Interest from venture capital (VC) in the proptech sector has been going strong and there’s no sign that this will change, KBW analysts have found.
In fact, in a recent report issued by KBW, analysts stated that VC investment totaled $4.2 billion in 3Q (averaging multiple sources), with a 42 percent year-over-year increase, while year-to-date funding totals $13.8 billion. KBW analysts estimate 32 deal announcements in 3Q and 108 YTD through November. In the public universe, they estimate 3Q revenues increased 24.5 percent year-over-year to $5.5 billion, up from 18.5 percent a year ago. Real estate FinTech and co-working/flexible space have garnered the most investment this year.
While competition may increase at the margin, KBW expects the evolving proptech ecosystem to provide attractive acquisition opportunities. According to MetaProp’s mid-year survey, 64 percent of proptech VC investors expect to invest more over the next 12 months, an all-time high and up from 46 percent a year ago. In 3Q, two sizeable PropTech-focused VC firms closed new funds (Fifth Wall, Brick & Mortar), while two other firms are reportedly raising capital (MetaProp, Camber Creek). In addition, the first PropTech-focused special purpose acquisition company (SPAC), PropTech Acquisition Corporation (PTAC), priced a $150 million IPO in November.
CREtech has also issued a report and the firm’s chief intelligence officer Ashkán Zandieh has concluded the following:
• The residential proptech market has started to pull away from all other sectors.
• North America dominates venture capital activity in deal volume.
• Asian proptech companies are beginning to write bigger checks than US VCs.
• 2019 is the year of proptech with the seventh consecutive billion dollar month.