Investor confidence continues to ride high behind robust deal flow, increasing M&A expectations and strong portfolio performance, according to the Global PropTech Confidence Index from MetaProp, a proptech venture firm. The fallout from the failed WeWork Cos. IPO, as well as the move into an election year, brings some uncertainty to the space, which may explain the drop from six months ago.
As the space begins to mature, proptech startups are hiring more employees and hitting elevated yearly revenue numbers. With startups continuing to flood the market, consolidation will remain high. An increasing sentiment in the ability to raise capital is met with concerns of bloated valuations from around the space.
“The Global PropTech Confidence Index shows continued strong investor interest in proptech,” says Christopher Beach, REBNY’s chief technology officer. “This report demonstrates that New York City remains a global hub for technology development and innovation, providing the solutions needed to address the challenges facing the real estate industry.”
Additional year-end 2019 Global PropTech Confidence Index highlights include:
- 80 percent of investor respondents expect to see either more acquisitions or about the same number of acquisitions in 2020 compared with 2019.
- 81 percent of startups expect it to be either easier to raise venture capital or about the same in 2020 compared with 2019, up from 45 percent at year-end 2017.
- 45 percent of investors plan to make more investments in 2020 compared with 2019, down from an all-time high of 64 percent six months ago.
- 42 percent of startups said it was either likely or very likely their company would either be acquired, go public or have a major liquidity event in the next three years. This number is up from 28 percent in mid-year 2018.
- 16 percent of the startup respondents are companies founded by females, an all-time high and double the number at year-end 2016.
- 86 percent of investors said proptech companies in their portfolio are currently performing above expectations or meeting expectations, in terms of customer growth.
- 34 percent of startup respondents had more than $1 million in total annual revenues in 2019, up from 24 percent a year ago.
- 42 percent of startups are targeting mixed-use assets for commercial deployment, a major increase from 23 percent at year-end 2017.
Andrea Zander is web content editor at Institutional Real Estate, Inc.