The Future of the OpCo-PropCo Model
The Future of the OpCo-PropCo Model
We spoke to top real estate technology investors about the PropCo structure, including how and where they might deploy it in future deals
Thesis Driven dives deep into emerging themes and real estate operating models by featuring a handful of operators executing on each theme. The deep dives will give an investor enough context to understand the trend as well as opportunities for personal introductions to relevant GPs executing on opportunities. This week’s letter digs into how investors are using OpCo-PropCo-like structures and sidecar financing vehicles in some unexpected ways.
Last year, we at Thesis Driven dug into the benefits and challenges of the OpCo-PropCo model as well as assembled a list of almost 50 firms capable of making OpCo-PropCo investments. In an OpCo-PropCo structure, an investor backs an operating company (OpCo) in addition to making an investment in the assets managed by that company (PropCo). Done right, the structure can be a win-win: the investor can participate in financial upside on both sides of the transaction while the operating company gets an accelerant beyond a typical venture investment.
For this reason, the PropCo-like structures have become increasingly common in real estate technology deals. And as they increase in popularity, these sidecar investment vehicles are popping up in some unexpected places. This week, we spoke to several leading real estate technology investors to get their take on what the future holds for the OpCo-PropCo model and the new platforms and ideas they’re excited to fund over the next three to five years.
Today we’ll break these conversations down into five big themes that are shaping the future of real estate technology investment and dig into representative businesses in each theme. Here are the five applications we’ll explore today:
“OpCo-PropCo” models beyond real estate
The future of work
Decarbonization
Brand leverage
Niche-specific models