rentals, there’s been a change in consumer and societal expectations which is here to stay.
For landlords, property managers and investors in real estate, listening to these changes and taking unequivocal steps to reposition their assets, making them more in-line with post-COVID behavioral patterns will be critical.
In this, we see technology playing a huge role. Specifically, across the asset classes, here are 4 themes we are excited about and exploring keenly:
- The future of work will be hybrid: We envision a growing number of companies switching from completely remote to hybrid work models where employees come into HQ for 2-3 days / week. This will, and already has, presented unique challenges as it relates to collaboration, employee morale, logistics and determining the right office format. Landlords, which are proactive in providing bundled real estate and technology solutions to manage hybrid workplaces will evince more interest from tenants.
- Alt-hospitality will continue to grow: Recreation in the midst of nature, backed by notions of sustainability and freedom, gained particular tailwinds last year – millennials resorted to glamping, tenting and RV renting, as startups offering these services witnessed strong tailwinds. We believe these ‘alternative hospitality and recreational’ trends are here to stay, and incumbents would be well served in identifying how it affects the more conventional urban travel market.
- Warehouses will look for greater operational efficiencies: The growth of ecommerce and D2C brands has ensured continued demand for warehousing space, with occupancy levels already at record highs. However, with consumers expecting faster delivery times and a changing tenant profile, the logistics industry will increasingly need technology to streamline their operations, provide flexible solutions and navigate greater complexity on a day to day basis.
- Community for residential rentals: As the current pandemic paves the way for a looming mental healthcare crisis, we believe the community will gain more importance in the residential rental space. Property managers that create a more vibrant residential ecosystem, using technology where appropriate for events, services and amenities, will witness higher tenant retention, moving forward.
Q.4. What non-intuitive advice would you give proptech founders?
A.4. I’d recommend building gratitude in the DNA of the company. Brad Feld speaks about this in his book The Entrepreneur’s Weekly Nietzsche, and it’s something I have thought about and agree with.
As a young founder, we are all trying to get things moving fast, breaking stuff along the way, but hopefully getting the more important things right. In such an environment, it is easy to ignore the initial building blocks of culture because quite frankly it is one less thing to worry about.
One way to overcome this is by practicing gratitude towards your teammates. Turns out that it is not only a powerful culture building exercise but gratitude also paves the way for vulnerability. And a vulnerable team, open to discussing challenges – both personal and professional – is more closely knit, transparent and mission aligned.