MFV PARTNERS Interview Series: Hometeam Ventures

Kristine Harjes:

Hi everyone and welcome to The Motley Fool Ventures partner fund interview series, Investment Officer Kristine Harjes here. As you know, Motley Fool Ventures has been making direct investments in other venture capital funds. We’re super excited to highlight some of these rising star VCs and their investing strategies. I’m here today with Alexandria Lafci. She’s the founder and Managing Director of Hometeam VC.

So glad you could join me today, how are you?

Alexandria Lafci:

I am doing well. How are you doing?

Kristine Harjes:

Excellent! It is sunny and beautiful in DC. I can’t complain.

Alexandria Lafci:

Wonderful. We’ve got some good weather here in San Francisco as well.

Kristine Harjes:

Awesome.

So if you could introduce yourself to our audience, tell us a little bit about you.

Alexandria Lafci:

Wonderful. Hello. I’m Alexandria Lafci. I am from New York. I live in San Francisco now. I am the GP and the managing partner at Hometeam Ventures. We are an early stage fund, that’s focused on construction and prop tech, and this is a double bottom line fund. So I mentioned that and it really ties to my story and my background and my motivation. Pretty early in my upbringing, it became apparent to me that I wanted to work in social impact. That was because of my lived experience. My family’s lived experience. My mother and her siblings grew up in foster care. I grew up in section eight housing, government assisted housing in New York. Later, after I graduated undergrad, I did Teach for America, where about one third of my students were homeless for either all or part of the year.

That experience really showed me as a young adult, that if we don’t have Maslow’s Hierarchy, our base of the pyramid needs met, it becomes very difficult to actualize your full potential. Again, I saw that in my family, it was very tough in my upbringing. I saw it again as a teacher.

That really led and drove me to really dedicate my life and my career toward looking at the various vantage points with which we can solve the global housing demand. 1.6 billion, nearing three billion people, with inadequate housing by the end of this decade. I started a nonprofit called New Story. The last six years, that’s what I’ve been doing. Running a Y Combinator batch nonprofit where our team successfully built thousands of homes across Latin America and the Caribbean really focused on a low cost, high quality kind of scalable housing.

As COO and co-founder of New Story, I was really steeped in the end to end construction value chain. Constantly trying to drive costs down, increase speed, and really improve the process. There was just a lack of tools available to us, available to the construction industry. What I learned is that the construction industry spends less than half a percentage point on R&D. There are definitely adoption hurdles in the industry, but the industry is going to be about $18 trillion in the next two years. There was huge opportunity for impact and also for returns by bringing innovation to construction, and that’s what we’re really focused on at Hometeam.

I’m just so excited to continue working on a very important problem that hits close to home, for anyone who lives in the major city probably increasingly hits home for you, which is our global housing crisis. We’re excited to find the innovators, the founders who are building great companies to help the construction industry, really drive to meet that demand.

Kristine Harjes:

Love it. Absolutely love your story. How will New Story play a role in your funds success going forward?

Alexandria Lafci:

New Story and Hometeam Ventures are separate, but as the founder of News Story, my co-founder is still there running and leading it. There is amazing potential opportunities for a strategic partnership. A Mendell highlight, an investment we actually made at New Story prior to starting Hometeam in a company called ICON 3D. They are a 3D home printing leader based out of Austin, Texas. In addition to the financial investment we made at New Story, something that was really catalytic in the early days for that company was New Story’s ability to bring ICON down to south east Mexico. A lower cost, lower barrier area where together we printed the first 3D printed community in the world.

When it is advantageous for both New Story and a Hometeam portfolio company, we hope to broker more partnerships like that, where some of our portfolio companies may have the opportunity to partner early in their company life to be able to do some of these strategic pilots and prototypes. It’s actually one of the things that we think is a huge opportunity we can offer uniquely to the portfolio.

Kristine Harjes:

Awesome. So let’s dig in a little bit more to your investing thesis. Housing and construction sounds like it’s a small niche, but you already pointed out the ginormous market size. What are the sub sectors within the industry and which ones are you most excited about?

Alexandria Lafci:

Of course, we mentioned the size. Construction certainly seems niche, but when you look at the end to end construction value chain, you have pre construction that we’re really excited about. In that bucket, you have, process optimization tools, you have tools for engineering and design. You have tools for increased kind of visualization in the construction phase. You have tons of opportunities for automation, robotics, station of construction, safety, labor marketplaces on the job site. A lot of supply chain opportunities with the massive amounts of material that are required to create the built environment.

Post construction there’s a lot of really interesting fintech solutions that have been available for a variety of sectors, but not for this massive construction sector. Both pre, during, and post construction, there’s a tremendous amount of opportunity.

The construction sector is the least digitized. Second only to agriculture in the major sectors. Some of the tools that you’ve seen for many years, decades, that have been used to optimize and add efficiency to other sectors, there’s a lot of opportunity to just bring some of these familiar solutions into construction for the first time.

Kristine Harjes:

Something that we’ve all seen over the last year and changed during the pandemic is a more rapid adoption of some of these technology solutions into industries. Particularly they’ve been slow to adapt, for example, like the rise of tele-health. Is that something that you’re also seeing in the construction sector?

Alexandria Lafci:

That’s right. Construction is really fragmented and it can be a varied, depending on the property type, of very low margin industry. There is a lot of fear and trepidation with trying new things, especially when there’s very little guarantee of them working.

COVID certainly accelerated that. The margins got even smaller. I’m thinking of one example in particular where a company that we’re actually looking at where they need on job sites all over the world, they needed to have added visibility into how the labor force was interacting on job sites because there had to be space between workers. That is just one example, one case study of how a necessity prompted the sector to be more open to utilizing technology that would allow them to have that added visibility. There were just countless examples.

The U.S. Chamber of Commerce did a survey of around 800 construction leaders, and they do this every few years. For the first time a vast majority of construction leaders said that they would be willing to try advanced technology. We are seeing a shift in sentiments for a variety of reasons. COVID certainly a more recent one.

Kristine Harjes:

So it might be an excellent time to be starting a venture capital fund focused on this area.

Alexandria Lafci:

Yeah. We did it as a point of passion and seeing an opportunity in the space, but we’ve certainly realized as we got into it that the timing might really be in our favor as well. As of recently, the construction technology only gets about 2% of venture funding, a lot of LPs end up investing in us, because I think there’s a recognition that there is a changing tide in the sector and people want to get more exposure into it. I really do think that one of the top reasons is because there’s a lower adoption threshold that we’re starting to see with the customers. With these general contractors and developers and things.

Kristine Harjes:

Yep. Very cool. Something that also attracted us as an LP is the mission behind the fund. Can you elaborate on how diversity and inclusion play a role in your fund?

Alexandria Lafci:

Absolutely. We all know many of the stats, so I won’t repeat them, but there are not a lot of diverse check writers. Both with respect to racial diversity and gender representation. I really commend Motley Fool and others for recognizing that in order to meaningfully change the funding landscape, we also have to invest in and recognize that that check writers play a big role. It makes a lot of sense that people reach out to and develop relationships with and invest in their communities. We need check writers to have diverse communities. While Hometeam Ventures doesn’t have a specific mandate around the number of investments or the number of kind of diverse founders, we already see a massive amount of diversity in our deal flow. That’s because of myself and my partner, Julieta, who’s Argentinian, the communities that we’ve developed throughout our life.

Kristine Harjes:

Awesome. Well, we are super excited to see this amazing deal flow come into your portfolio and watch these companies grow. Thank you so much for joining us.

Alexandria Lafci:

Thank you. I really appreciate Motley Fool has been one of our most supportive and active LPs, and we are thrilled to be part of the family and really appreciate the intentionality around diversity that you guys have been really kind of leading on.

Kristine Harjes:

Well, thanks. And we’re just getting started. That will do it for this partner fund interview. For more information about Alexandria and Hometeam, please check out hometeam.vc for more on Motley Fool Ventures, including more of these interviews, you can check out foolventures.com. Thanks so much for listening and fool on.