The future of PropTech investment

By Rishi Banerjee and Laura Sears

Today, SEC Newgate UK hosted a webinar looking at the future of PropTech. We welcomed an esteemed panel of experts – Sammy Pahal, Managing Director of UK PropTech Association; Guy Windsor-Lewis, CEO and founder of Locale; Muir Baxter, Sales Director at SmartRent; Emily Laverick, Marketing Director at Built-ID and Jules Barker, Global Head of Product at WiredScore.

What was immediately apparent was the fact that the term “PropTech” is still a bit of an unknown. Whilst social media has helped to cut through the noise for some such as Built-ID, the sector still faces challenges in branding itself and consequently both B2B players and B2C audiences continue to grapple with the fundamentals.

So, what’s the investment case for PropTech? The sector has a small pool of successful, mature companies who do not need or do not necessarily want the investment while at the same time an ever-growing pool of start-ups, that continue to make their case and look for backing. Real Estate Innovation Network (REIN) identified 1,622 PropTech start-ups in Europe alone in 2019 while Investment in PropTech was up 69% in 2019 year-on-year to $9.0 bn, according to global investment bank GCA.

But with many accepting that tech adoption is on the rise in the immediate aftermath of the Covid-19 pandemic, is this really following suit when it comes to investment backing over the past 12 months? Investment has certainly helped some grow their product rapidly, improve client feedback and expand without holdbacks.

Guy Windsor-Lewis of Locale suggested that in the days before the pandemic, there was a ball of cash, but this last year hasn’t seen it deployed due to the economic uncertainty and therefore there’s now a mountain of cash waiting to find homes in the PropTech world, particularly with a new raft of investors who see PropTech as “sexy”.

Most interesting was the panel’s observation that ESG is gaining momentum not just within traditional property sectors but also within PropTech. In the last 12 months, venture capitalists are starting to drive ESG further up the agenda, recognising that PropTech is a significant ally in the sustainability race. Interestingly, earlier this month, real estate tech investor Fifth Wall launched a Carbon Impact fund, a new $200m venture fund to accelerate the decarbonisation of the industry through innovative solutions.

While data and connectivity has been a focal area of years past – investment in being able to monitor the wellness and wellbeing, for example - air quality monitoring – is likely to increase as a trend. Across the globe, the drive for companies to hit net-zero emissions by 2050 is further coalescing real estate tech investment around green solutions. 

As we see glimmers of light at the end of the tunnel, it looks like, if PropTech firms make their case for it correctly, the appetite for investment is certainly there.