New York-based property investment platform Cadre has attracted more than $130m of funding from the world’s biggest tech backers since it launched in 2014. Founder Ryan Williams reveals how the finance start-up looks set to create a completely new real estate industry
The real estate sector is awash with fresh-faced, young tech entrepreneurs looking to disrupt, enable and transform an industry often chastised for being slow to embrace change.
Ryan Williams fits that profile like a glove. The 29-year-old, Louisiana-born, ex-Harvard, Blackstone and Goldman Sachs rising star launched real estate finance start-up Cadre in 2014 with investors Josh and Jared Kushner, in a move designed to transform the real estate landscape.
“This is not just about building a transformative company,” he says from his Manhattan HQ in New York’s Nolita district. “It is about creating a completely new industry.”
Cadre – an online platform that allows landlords and owners to post vetted commercial real estate deals, valued at somewhere in the region of $50m to $250m (£38m-£189m), to a network of wealthy individuals or “qualified purchasers” to invest in directly – is a market recalibration for the technological age, with digital transformation the ultimate goal. At a time when others, including start-up property exchange IPSX, are launching similar platforms, Williams sets out his stall.
In a different league
The problem, in an increasingly noisy and overcrowded proptech sector, is that if you have heard that pitch once, you have heard it a hundred times. But Williams is in a different league. Since launching Cadre he has raised more than $130m in funding and closed nearly $1bn in transactions.
His backers include Andreessen Horowitz, Peter Thiel’s Founders Fund, Goldman Sachs, Alibaba founder Jack Ma, the Kushners and American investor and business magnate George Soros, who has reportedly supported the firm with a $250m credit line. In January this year, former Vornado Realty Trust chief executive Michael Fascitelli took over Cadre’s investment committee.
Williams’ 45-strong team includes a swathe of former Facebook, Apple, Google and Square executives who have flocked to join the ranks of the start-up, which aims to “make the real estate market more like the stock market”.
Plans are afoot to grow the business beyond New York, with international expansion plans in the offing. “Around a third of our investors are international, and this demand is a good signal for overseas activity and growth,” says Williams.
But despite claims that Cadre can cut investors’ fees in half, Williams insists he is not out to eliminate traditional agents.
Value and transparency
The platform’s function is pretty straightforward. Buildings are listed on the site (although only around 1% of the stock the team is approached with will actually make the grade) and can be anything from offices to shops and apartment buildings.
A pool of pre-qualified investors can then make an investment through the platform. Williams says the amount of cash paid ranges from $100,000 to $15m per investor.
“We want to increase universal participation in real estate and alternative asset investment,” he says. “Real estate in particular should be an asset class that is more accessible and more transparent. It should have lower fees when it comes to investment and should be an industry where value and transparency are the norm, not the exception.”
Currently, all of the properties listed on Cadre are located in the US, but the start-up plans to expand internationally.
“The primary investment regions beyond the US are Europe and Asia,” Williams says. “Then there is the miscellaneous bucket of investors from South Africa, Israel and the Middle East. But it is predominantly the first two, so those are the areas we will most likely be focusing on.”
The attraction of the platform for investors is threefold. Reduced fees, increased transparency and asset class diversification make for a relatively easy sell.
“We are able to reduce the fee load by effectively cutting in half the traditional fund ‘2 and 20’ model, where investors are typically charged 2% in annual fees and then 20% of any profits in exchange for access to the deals and management of their assets,” says Williams.
“Then there is transparency. Every building stands alone so you can invest deal by deal, although many of our investors are now opting to manage more of a bundle portfolio.
“And finally, diversification. People investing using Cadre can do so across a wide range of geographies, asset classes and operating partners in a way that, historically, has been reserved for traditional funds. So, in many ways, we are taking the institutional nature of the existing fund model but then layering on significant fee savings. So that is why investors are so excited.
But what are the attractions on the other side of the equation?
“The operating partners – the people listing the buildings – can see we have the ability to move with the velocity of a fund,” he says. “We have a quarter-of-a-billion-dollar back-stop provided by a large family office that gives execution certainty, but we actually provide a much more flexible construct in terms of capital for operators.”
Evolve to survive
Williams is quick to add that, despite the fact that the platform can put together and execute deals within a matter of weeks rather than months, Cadre is not out to eliminate the role of the traditional broker.
“I see a huge benefit to human touch and relationships,” he says. “We are not proposing we remove those skills from the market, we are just looking to augment the relationships between players with technology that can create greater efficiency.
“Our view is that there is definitely still a role for brokers and, actually, we work with a ton who provide us with opportunities, deals and introduce us to operating partners,” he adds.
“We are ultimately looking to equip these brokers with better tools and services to add scale. We want to help them be more, not less, impactful.”
And, like anyone operating in the fast-changing real estate world, he says that evolution will be necessary for survival – whether the sector likes it or not.
“Real estate really is a Jurassic industry. I think the biggest tech jump for most people in the sector up until now was going from fax to e-mail, so the bar is set low.
“Right now all we are doing at Cadre is adding efficiency, reducing costs and providing better access to assets, but in the long term I think there will be opportunities to reshape the entire investing paradigm.
“What we want to achieve involves creating a completely new industry where participation in investing in asset classes within markets like real estate is opened up to the point that it can drive people’s lives forward and create multi‑generational wealth.”
Commitment to innovation
“I promise none of this has been as easy as it sounds,” says Williams. “It is really tough to create this sort of business in a sector built on decades and, in some cases, centuries of traditional practice.”
But he is not one to rest on his laurels. “Once you get caught up in a bit of success and momentum, progress can falter,” he says. “So it is about making sure we have a fundamental, enduring drive to be proactive, rather than reactive, and maintain our cultural vision and commitment to innovation.
“The key for me is to always make sure my team knows that and that they feel like they are backing something they believe in. But that vision has to be executed. Because a vision without execution is just an hallucination.”
Williams has made his own personal sacrifices in his quest to avoid that hallucination. He works until after 1am most nights, eats the same breakfast every morning to avoid wasting precious time on unnecessary decision making and has, on average, 19 meetings every day.
“Output is never greater than input,” he shrugs.
“When I was growing up my dad used to repeat a quote from Martin Luther King Jnr and I love it: ‘If a man is called to be a street sweeper, he should sweep streets even as Michaelangelo painted, or Beethoven composed music, or Shakespeare wrote poetry. He should sweep streets so well that all the hosts of heaven and earth will pause to say, ‘Here lived a great street sweeper who did his job well’.’’
That kind of commitment will be music to investors’ ears, and might just convince the real estate industry to join Cadre’s revolution.
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