After venture capital funding reached record levels in the first six months of the year, can the sector maintain its momentum despite “some choppiness”?
Total investment in private proptech companies rose 5.7% on the same period in 2021, reaching $13.1bn, according to the Center for Real Estate Technology & Innovation.
However, the total capital raised fell 23% between the first and second quarters.
Moreover, the industry would have to raise a further $19bn this year to match last year’s $32bn haul, which was bolstered by a busy second half that saw several spikes in investment.
“It remains to be seen, but at these levels, the proptech industry is on pace to match or set a new record in venture funding,” said Ashkán Zandieh, co-chair at CRETI.
“While I’m bullish on the financial health of the private proptech venture market, it’s worth noting that there is some choppiness in the market which makes landing a little rough for companies across the board.”
As the two most popular sectors, industrial and residential each accounted for 26% of total investment.
Though still popular among VCs, residential was far less prominent in H1 2022 than it was last year when nearly half (49.1%) of all proptech funding went into the sector.
The report credited the Biden administration’s focus on infrastructure – which led to the passage of a $1.2tn infrastructure bill in November – for fuelling growth in industrial and construction tech this year.
These two sectors represented 32.4% of proptech capital allocation.
JLL Spark hits milestone
The CRETI proptech report came just days after JLL Spark announced that it had invested $340m across more than 40 proptech startups since its launch four years ago.
JLL’s venture arm targets tech that can improve commercial real estate, including its development, management, leasing, investment and occupancy.
Mihir Shah, co-CEO of JLL Technologies, the parent division of JLL Spark, said: “Our goal is to bring the best of the startup ecosystem to JLL and its clients, globally.
“JLL Spark is unique in the industry, combining a world-class venture capability and unrivalled expertise in the commercial real estate sector with an ability to provide a path to revenue to the teams we invest in.”