DealmakingProptech

Proptech innovators never let a crisis go to waste

The $4.4 billion raised by proptech companies in H1 marks a YoY decline of 6%

Proptech companies in the U.S. nailed down $4.4 billion in growth capital during the first half of 2020, according to a report from the U.S. arm of global investment bank GCA.

And despite some decreased investor sentiment, the coronavirus pandemic promises to further boost the sector.

The report, published by San Francisco-based GCA Advisors LLC, says the pandemic has produced “both opportunity and dislocation” in proptech, with many companies in the sector benefiting from “tech tailwinds created by the crisis.”

The $4.4 billion raised in 136 proptech deals during the first half of 2020 represented a year-over-year decline of 6%, the report shows. Big investments in Airbnb, Sonder and Vacasa helped propel first-half investment activity, according to the report.

Here’s a rundown of some of the major first-half funding deals:

M&A proptech had its own share of big deals during the first half of 2020. Among the transactions highlighted in the GCA report are:

  • Fintech goliath Intuit agreed to buy personal finance marketplace Credit Karma, whose offerings include lead generation for mortgages, for $7.1 billion
  • Commercial real estate data provider CoStar Group purchased commercial real estate platform Ten-X Commercial for $190 million and apartment rental website RentPath for $588 million
  • Title insurance giant First American bought Docutech, a provider of document technology and services, for $350 million
  • AI-powered real estate startup OJO Labs closed a $62.5 million round led by investment platform Wafra and agreed to buy residential real estate search engine Movoto

What’s ahead for proptech?

Funding and M&A deals blanketed the proptech sector during the first half of 2020. But what’s on the horizon? The GCA report envisions the pandemic propping up additional growth in proptech:

  • Adoption of proptech in the residential real estate sector is growing thanks to the rise of capabilities like virtual showings, e-signatures, virtual notary and digital lending.
  • Commercial real estate also will see an uptick in proptech as companies re-evaluate their approach to office space, bolstering demand for tenant engagement, office safety, space utilization and facilities management tools.
  • In construction, proptech will accelerate in the pandemic era due to adoption of digital construction models, collaboration tools and jobsite management tools.

Although GCA’s report offers an upbeat outlook for proptech, the confidence of executives and investors in the sector has waned during the pandemic, according to a survey by VC firm MetaProp.

“You can’t stick your head in the sand and pretend like there wasn’t going to be some impact on proptech, given that we’re in a huge macroeconomic recession, the worst we’ve seen in our lifetimes, a real estate cycle affecting all asset types and a health scare,” MetaProp co-founder Aaron Block told Bisnow. “The question is: How long is this going to be bad, and how bad is it?”

Not everyone is as pessimistic about the sector as the MetaProp survey respondents are, though.

During the recent REImagine conference hosted by the Urban Land Institute’s Asia Pacific organization, Josh Raffaelli expressed enthusiasm about the sector. He’s managing partner of Brookfield Technology Partners, the tech investment unit of Toronto-based Brookfield Asset Management. Last year, Brookfield led a $90 million Series D round in New York City-based VTS, a commercial real estate leasing and asset management platform.

“The trend lines are becoming clearer that this is an industry that is going to be advantaged in the long run through adoption of technology tools,” Raffaelli said, “and it will create a fertile opportunity for technology startups to be successful.”

Latest Articles

2022 HousingWire TECH100 Real Estate Honorees HW+
Mar 11, 2022 By

This year’s list of TECH100 Real Estate honorees represent a huge shift in the direction that the real estate industry is heading in. Though real estate may have fallen behind in technological advances compared to other industries in the past, all of that is changing, and this year’s list of Tech100 winners embody that shift. […]

Content from our partners

Log In

Forgot Password?

Don't have an account? Please

Register

Forgot Password

Please enter your registered email address below to receive a password reset link.

Check Your Email

A password reset email has been sent to the email address on file for your account, but may take several minutes to show up in your inbox. Please wait at least 10 minutes before attempting another reset.

Welcome to FinAssist

Go to your inbox and open 'Welcome to FinAssist, your company discovery platform' to get started. You may also skip your inbox and 'Start tutorial'.