Investors, Startups Still Keen on PropTech

Positivity persists in the real estate technology industry, according to MetaProp's latest Global PropTech Confidence Index.
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MetaProp’s Year-End 2019 Global PropTech Confidence Index indicates that investors and startups remain highly optimistic about real estate technology, in spite of some unanticipated turbulence. The new report, which MetaProp produced in partnership with the Real Estate Board of New York and The Royal Institution of Chartered Surveyors, took the pulse of more than 2,300 investors and startup founders/CEOs, the highest number of participants ever surveyed for the index.


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The Investor Confidence Index totaled 8 out of 10 at the close of 2019, a notable decline from the all-time high of 8.8 recorded at mid-year 2019. The drop, MetaProp suggests, may be attributable to the hesitation bred by WeWork’s failed IPO and the uncertainty that comes with an election year. Still, strong deal flow and growing M&A expectations, along with solid portfolio performance continue to buoy sentiment. The Startup Confidence Index, on the other hand, held relatively steady at 7.2 out of 10, just a slight drop from the mid-year 2019 figure of 7.3. Startups continue to increase employee numbers and are reaching elevated yearly revenue totals.

Investor insight

Eighty-six percent of investors responding to the survey believe that when it comes to customer growth, PropTech companies in their portfolio are presently either performing above or meeting expectations. With regard to acquisition prospects, investors remained unexpectedly consistent. “In a year filled with M&A activity, most notably Procore acquiring project management platform Honest Buildings and MRI Software acquiring AI real estate pioneer Leverton, we were surprised that 80 percent of investors still expect to see either more or the same number of acquisitions in 2020, compared to 2019,” Aaron Block, co-founder & managing partner of MetaProp, told Commercial Property Executive. “This signals that we should be gearing up for some major M&A news within the PropTech space in 2020.”

As for investment plans, 45 percent of investors expect to make more investments or about the same number of investments in 2020 compared to 2019, denoting a decline from the record high of 64 percent seen in the mid-2019 index. It’s a change that MetaProp attributes to a combination of factors, starting with the fact that PropTech deals are being completed at a later stage and a higher dollar amount, which may cause the total number of deals to level off or decrease year-over-year. “Secondly, it’s important to note that only 15 percent of investors expect to make fewer investments in 2020, compared to 2019. With investors reporting strong portfolio performance, robust deal flow and increasing M&A activity, we remain bullish on how they view the market in 2020,” Block said.

Startup perspective

Startups had a very good year in 2019. Thirty-four percent of respondents recorded $1 million or more in total annual revenue, a year-over-year increase of 24 percent. Looking ahead, participating startup founders and CEOs are quite confident about venture capital, with 81 percent expecting it to be either easier to raise venture capital or about the same this year in comparison to 2019. The sentiment indicates a 45 percent increase over that seen two years ago at year-end 2017. Additionally, 42 percent of startups believe it is likely or very likely that their company will be acquired, go public or have a major liquidity event within the next three years.

MetaProp’s year-end 2019 index also revealed a notable shift at the micro level, with 42 percent of startups planning to focus on mixed-use properties for commercial deployment, compared to just 23 percent at the end of 2017. And there was a significant demographic change, as the number of responding startups founded by women rose to an all-time high of 16 percent, twice the amount recorded just three years ago.