Investor confidence in prop tech hits record high

August 29, 2018 / Isla MacFarlane
Investor confidence in prop tech hits record high

The Global Prop Tech Confidence Index for mid-2018 suggests that overall investor confidence on a scale of 1-10 is at an all-time high of 8.7, up from 8.0 at the end of 2017. This tsunami of investor confidence shows no sign of slowing down.

High M&A expectations, strong company performance, as well as increased funding and deal flow in the space have all buoyed confidence. This coincides with a report that $12.6bn in funding was poured into PropTech startups in 2017, up from $4.2bn in 2016.

“The serious growth and success of PropTech startups has drawn the attention of not only venture capital investors, but of traditional real estate powerhouses such as RXR, PGIM Real Estate, CBRE, Cushman & Wakefield, JLL Spark and Altus Group, all of which are LPs in MetaProp’s recently announced Venture Fund II, some making their own technology investments, as well,” said Aaron Block Co-Founder & Managing Director. “Along with non-real estate-based institutional investors, the billions of dollars being directed to this investment category has catapulted PropTech to new heights of asset-class desirability.”

Key findings from the report include:

  • 96% of investors are planning to make either about the same number or more PropTech investments in the upcoming 12 months, up dramatically from 76% a year ago;
  • 57% of investors are expecting to see more pitches in the upcoming 12 months, down from 76% at Year-End 2017;
  • 46% of respondents are headquartered outside the United States, up from 30% a year ago and 24% two years prior;
  • 36% of their PropTech investments are exceeding expectations in terms of customer growth, up from 21% at Year-End 2017 and only 12% 2 years ago;
  • 44% of startup CEOs said their company has been operating for at least three years, a major increase from 30% just six months ago;
  • 30% of startups employ more than 20 people, up significantly from 18% at Year-End 2017;
  • 17% of startups report that it will be harder to fundraise in the upcoming year, a tremendous decline from 55% at Year-End 2017.

“The biggest change and opportunity will be watching how PropTech entrepreneurs execute on building their businesses during a market downturn, and how the investors who have supported them react,” said Jordan Nof, Managing Partner, Head of Investments, Tusk Ventures. “It is when the market gets difficult that we see who is really positioned for success. Some businesses will prove to be imperative technologies that can help real estate owners, operators and brokers continue to accelerate growth despite adverse macro trends. However, the companies that provide only minor incremental improvements to the status quo could struggle to gain adoption, specifically enterprise software.”

MetaProp publishes the Global PropTech Confidence Index twice a year. The survey was designed in collaboration with the Real Estate Board of New York (REBNY) and the Royal Institution of Chartered Surveyors (RICS) based on industry leading standards for sentiment analysis.

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