Real Estate Technology Investors Investing More in Fewer Deals

As we have previously shared, the Real Estate Technology (proptech) startup sector is seeing a lot of momentum. How have its funding trends evolved over time? On our Real Estate Technology research platform, we have analyzed the data through 2017 and can conclude that investments into the Real Estate Technology market have become fewer in frequency but larger in amount.

We have come to this conclusion from the following three takeaways:

  • Total funding amounts are seeing strong growth
  • Number of funding events is seeing a decline
  • Average funding per deal is increasing

We will illustrate these takeaways through a series of graphics.

Real Estate Technology Funding Amounts Seeing Strong Growth

Let’s start off by examining the annual real estate tech funding amounts, stacked by quarters.

Real Estate Technology Funding by Quarter
Real Estate Technology Funding by Quarter

This graph illustrates that real estate tech funding saw robust growth at the annual level. Specifically, the funding in 2017 was 162% of that in 2016. In addition, the CAGR in funding amounts from 2012 to 2017 is an impressive 63%.

We have seen that real estate tech funding is showing strong growth, but what about the number of deals?

Real Estate Technology Funding Events Declining

The following graph shows us the annual number of Real Estate Technology funding events, stacked by quarters.

Real Estate Technology Funding Count by Quarter
Real Estate Technology Funding Count by Quarter

The above graphic illustrates that the number of real estate tech funding events saw a healthy upward trend from 2011 to 2015 and declined thereafter. The CAGR in funding events from 2012 to 2017 is still positive at 16%, despite the number of funding events dropping by 76% in 2017 vs. 2016.

We have seen that real estate tech funding amounts are growing steadily but the number of funding events is seeing a decline. Let’s see if the trend in average deal size provides any further clues.

Average Real Estate Technology Funding Deal Size Increasing

The following graph shows the average funding per Real Estate Technology deal over different quarters from 2011 to 2017, as well as the trendline.

Real Estate Technology Average Funding Event Size Over Time
Real Estate Technology Average Funding Event Size Over Time

As we expected, this graphic indicates that the average Real Estate Technology funding per deal has experienced consistent growth over the past few years. The trendline shows that from Q3 2011 to Q4 2017, the average deal size has grown by approximately 350%. This stable upward trend in average deal size demonstrates that while the number of deals has dropped, the investments in Real Estate Technology have indeed become more substantial over time.

Conclusion: Real Estate Technology Investors Are Investing More in Fewer Deals

In summary, we have seen from the above graphics that real estate tech funding amounts experienced strong growth at the annual level, yet its deal count has seen a decline in recent years. Moreover, the average funding per deal has been increasing consistently over time. These takeaways lead us to conclude that the investors in Real Estate Technology are investing more money yet into fewer funding deals. It’ll be interesting to see if this trend continues in 2018.

What are your thoughts on this? Let us know in the comments section below.

To learn more about our complete Real Estate Technology research platform, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Real Estate Technology Sector Overview – Q4 2017

The real estate technology (proptech) sector has seen a lot of funding and exit activity over the past few years. Yet what are the different components of proptech and how do they make up this startup ecosystem? On our real estate technology research platform, we have classified the companies in the sector into functional categories. This blog post aims to examine these categories and how they compare with one another through a series of graphics.

IoT Home Is the Largest Real Estate Technology Category

Let’s start off by looking at the Logo Map for the real estate technology sector. As of January 2018, we have classified 1,613 real estate technology startups into 12 categories which collectively raised $46 billion in funding. The Logo Map highlights the number of companies in each category and a random sampling of these companies.

Real Estate Technology Logo Map
Real Estate Technology Logo Map

We can see from the Logo Map above that IoT Home is the largest real estate technology category with 329 companies. This category is comprised of companies that provide Internet of Things (IoT) devices focused on the residential real estate segment. Some example companies in this category include Ayla Networks, Nest Labs, Dojo Labs, and Entia.

We have seen what the different categories in real estate technology are and how many companies are within each category. What about their funding and maturity in relation to one another? Let’s look at our Innovation Quadrant to find out.

Most of the Real Estate Technology Categories Are Pioneers

Our Innovation Quadrant for the real estate technology sector divides the categories within the sector into four different quadrants according to their average funding and average age. The Heavyweights are the categories with companies that have reached maturity with significant financing. The Established are those that have reached maturity with less financing. The Disruptors are less mature but with significant financing. The Pioneers are less mature and with earlier stages of financing.

Real Estate Technology Innovation Quadrant
Real Estate Technology Innovation Quadrant

We can see from our Innovation Quadrant above that most of the categories within real estate technology belong in the Pioneers quadrant. The Commercial Search category has raised more funding and thus made its way into the Disruptor quadrant. Construction Management and Facility Management are the most mature categories with less funding. Life, Home, P&C Insurance category is in the Heavyweights quadrant for having reached maturity with significant financing.

We’ve now seen how the real estate technology sector is categorized and the relative stages of innovation for those categories. How do these categories stack up against one another in a holistic view? Let’s look at the Total Funding and Company Count Graph.

Commercial Search Is the Best Funded Real Estate Technology Category

The graph below shows the total amount of venture funding and company count in each real estate technology category.

Real Estate Technology Total Funding and Company Count by Category
Real Estate Technology Total Funding and Company Count by Category

We can see from the graph above that while IoT Home has the most companies in the real estate technology sector with 329 companies, it’s the Commercial Search category that leads the sector in total funding with $8.5 billion. The Commercial Search category is comprised of companies that help consumers and businesses find commercial real estate for rent and sale. Some example companies in this category include WeWork, 42Floors, CoworkingON, and PivotDesk.

Conclusion: Most Real Estate Technology Categories Have Large Growth Potential

The graphics above indicate that most of the real estate technology categories are pioneers and show large potential for growth and development. In addition, the sector is bustling with a good number of IoT Home companies. Yet the real estate search companies, including Commercial Search, Short-Term Search, and Long-Term Search, are receiving the lion’s share of the venture funding in the market. It will be interesting to see if this trend continues in 2018.

What are your thoughts on this? Let us know in the comments section below.

To learn more about our complete Real Estate Technology report and research platform, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Real Estate Technology Funding Trends – Q3 2017

The following graphs highlight recent trends in Real Estate Technology startup funding activity. The graphics include data through June 2017.

Total Real Estate Technology Funding by Year
Total Real Estate Technology Funding by Year

The above graph summarizes the total funding raised by Real Estate Tech startups for each year. 2014 has the most funding to date at just over $8B.

Real Estate Technology Funding by Vintage Year
Real Estate Technology Funding by Vintage Year

The above graph summarizes the total amount of funding raised by Real Estate Tech companies founded in a certain year. Companies founded in 2010 have raised the most funding at around $6B.

We are currently tracking 1550 Real Estate Tech companies in 12 categories across 62 countries, with a total of $44.6 Billion in funding. Click here to learn more about the full Real Estate Technology market report.

Real Estate Technology Funding by Round – Q3 2017

The following two graphs summarize the rounds of funding going into the Real Estate Technology space. Please note these graphics are made using data through June 2017.

Real Estate Technology Funding Amount by Round
Real Estate Technology Funding Amount by Round

The graph above shows the total amount of VC funding broken out by round. From 2006 to 2016, we saw a sharp increase in the overall sector funding, with the total amount peaking in 2015 and then declining thereafter. Early and late stage funding round events (Series A, B, and Late Stage) have accounted for a substantial amount of total funding.

Real Estate Technology Funding Count by Round
Real Estate Technology Funding Count by Round

The graph above shows the total count of funding events broken out by round. The general trend over the past few years has been a substantial number of funding events in the Seed stage and a fewer number in the Series A stage, with the funding events in the later stages quickly dropping off.

We are currently tracking 1534 Real Estate Technology companies in 12 categories across 62 countries, with a total of $43.3 Billion in funding. Click here to learn more about the full Real Estate Technology market report.

Real Estate Technology Exits by Category and by Year – Q3 2017

The following graphs highlight the exit activity in the Real Estate Technology sector. The graphics include data through June 2017.

vExit Activity by Category in Real Estate Technology
Exit Activity by Category in Real Estate Technology

The above graph summarizes the number of exits (acquisitions and IPOs) in each Real Estate Technology category. The IoT Home category leads the sector with 23 acquisitions and 4 IPOs. The Life, Home, P&C Insurance category is the runner-up with 11 acquisitions and 12 IPOs.

Exit Activity by Year in Real Estate Technology
Exit Activity by Year in Real Estate Technology

The above graph summarizes the number of exits (acquisitions and IPOs) in Real Estate Technology by year. 2016 currently leads the sector with 25 acquisitions and 2 IPOs. 2014 is the runner-up with 18 acquisitions and 3 IPOs.

We are currently tracking 1527 Real Estate Technology companies in 12 categories across 62 countries, with a total of $38.5 Billion in funding. Click here to learn more about the full Real Estate Technology market report.

Average and Median Age by Real Estate Technology Category – Q3 2017

The following graph shows average and median age in the Real Estate Technology sector. The graphic includes data through June 2017.

Age by Real Estate Technology Category
Age by Real Estate Technology Category

The above graph summarizes the average age and median age of companies in each Real Estate Technology category. The Life, Home, P&C Insurance category has the highest average age at around 13 years and the highest median age at around 12 years. Construction Management follows behind with an average age of 12 years and a median age of 9 years.

We are currently tracking 1519 Real Estate Technology companies in 12 categories across 62 countries, with a total of $38.4 Billion in funding. Click here to learn more about the full Real Estate Technology market report.

Real Estate Technology Companies Founded by Year – Q3 2017

The following graph shows the founding date distribution in the Real Estate Technology sector. The graphic includes data through June 2017.

Real Estate Technology Companies Founded by Year
Real Estate Technology Companies Founded by Year

The above graph summarizes the number of Real Estate Technology companies founded in a certain year. 2014 ranks at the top with 241 companies founded in that year. 2013 is close behind with 196 companies founded.

We are currently tracking 1511 Real Estate Technology companies in 12 categories across 62 countries, with a total of $38.1 Billion in funding. Click here to learn more about the full Real Estate Technology market report.