Publications

- February 1, 2019: Vol. 13, Number 2

Proptech start-ups bemoan slow decision making

by Marek Handzel

Proptech start-ups are finding ponderous decision-making processes a major barrier when it comes to establishing partnerships with established real estate companies.

A recent study conducted by Union Investment and the German Tech Entrepreneurship Centre (GTEC), which involved polling some 100 proptech companies worldwide, has revealed that more than 52 percent of digital innovators cite “slow and cumbersome decision-making processes” as a major problem when trying to set up working relationships with established companies. For 68 percent of respondents, speeding up their partners’ ability to make decisions is high on their wish list for effective cooperation, followed by a greater appetite for risk on the part of established companies and more willingness to embrace different collaboration models.

Union Investment suggests that part of the problem may be a lack of understanding on the part of young company founders when it comes to the various processes and checks that have to be carried out in the real estate sector. “Regulations, IT security and documentation requirements, combined with a myriad of prescribed processes, all create an obstacle course for start-ups which hinders cooperation with established real estate companies,” says Jörn Stobbe, chief operating officer and managing director of Union Investment Real Estate.

“Decision-making processes cannot be changed by taking a disruptive approach,” says Stobbe, commenting on the survey results. “Start-ups need to learn that complex decision-making processes and the openness shown by many real estate players towards entering into alliances of various forms are not mutually exclusive — in fact, they are two sides of the same coin.”

Stobbe says that pilot projects are the most efficient way for proptech start-ups and real estate businesses to get to know each other. “It’s important not to wait until everything is perfect before you get going, though, otherwise you’ll probably be too late to market,” he adds.

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