Proptech Pulse: Carolyn Kwon on Investable Proptech Platforms

Discover how to successfully separate genuinely investable real estate technology from overhyped industry trends in this episode of PropTech Pulse. We are joined by Carolyn Kwon, a Managing Director at the highly respected venture capital firm Moderne Ventures. You will learn the exact evaluation framework top investors use to identify software platforms that deliver immediate, quantifiable value to your daily brokerage operations. 

Our conversation explores the crucial shift away from isolated point solutions toward comprehensive transaction management platforms that actively eliminate administrative friction. We also dive into evaluating artificial intelligence defensibility and examine how next-generation cryptocurrency payment rails will soon transform the way digitally native buyers purchase homes. Understanding the psychology of the founders building these tools might just change how you select your next software partner. 

Carolyn evaluates over 4,500 companies annually, giving her an unparalleled perspective on the technological shifts fundamentally reshaping the real estate market today. As new consumer demographics demand entirely frictionless and fully embedded service models, adapting your technology stack is essential to maintaining your competitive edge. Subscribe to PropTech Pulse for more insights, connect with Carolyn on LinkedIn, and visit lwolf.com to explore our complete suite of solutions. 

https://www.lwolf.com/podcast

Transcript

Kyle Hunter: Welcome to the Proptech Pulse podcast. Your inside look at the world of real estate technology. I'm your host, Kyle Hunter, here to guide you through the latest trends, expert insights, and game changing tech shaping the real estate world. This is your go to source for staying ahead of the ever evolving industry. Let's dive in. everyone, and thank you for joining Prop Tech Pulse today. I'm very excited to have Carolyn Kwon with Moderne Ventures here with us. Hello, Carolyn. 

Carolyn Kwon: Hi, Kyle. Thanks for having me. 

Kyle Hunter: Thank you. Well, I'd love to start off with you maybe telling us a little bit about modern. I know that you've been around a while, but it kind of goes on a little bit under the radar. So I'd love to hear about what Modern Ventures does and how you got into this. 

Carolyn Kwon: Sure. So bit about myself and modern. I'm a managing director at our firm. We are a generalist VC, so we look across all different types of industries, identifying and investing in technology companies that are typically what we qualify as late see to growth stage. So for us as companies that are 2 million or more in revenue. And I would say what separates us since we fly under the radar, so to speak, is we are very operational and strategic. We run a program called passport, which is really a fast track to bring customers from trillion dollar industries of real estate to these startups. So some of our investors and partners include the world's largest real estate brokerages, like anywhere and formerly anywhere, leading real estate companies of the world Gray Star, Avalon Bay, Toll Brothers. And so we're really at the intersection of seeing all different asset classes as well as companies 

Kyle Hunter: Now you also providers that provide to residential. What kinds of things do you see are maybe overhyped. Like, you know, obviously the AI kind of is is is always out there, you know, what do you see that's happening there versus maybe what they're not paying enough attention to or, you know, maybe focusing on the wrong things. 

Carolyn Kwon: From a residential standpoint, you know, from an overhyped point, I would say maybe two years ago, we were all infatuated with what are now point solutions or features. So document abstraction, data labeling, data aggregation was a big topic that often was coming up. And and so I guess I view overhyped as oversaturated at this point or just features that now have evolved into more platforms. And so I think that is where we're at at this point, at least as relates to AI generally from a prop tech standpoint, on the oversaturated front, a lot of the moving concierge type of platforms, I'll break out into multifamily like leasing solutions are quite prevalent. And then I believe the fundamental areas that people are trying to fix are are transaction management, for one, I believe other processes pain points. seeing our partners thinking about the operational workflows that help a brokerage run their day to day is where at least the sophisticated ones that I work with are already working on and have established their their players that they're putting into their tech stack.    

Kyle Hunter: So when you're a what what makes you, you know, what leads you to a determination of this company is interesting versus maybe one that says this one is investable. This is something that I see a future in, you know, and maybe take me through the process of selecting the right partner that you choose.    

Carolyn Kwon: Sure. So I'll speak, at least from a modern standpoint. And we for some stats here, we look at over 4500 companies a year. And then for our passport program, we have run over 100 companies through that program. And a lot of are interesting. But what what separates the interesting from the investable is really a few things. First would be can we as a firm deliver strategic value to that company by opening up our network? In other words, does the company or the startup rather address a challenge gap opportunity in the industry and can we support them to help them grow? The second is really beyond our our real estate industry and our partners. Does that company also have defense ability and can grow? Think about your total addressable market beyond even real estate. And so surprisingly, a lot of people view modern as a prop tech fund. But really we we are looking at technologies that are defensible and can hedge against cyclicality. And so really want to and how that company we can expand. how much they have valuations. The founder has become more and more important, especially as you have increasing entrance into the market primarily through AI. And then I would also argue that now what we're hearing from investors or our investors rather are what is the startups AI strategy themselves? Are they talking to talk? How did they defend themselves? How are they thinking about their competitive edge. And that can span from a service type company to one that is truly an AI company as well. 

Kyle Hunter: That's interesting. So making sure that they have a defensible and thought process around how they're applying AI within their solution sets and they're looking to use them. Yeah, right. Well because then that drives efficiencies. And optimizing driving costs down. So makes makes complete sense. I want to go back to the founder, because I know that that's an interesting concept. When you're looking at founders, have you had where you kind of love the idea in the concept. And you see the greater, but because of the founder, you've decided to maybe not make that decision.    

Carolyn Kwon: I would I would say we've always prioritized the founder in our diligence. And so it's more so. Have they had a repeated track record or is this their first time as a founder? What's their vision look like over the next for one year, three year, ten year plans and so on. And then for me and I'll just speak for myself here. I'm always interested in how they view themselves. Like, do you take it to us? Can you take it to a certain level and then. Hand that over to somebody who can then take it to. IPO? Or are you founder that needs to see all the way to the end? And so just like that type of psychological evaluation is something that that fascinates me generally of how they approach their company and ownership.    

Kyle Hunter: Yeah. So that leads me to my next question. Where do you see founders, you know, making mistakes when they're pitching? Like, what is something that you've seen where you're everything lined up and all of a sudden it went off track because of something they were doing?    

Carolyn Kwon: Surprisingly, it it's interesting that I still have founders that. don't know what problem their solving and, and even still like, do you not have a clear idea of how to articulate the quantitative impact that they can have on their partner customers or their their future customers? And even having just an estimate of how are you calculating that you can save time, or how are you estimating that you can expedite this, this process are things that I believe are are missing and people love because maybe they're in their will house to talk about the features and the shiny objects. But I would say buyers now are really fixated on how can you deliver value and how quickly can you deliver that as well?    

Kyle Hunter: Enjoying the Proptech Pulse podcast. Don't miss a beat. Hit the subscribe button and stay in the loop with all of our latest episodes. And hey, if you're loving the content, leave us a review! It really helps us grow and reach more real estate pros like you. Also, don't forget to follow us on our social channels. We're sharing tips, trends, and behind the scenes content you won't want to miss. Find us on all the social platforms @getlwolf.  

Kyle Hunter: You know, again, the shiny thing and when you have founders that fall in love with their own product, but really it has to make business sense. And at the end of the day, they have to solve something for the broader population and have something that's marketable so they can actually, you know, bring value to whoever their investors would be. So, you know, certainly something to stay away from. And speaking of that, I mean, is there anything that like any. You're like, you know, this is kind of training in the wrong direction or. A direction that you feel like. Are you pretty open to whatever they bring?    

Carolyn Kwon: Well, again, we'll look across all different industries and evaluate even companies that maybe sound familiar to our portfolio currently where we maybe have some pause. And this is also coming from our partners. Again, the real estate companies is it's hard for us to work with startups that might be restricted from a regional standpoint. So maybe avoiding companies that are restricted either from a data remote where they just only have a certain number of data sets, or it can either be a physical location constraint. So I think that's where I've shirked away or said not not at this time.    

Kyle Hunter: Not at this time. So in your portfolio and totally understand if you can't answer that, but do you have any of your portfolio companies that you're, like, really excited about right now that you could share?    

Carolyn Kwon: Yes.    

Kyle Hunter: Oh, okay.    

Carolyn Kwon: I've seen many, I guess. Let me think about my some of my favorites. I'll talk about one that's really exciting because I believe it has implications for the residential space. So one company is called Mesh and I view Mesh as almost a plaid for cryptocurrency. Oh, and so what Mesh essentially does is they are connecting crypto wallets. So think your bitcoins with payment processors. So think PayPal Shopify mortgage platforms. And what they're doing is they're creating a seamless infrastructure on the back end to accept those crypto payments and then convert that to the desired currency on the receiving end. So think I pay a down payment with Bitcoin using And from that perspective about that company is when we first invested around two years ago, they were doing around 100 million in monthly transactions. As of January, they were doing 8 billion in monthly transactions. And then in March, they're now and we're in May, but 30 billion in monthly transactions. Why? I think it's interesting for the residential space to tie it all together is we're seeing Gen Z. So not my generation for the next generation be digitally native, more comfortable with putting their wealth outside of traditional banks. And what we're also seeing is that they're beginning to outpace prior generations in terms of home ownership. And so I really believe we should pay attention to those types of payment rails that could also support maybe the consumer interest around how they want to spend and how they want to deal with the largest transactions of their lives, potentially. So I'm really excited about mesh, and I think more than there.    

Kyle Hunter: You know, it's interesting. I think I was listening to a podcast the other day, and one of the points someone predicted was that in a couple years, you know, all iPhones will have a native solution built. I mean, it'll just be part of it because that is the speed at which they're using cryptocurrency to transact, to make that just an easier process. And it makes sense to filter into the home ownership process because there's so many things that happen. And then as that is who, you know, holds the cryptocurrency, they need ways to be able to easily deploy that in, you know, everything that they're doing. So having that embedded I think is makes a lot of sense. So yeah, no that's really cool. So last couple of questions. What do you think the real estate transaction will look like and say 5 to 10 years. Like do you think it's going to be drastically different or a lot of the same just with, you know, easier tech to kind help that process go along?    

Carolyn Kwon: I, I'm excited about how I think there's aspirations and rightfully so, to make it more digital, make it AI native. And actually there are you guys. But I'm excited over the fact that you've hired a new CEO that comes from outside of this industry and has kind of transformed a different type of workflow through HR, which was my old world prior to this, which is also people first hiring and finding a new job is a people first process. So taking those learnings and thinking about how can the process of buying a home be more seamless, or going through title or going through the lending process? Be an embedded service, I think is really the next iteration of transaction management, where you will also see opportunities to blend together insurance and home warranty. And perhaps in our portfolio we have trust and well, which is state planning and protecting your home. And so I think the new iteration is again one of those embedded workflows that will move and delight the homeowner.    

Kyle Hunter: Yeah. And I think you're right about that. I mean, even going back to what the changing in demographics and the way that consumers behave, a lot of times that's what you hear, is that, you know, they're used to a lot of the conveniences and ease of the other parts of their life, and then they get into the actual home buying process. And it's a different experience, and a lot of times it's more difficult for them to navigate. And so having, you know, removing that friction in how that they can't transact, maybe we can get maybe we can finally get above 4 million, you know, units in there. That's right.    

Carolyn Kwon: I feel like we're we're very accustomed now to. Gratification and so. Certainly on that. I think that's why people in the generation want as far as ownership.    

Kyle Hunter: Cool. Well, last question. What's a hard truth about founders, you know, proptech or otherwise that you know, that that agents were you know, that they just don't want to hear what's one thing that that founders that when you tell them this is something that you need to know, but it really kind of goes against what they feel like they would want to do.    

Carolyn Kwon: Maybe this answers your question. I, I, I don't know if the founders truly understand the level of sophistication across the table. And I think actually the residential space gets weirdly a bad rep as it relates to their appetite around innovation or agents willingness to adopt certain technology. And and at least from my part, the folks across the table are like your Wendy's from who you know, from the Cais company and Brooks from Windermere. And and they are. Quick movers that are deliberate and will push the envelope. As far as for founders like, let's see what you can do and the ones that are able to rise founders to the occasion and be nimble and and adapt quickly and be mindful of the fact that also across the table, they're putting in clauses now around if you get acquired or if you run out of money and like there, there is a level of of refinement that. It's not just picking off 1 or 2 agents and thinking it's going to be a breeze from there. It's really like, how do you grow alongside and and walk alongside? I would say these institutional partners.    

Kyle Hunter: I actually agree. I mean, I think that we do sometimes in the residential area, get a bad rap about slow adoption and, you know, some of these things. But the reality is, you know, they're out there trying all kinds of things. I think it's more of a complexity of what's involved. And a lot of folks, you know, when they get into the space, they're like, well, why doesn't it work this way? Well, it does, but it also works this way, this way and that other way, and it still does. And so really understanding the full, you know, broad. But, you know, to your point, some of those folks that you mentioned are very tech forward. And, you know, they're really into leading edge and understanding how to take some of the concepts that you described. And, you know, maybe bringing in the newer generation, but also the older generation and making it work in, you know, successful fashion. So.    

Carolyn Kwon: And just to add to that, you know, it does circle back to what do founders need to work on. And it's articulating, again the speed to value and what you are addressing for those organizations. Because ultimately, at least in our view, you're either increasing revenue or decreasing expenses, or you're enhancing their brand and their reputation in some capacity. So it doesn't really veer off of those value traders we've found too often. So the more people can refine that pitch, the better.    

Kyle Hunter: Well, Carolyn, thank you so much for joining today. I think that was a great place to end it. And yeah, thank you for being our best.    

Carolyn Kwon: Thanks.    

Kyle Hunter: Appreciate Thanks for tuning in to the Prop Tech Pulse podcast. Looking to take your real estate game to the next level? Check out our cutting edge tools. Visit Al wolf.com to learn more and see how we can help you succeed. I'm your host, Kyle Hunter, and I'll catch you next time as we continue exploring the future of real estate together. Don't forget to subscribe, leave a review and stay connected. Until then, keep innovating and thriving in the world of real estate.