2018: PropTech 2.0

2018: PropTech 2.0
This post was published on the now-closed HuffPost Contributor platform. Contributors control their own work and posted freely to our site. If you need to flag this entry as abusive, send us an email.

2017 has been a good year for the PropTech industry, sometimes also called Real Estate Tech. While the sector was created around 2013-2014, this year witnessed its transition from infancy to maturation. The industry not only saw its largest funding rounds ever, it also started structuring itself in the mold of tech ecosystems pertaining to other industries (think FinTech).

PropTech is becoming more mainstream, with real estate tech firms now creeping into every national real estate conference’s programming and drawing positive attention to solutions they provide to either enhance or revolutionize the way the bricks-and-mortar business operates.

‘Traditional’ real estate firms responded in 2017: large companies and landlords such as JLL, CBRE or Brookfield have increasingly invested in either real estate tech firms themselves or venture capital firms targeting PropTech, driven by the idea of gaining first-hand access to technologies and not being left in the dust by disruptive ways of operating.

As of the 3rd quarter of this year, at least 108 PropTech startups raised over $400 million in seed or early-stage monies in North America over the previous 12 month, up 33% from the year prior. With regards to later rounds, the two most noticeable were very recent, monster deals: WeWork, a co-working company created in 2010, raised $4.4 billion at a $20 billion valuation in August. Compass, a residential brokerage house, raised successively $100 million in November and $450 million earlier this month, with a current valuation of $2.2 billion. Both companies were funded by Masayoshi Son’s $100 billion SoftBank Vision Fund.

Among promising companies leveraging technology is LG Fairmont, a New York residential brokerage firm started by Aaron Graf. He created a proprietary software that automatically sources home buyers, sellers and renters over the internet to algorithmically match them in real time with relevant agents within LG Fairmont, based on their past performance and expertise. Technology here is used to automate more of the time intensive, low-value work so that more focus can be spent on high-value work.

Cutting edge as well is LeasePilot, a Boston-based company which developed and markets a software facilitating the drafting and editing of commercial leases. Created in 2015, it enrolled several national landlords as clients and raised $1.5 million in May from Rose Park Advisors, a Venture Capital firm which was an early investor in startup success story DocuSign (current valuation: $3 billion).

The PropTech space is becoming more and more international. A recent poll of industry CEOs featured 48% of respondents with headquarters overseas, up from 30% in 2016. An interesting example of such: PlotBox, a SaaS firm based in Northern Ireland and started by Sean McAllister, which invented a software to bring technology to the death industry (cemeteries). A wide and overlooked market indeed, very well received by 500 Startup’s Californian accelerator program in which PlotBox participated.

 Aaron Graf, founder and CEO of LG Fairmont, a New York-based tech-driven real estate brokerage firm

Aaron Graf, founder and CEO of LG Fairmont, a New York-based tech-driven real estate brokerage firm

Venture Capital firms targeting the property sector have also been on a fundraising spree: most noticeably, Fifth Wall Ventures, a Los Angeles-based investor, closed on $212 million in equity commitments in May. Another Los Angeles firm, Navitas Capital, announced earlier on this month the closing of a $60 million fund, primarily with investments from industry heavyweights.

The PropTech ecosystem structured itself well this year, with the creation of sector-focused events, incubators and accelerator programs, and the involvement of top-tier universities nationwide. In March, Columbia University launched an 8-week program for early-stage ventures, in partnership with MetaProp, an accelerator and venture capital firm focused on real estate. In a recent conversation, Josh Panknin, the driving force behind Columbia’s PropTech initiatives, highlighted that a realization occurred this year that developing effective real estate technology is extremely difficult. According to him: ‘It is pretty clear that the structure of good ideas combined with a strong team and industry backing is the best way to solve the complex challenges that are present in the real estate industry. Companies need founders with strong real estate and technology experience, not just one or the other. Fundraising became increasingly difficult for firms that didn’t meet those criteria. At Columbia, we are trying to apply those lessons by taking really impactful ideas from real estate professionals and combining them with strong technology capabilities. We think this is the best way to create the kind of technology that will be not just a business, but transformative for the industry as a whole.’ A bold and inspiring vision.

Looking ahead, 2018 could see the increased use of Augmented Reality (AR) in real estate. Apps laying digital images on top of real ones when looking through a smartphone screen have concrete applications for real estate agents, designers or architects, and several startups are already focusing on using AR in the property business.

For all the buzz about bitcoins and cryptocurrencies, blockchain technology might have its most immediate use in real estate as a new mean to record deeds (which change hands when property is transferred), and some states have already updated their laws to allow it.

Entering 2018, PropTech, while still in its early innings as an industry, has matured. We can look forward to next year being a turning point for companies bringing modern solutions to the largest industry of the world, real estate. And by extension, the sector could be one of the most innovative and best performing within the tech industry overall. Exciting!

Popular in the Community

Close

What's Hot