Amid all the jitters in the banking sector, we have to ask ourselves…what’s happening with the PropTech sector?
The short answer is that investment in the sector is down, but it is definitely not out. Investors are continuing to pump money into ventures ranging from online platforms connecting buyers with mortgage providers to building lending management software.
The first quarter of 2023 saw nearly 180 investment deals involving PropTech firms, roughly the same number as the first quarter of 2022, the Commercial Observer reports. However, the deals were much smaller, with the overall volume of venture capital money pouring into PropTech companies falling to $1.69 billion in the first quarter. That represents a 77 percent decline in the first three months of the year compared to the same period in 2022 when it stood at $7.44 billion.
The first few weeks of the second quarter have also seen some big ups and downs in funding for PropTech companies, according to the Center for Real Estate Technology & Innovation, or CRETI.
Meanwhile, the second week of April saw PropTech investments fall to $245 million, down from $645 million during the same week in 2021. But funding bounced back in the third week of April, with $450 million worth of investment deals, a shade higher than the $449 million the same week in 2022, according to CRETI.
When specifically looking at the commercial real estate market, the office market is reeling as big tower owners and developers struggle with large vacancies, there has been a pullback in interest in paying for new PropTech services and technologies, observers say.
That said, investors are continuing to back a number of new PropTech companies. Recent deals include a $100 million investment deal landed by Habi, which operates a platform aimed at streamlining the process of buying and selling real estate, and CrowdProperty, a UK company that just raised $18.7 million for its development lending platform, CRETI reports.
“We observed a slowdown in investment activity during the first quarter relative to the same period last year, but we continue to see capital available for outperforming companies in our space,” Matthew Boras, senior vice president of Manhattan-based RXR Digital Ventures, told the Commercial Observer. “Despite expected near-term macro headwinds impacting startups across all industries, we are more excited now than ever by the investment opportunity presented by the trends driving technology adoption across the real estate and construction industries.”
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