Even With Troubles, Money Flows Into Proptech
As the flood continues, it is important to know when technology with your name on it comes along.
There’s been an abundance of sour news over the last couple of months for the proptech industry. By the end of 2023, venture funding for the category dropped by 42.4% year over year. A one-time unicorn (startup with a valuation of at least $1 billion in funding rounds) crashed, burned, laid off all its workers, and got sold off.
It’s a concern for CRE companies using the software and hardware from these firms. Will someone disappear from under your feet/? Concern that the product line you implemented probably doesn’t have the funding it needs to get to where they promised they would eventually be?
But ups and downs in funding and fortunes is nothing new for tech in general, even if they seem to presage future disaster in the development of CRE-related software. Lower levels of investment by venture capital firms may have more to do with the skittishness of VC funds’ limited partners concerned about where things might go.
Through December 2023 and January 2024, there have been multiple deals, according to MetaProp’s January newsletter, totaling more than $313.25 million. Most of the investment was in U.S.-based companies. It doesn’t mean that this was all the investments that happened during the period.
There is a broad set of examples showing some of the many ways proptech can manifest. A few: letting renters get rewards on their monthly payments; a construction materials marketplace; machinery rental; mortgage marketplace; payment systems for waste management; cash-back rebates for home buyers; robotic painting; or an AI system for automating finances in construction.
The point of the recitation is to begin an understanding of how many different needs and subsectors of CRE that different proptech firms can serve. Take construction for a moment. Materials marketplaces, finance automation, digital twins to track progress and changes in the construction process, drone examination of construction sites, asset tracking — so much and more available to companies that seek to improve their business practices. (Assuming that they have the basics in place before getting fancy.)
Monitoring technology, understanding the promises, and uncovering the hype and weaknesses, are all part of managing tech needs. It should be as common and regular as watching news about interest rates, regulatory demands, and government programs that might offer advantages for those in CRE who do the work and learn how to use them.
Even in concerns about inflation and financing, even when many investors step back, there will still be investments and tech firms that get the resources they need to do things you might need.