Q&A | Kingma Ma, Proptech1 Ventures
Why governments need to talk tech and real estate as a blended subject and how to navigate the daunting landscape of thousands of techie names you have never heard of.
Kingma Ma is head of UK at Proptech1, a three-year-old venture capital firm headquartered in Germany with €50m to spend from investors such as JLL Spark, PwC, and Aareal.
Has property grasped climate tech yet?
A lot of the ESG drive that’s happened in the corporate world has come from the finance industry in the past couple of years. What’s really interesting now is that there’s a nice blend of both financial metrics, and sustainability metrics going hand in hand. That means traditional asset managers are becoming more clear in terms of how the sustainability measurements are directly affecting the valuations or their portfolios, too. So, I do think that real estate companies have adapted but that doesn’t mean the job is done. But you know, I think they are adapting towards, like the greater basic greater awareness and greater regulation shift.
I think if you look at pretty much every major real estate company, or major investment company that has a large real estate portfolio, almost every single one has a person in a leadership position now focusing on sustainability. And I think a large part of their responsibility is to look at new solutions to address ESG problems.
How is Proptech1 performing?
We’re a relatively new fund. The fund itself is a German fund that was set up in 2019. We have invested in 13 companies in our portfolio so far. Our sweet spot is mostly seed stage and series A stage meaning that these technologies, these startups that we’ve invested in, have often been formed maybe one to three years before we invest in them. Generally, we don’t expect startups to exit until maybe at least six or seven or eight years after their own inception. So out of the 13 companies have invested in, none have exited. We invest up to €2m as our first ticket size, and we reserve up to €4m in total for the company invested in. Average ticket size so far is about €1.5m. We launched in the UK last year and have two investments here and we’re very much looking forward to making more UK investments. We are also interested in other European countries, and actively looking in the Nordics and France as well.
How can property people make sense of the daunting landscape of thousands of tech names they have never heard of?
There’s almost different languages used between the traditional real estate sector and the tech sector. Anyone in this proptech ecosystem, where we’re trying to connect the two industries together, has an important role to try to translate one language into another. A lot of proptech startup founders themselves come from the real estate background, so they’re not mutually exclusive. But there’s still a long way to go.
I think that governments are keen to demonstrate how much technological innovation is happening in their countries. There is a link between economic prospects and how much technological innovation is going in. At the same time real estate is obviously a massive topic. It’s a huge industry for pretty much every country in the world. It’s enormous and powerful and always in the news, we’re talking about cost of living crises, which involves house prices going up, we’re talking about cladding, and we’re talking about energy efficiency issues. But what’s interesting is that there doesn’t seem to be much of a blend of the two sectors so far. I think we do have quite an opportunity, but also maybe a responsibility as well to emphasize that those two actually do merge very well.
Are tech companies finding it easier to sell into property?
There’s the directors of innovation being recruited into real estate, just as chief sustainability officers are. In fact many of them go hand in hand, because of the joint nature of that role. The more leadership positions there are, the more we will see influence and budget and mandate towards driving technological adoption for companies. Ultimately, they see that as their competitive advantage, either embrace new ways, or you might get out-competed by your competitors. We might be able to do things faster, do things better than you.