Developer, investor and brokerage head Howard Lorber is trying on a new role for size: venture capitalist.
His company, Vector Group, is pivoting its real estate business — which includes brokerage Douglas Elliman and new development firm New Valley — into investing in early-stage proptech companies, the firm confirmed to The Real Deal.
The announcement comes on the heels of Vector’s real estate businesses reporting a net loss of $75.9 million in 2020, the second consecutive year of losses.
The new VC arm’s initial bets include a minority non-controlling stake in Rechat, a customer relationship management platform, and investments in proptech funds such as Camber Creek Fund, which counts Notarize, Curbio and Flex among its portfolio.
New Valley Ventures will be spearheaded by Vector’s new chief operating officer Richard Lampen, who was appointed in January, though he has served as Vector’s executive vice president since 1995. During that time, Lampen was the CEO of Ladenburg Thalmann Financial Services. He returned to working at Vector full-time last February, after Ladenburg’s broker deal network sold for $1.3 billion to Advisor Group and Reverence Capital Partners.
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Now, he’s looking to kickstart a new line of business for Vector’s real estate segment.
“Vector’s a significantly sized company with significant resources and we have a very large residential and new development business today but, listen, we hope that New Valley Ventures over time will take its place as an important contributor,” Lampen said in an interview.
He declined to comment how much capital the new VC arm has to deploy, but confirmed the investment division was being funded exclusively by Vector.
Lampen hired Dan Sachar to act as the new division’s managing director and serve as a vice president of enterprise innovation at Vector. Sachar will work alongside David Ballard, who was recently hired as Vector’s chief technology officer. Both Sachar and Ballard previously worked at Ladenburg Thalmann developing technology for its financial advisors.
New Valley Ventures’ primary focus is investing in companies that are developing technology for agents.
“We are finding new tools that we think can improve things that are at the heart of the services that agents offer now,” said Sachar. “[But] we are also looking at some opportunities that add new things to what agents can offer, and I think that’s going to be a big part of our focus.”
The VC division will work closely with Douglas Elliman when selecting investments, consulting with Scott Durkin, Elliman’s president and COO, as well as Connie Mui-Reilly, the brokerage’s chief information officer. But the brokerage will opt to use technology developed by its portfolio companies on a case-by-case basis. In the case of Rechat, the brokerage will adopt the platform nationally this spring.
Sachar noted that the investment approach is not premised on exclusive use by Elliman or Vector’s new development arm.
“We want to invest in an independent company that can move at the speed of a younger emerging startup and can innovate and develop tools and features at a fast pace,” he said.
Lampen expects New Valley Ventures’ close ties to Elliman will serve as a draw for startups, but he noted that the VC arm is not focused exclusively on residential brokerage. He pointed to Vector’s new development arm, as well as its services in property management, real estate investment, mortgage financing, and title and escrow services, noting that Vector is looking to scale a variety of real estate businesses in these sectors.
“The hope is that we can bring these companies more than just our ability to write a check,” said Lampen.
He declined to comment on future investments or whether Vector was contemplating launching a special-purpose acquisition company, or SPAC, which has become the vehicle of choice for proptech investors in recent months. But he’s not ruling out anything.
“We’re still in the early stages of it,” said Lampen. “How significant our activities are is really going to be a function of the opportunities that present themselves to us.”