Goldman Sachs alumni Mike Sherwood and Chris Grigg are to be reunited as judges at the EG TechTalk Academy.
British Land chief executive Grigg, who left the bank in 2005 after 20 years, will be determining which of the competition’s proptech start-up entrants will clinch a share of the £150,000 of investment on offer, alongside the former co-head of Europe at Goldman, who retired last year.
Their backgrounds in the more regulated and data-focused world of finance and investment banking will bring into focus how similar solutions could be applied in real estate.
“Investment banking became a technology business and became by far the biggest division in the firm,” says Sherwood, looking back on his 30-year career at Goldman. “It was offensive in going after new business and ideas and defensive in the way of looking to improve our own business, taking out cost and making it more streamlined. There are a lot of commonalities with where property is today.”
Sherwood also highlights the potential importance of blockchain as a major efficiency driver in settling legal and payment issues that would reduce some of the roles of lawyers and agents and simplify processes.
The cost of maintaining data necessary to meet regulation in the highly regulated world of investment banking has been a driver for change and efficiency, and according to both Grigg and Sherwood, this theme has a long way to run in property.
“When regulation increases in UK property it will land in an environment not used to another layer of regulation,” says Grigg. “In investment banking, regulation was sometimes an opportunity and sometimes a cost, but systems were set up to deal with it.
“It will hit real estate in a different way and it will be more of a surprise for those that don’t have frameworks in place. It tends to favour large companies that can incorporate it and can also lead to faster innovation.”
There is no one particular area that Grigg and Sherwood will be looking for in EG’s TechTalk Academy finalists, but they will first and foremost be looking for the right management and leadership.
“I have seen a lot of good ideas executed badly,” says Grigg. “If you mess up it doesn’t matter how good your idea was, it won’t save you. It is about speaking to the right people at the right stage in the cycle… Often bad ideas can masquerade as good ideas and they are ones actually that someone has already had.”
Sherwood adds: “Most important is that the CEO, founder or entrepreneur has a passion for what they are going after and there has to be real blue sky to go after. Like in everything you do, certain people give you a certain energy and those are the people you want to back. It is hard to know in a short space of time – first impressions can be misleading.”
The perils of investing in start-ups – tech start-ups, in particular –means there are many failures to go alongside the successes. But this does not put off either of the former Goldman men in what may be considered a golden era for raising capital.
“We live in an odd time where risk-free rates are low and, by historic standards, you have a lot of people prepared to put money into different start-ups and be patient coming at a time of rapid growth in technology,” says Grigg.
Sherwood, himself a minor shareholder in residential landlord services website Rentify, says you have to take a balanced view to investing.
“You have to make a handful of investments. The ones that work make 10 or 20 times your money and the good thing is if you lose you can only lose one times your money. There is no magic formula, unfortunately.”
There may be no magic formula to making investments in tech businesses, but the start-ups that end up pitching to the duo come 15 November will certainly be subject to the intimidating scrutiny of some of the sharpest minds in finance and property.
Click here to book your place at the TechTalk Academy showdown.
‘It is all about believing in the team’
REV has invested some $250m (£190m) in tech start-ups since its formation in 2001. Here, founding partner Kevin Brown, one of the judges on EG’s TechTalk Academy, shares what he will be looking for from our finalists.
“It is all about the team. The property cliché is that there are three things you look for when buying a property: location, location, location.
“The equivalent VC cliché is: management, management, management. I find that it is typically the second or third best idea, but the best execution that wins in the deals we have been involved in. And in terms of the teams themselves, I would like to say it is experience, but it is not always that.
“Sometimes it is just seeing some conviction and a team that you genuinely believe wants to change a small part of the world.
“If you see a team that sees some sort of inefficiency in a market they understand and you get the feeling they are not going to rest until they have changed, that that’s the kind of team I go after.”
To send feedback, e-mail david.hatcher@egi.co.uk or tweet @hatcherdavid or @estatesgazette
