MetaProp Index Year End 2021

Proptech investors shrug off economic woes

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Karl Tomusk

Despite inflation, instability and rising interest rates, confidence in real estate innovation has hit a record high among investors, according to the latest MetaProp Global Proptech Confidence Index.

Investor confidence reached 9.3 out of 10 in the MetaProp survey of investors and startup CEOs, up from a previous high of 9.2 at the end of 2020. By contrast, startup confidence fell from 7.7 to 7.4 in the same period.

The report, which has run since 2016, attributed the rise among investors partly to falling valuations among startups – caused by wider economic uncertainties, a maturing sector and downward pressure on company valuations trickling in from the public markets.

While this means most startup founders believe it will be as hard or harder to raise capital in the next year, investors are looking for more startups to solve problems in real estate.

Some 71% of respondents expect to make proptech investments over the next year, up from 54% six months ago. Investors also expect back eight startups this year – another record for the index.

Other takeaways

1. Finding ways to decarbonise real estate is the major challenge this year. But the second big concern is figuring out if and how Web3 – the next generation of the internet broadly based on decentralisation and tokenisation – can be incorporated into real estate.

2. Proptech startups are delivering better than expected results. Some 85% of investors said their portfolio companies are performing at or above expectations in terms of customer growth.

3. Working from home has become more popular in the last year. Four-fifths of startups said they expect at least one-third of their teams to continue working from home over the next 12 months – up from 71% last year.

4. Investors will focus on space management tools. One respondent said: “The rush of investment in tools to allow for ‘remote walkthroughs, etc.’ will slow. It’s not the massive pain point people think it is, and agents are getting by with existing tools such as FaceTime, Zoom, etc.”

5. Pressure is mounting for tech talent in real estate. A quarter of startup respondents said they expect to hire 20 or more full-time employees in the coming year (more than in any year since the index started in 2016), leading to an “unprecedented competition for talent”.

6. Tech leaders are still overwhelmingly male. Some 87% of startup CEOs said they are male, and 63% said they are white or Euro-American.

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