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MetaProp's Aaron Block said tailwinds remain strong despite less than half of investors planning more investments this year than they made in 2019

MetaProp: Investor sentiment cools over property tech

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Paul Unger

Confidence has dipped in the past six months among investors looking to put money into ventures in real estate innovation due to perceived over-valuations and WeWork’s aborted IPO, according to an extensive survey by the New York-based VC.

This year, MetaProp surveyed a record 2,300 investors and startup founders for its Global PropTech Confidence Index.

The survey findings showed that the impact of what it dubs ‘the WeWork DiePO’, as well as moving into a US election year, has brought some uncertainty and caused a dip in sentiment during the past six months.

The report’s authors found that “as the space begins to mature, we’re seeing proptech startups hire more employees and hit elevated yearly revenue numbers. With startups continuing to flood into the market, consolidation will remain high. An increasing sentiment in the ability to raise capital is met with concerns of bloated valuations.”

Other findings:

  • 45% of investors plan to make more investments in 2020 compared to 2019, down from an all-time high of 64% six months ago
  • 86% of investors said that companies in their portfolio were currently performing above expectations or meeting expectations in terms of customer growth
  • 80% of investors expect to see more or the same number of acquisitions in 2020 compared to 2019
  • 81% of startups expect it to be easier or the same to raise venture capital in 2020 compared to 2019, up from 45% at year-end 2017
  • 42% of startups said it was either likely or very likely that their company would either be acquired, go public or have a major liquidity event in the next three years. This is up from 28% in mid-year 2018
  • 16% of the startup respondents were founded by females, still way belowan equal level with males but double the number MetaProp found at year-end 2016
  • 34% of startup respondents had $1m or more annual revenue in 2019, up from 24% a year ago
  • 42% of startups are targeting mixed-use assets for commercial deployment, a major increase from 23% at Year-End 2017

MetaProp produces the Confidence Index twice a year in partnership with the Real Estate Board of New York (REBNY) and the Royal Institution of Chartered Surveyors (RICS).

Aaron Block, MetaProp co-founder and managing partner, said: “The entrepreneurs, investors and industry observers want to know how to make sense of proptech’s substantial tailwinds and WeWork’s setbacks. They want to understand how these market dynamics affect sentiment. The Global PropTech Confidence Index is the only research that compares future period insights and perspectives from the top real estate technology market participants. To me, this period’s results demonstrate proptech’s resilience. Both PropTech investors and PropTech startups clearly believe that technology-led innovation will remain a growth engine and value driver for the real estate industry.  I’m particularly encouraged by the investors’ consistent optimism.”

Christopher Beach, REBNY’s chief technology officer, said: “The Global PropTech Confidence Index shows continued strong investor interest in proptech. This report demonstrates that New York City remains a global hub for technology development and innovation.”

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