Recent years have featured an explosion in proptech investment, with seed and later stage capital fueling a whole new generation of startups aimed at the commercial real estate industry. That’s come as some of the more established players continue to grow, as evidenced by the valuations in some recent proptech deals.
Since 2012, more than $43 billion has been invested
in roughly 8,000 proptech companies, according to CB Insights. Some of these companies are focused on tech enablement, helping incumbent industry participants do what they do better.
In 2020—in the midst of the pandemic—venture capital equity investment in U.S. proptech declined to $4.6 billion, according to Keefe, Bruyette & Woods, a boutique investment bank and broker-dealer that specializes in the financial services sector. The firm also noted that funding had shifted to mid- and late-stage funding for proptech firms with seed and early-stage funding rounds declining 47 percent while later stage funding only fell 4 percent. In 2021, through April, funding in proptech was up 259 percent year-over-year and funding activity in the first quarter of 2021 at $2.8 billion was the highest on record.
Meanwhile, in one recent deal, MSCI Inc., a provider of support tools and services for the global investment community, completed its acquisition of proptech data stalwart Real Capital Analytics (RCA) for nearly $1 billion.
Proptech tools also run the gamut, helping real estate firms with a variety of tasks including deal management, document management, investor relations, property and facilities management, and lease administration, among many other tasks. Meanwhile, other companies are focused on disruption—developing technology that will essentially blow up incumbents’ entire businesses, according to Clelia Warburg Peters, partner at BainCapital Ventures and president of Warburg Realty.
The harder questions to figure out amid all of this is gauging how much market penetration various tools have and where the opportunities lie both for proptech firms looking to build market share and for traditional real estate firms who may be missing out on ways to improve processes and create differentiators with competitors.
These are some of the questions we aimed to answer in a recent survey of WMRE readers and users.
Survey methodology: The WMRE research report on the proptech industry was conducted via online surveys distributed to WMRE readers in August 2021. The survey yielded 343 qualified respondents with nearly half (49 percent) at the executive level of vice president or higher. Forty-four percent are active in the West/Mountain West/Pacific Northwest, while 43 percent do business in the South/Southeast/Southwest, 41 percent operate in the East and 33 percent are active in the Midwest.