Alpaca's Big PropCo Play
A deep dive into Alpaca's foray into real estate private equity aiming to take OpCo-PropCo models into the mainstream
On September 27th, almost a hundred founders, institutional allocators, and real estate investors gathered in the Catskills. Over two days, the group dug into the future of financing innovative brick-and-mortar businesses—with a particular focus on the PropCo model.
With real estate roots and proptech bona fides, Alpaca has found itself at the center of the industry’s newfound interest in OpCo-PropCo concepts. So they were uniquely positioned to host the 30/30 PropCo Summit last month, a perfect opportunity to debut the firm’s latest venture: Alpaca Real Estate, a new real estate private equity firm wholly focused on funding PropCos leveraging innovative technology or operating models. And they have the team, the capital, and the ambition to take the OpCo-PropCo model beyond its hospitality origins, creating a viable alternative financing path for novel brick-and-mortar concepts.
I had the pleasure of chatting with Alpaca Real Estate co-founder Daniel Carr to better understand the firm and its new real estate model. This letter will cover:
The story of Alpaca Real Estate;
Alpaca’s methodology and approach;
Alpaca’s sectors of interest and evaluation criteria;
Alpaca Real Estate in the context of the broader real estate finance landscape.
Why PropCo and Why Now?
While Alpaca is best known for its proptech investments, the firm has real estate roots. I first met Ryan Freedman, Alpaca’s founder and principal, in 2015 when he was running a sizable real estate portfolio with investments across student housing and multifamily. Since then, Alpaca’s VC arm has invested in dozens of proptech names including Compass, Point, and Xeal.
But as we’ve discussed previously here at Thesis Driven, there’s a growing understanding that innovative brick-and-mortar real estate businesses are a poor fit for venture-style funding. Many are stuck in no-man’s-land, unable to provide venture returns but too small and unproven for traditional real estate investors. Instead, new funding models—from real estate accelerators to co-GP vehicles to PropCo funds—are emerging to fill the gap. Given their firm’s experience in both real estate and technology, Alpaca was uniquely positioned to tackle this opportunity.