Proptech is rapidly expanding and evolving in scope and size; and we are currently in the third wave.
To summarize the history of proptech in the US:
Proptech is a broad-based term for innovative, technology-enabled and technology-based solutions focused on real estate assets, and various parts of the real estate life cycle.
Andrew Baum of the University of Oxford, and others have suggested four main verticals for proptech: smart real estate and building technologies, shared economy, real estate fintech and contech.
Smart building technologies
Solutions in this vertical are focused on the operation and management of real estate assets. Often these solutions depend on wireless connections that track and share information about the building’s operations and costs. This information allows users to manage and control usage, and also to automate processes.
The sharing economy is a peer-to-peer (P2P) business model for buying, providing or sharing access to goods and services through an online platform. The sharing economy has transformed real estate with coworking, coliving, short term home rentals and hourly rate meeting rooms.
Real estate fintech
Real estate fintech companies include peer-to-peer crowdfunding platforms (Fundrise), as well as business-to-business (B2B) platforms focused on banks, lenders and other finance companies (Built). Not many people are focused on real estate fintech, but it's the largest lending category in the United States that relies so heavily on antiquated technology.
Real estate fintech
The Construction Technology Institute defines construction technology as innovative tools, machinery, modifications and software used during the construction phase of a project enabling advancement in field construction methods, including semi-automated and automated construction equipment. Today, this includes connected equipment and tools, telematics, mobile apps, autonomous heavy equipment, drones, robots, augmented and virtual reality, and 3D printed buildings.
Investment in proptech
“...I would characterize the last five years as being an ‘Age of Enlightenment’ for major real estate owners, operators, and developers: CIOs were hired for the first time, large IT budgets have been allocated and are growing, and almost every major real estate owner now recognizes that adoption of new technology is existentially critical to their future strategy.”
- Brendan Wallace, Co-founder and managing partner, Fifth Wall Ventures
Investment and interest in proptech and tech-enabled solutions are growing rapidly. Proptech has attracted venture capitalists, who invested a record $31.6 billion in proptech start-ups globally in 2019, according to a report from CRETech, a commercial real estate tech research and marketing group.
This was a record-breaking high. During the first half of 2019, the deal volume was already at $14 billion. The previous record was $12.7 billion in 2017; and a 152.7% year-over-year increase over $9.6 billion deal volume in 2018.
2019 was a banner year for proptech, but COVID-19 irreversibly changed prospects for 2020. During the pandemic, proptech investing was slow and cautious, and is likely to continue to be so for the short term. Investors are limiting new investments and focusing on their portfolio companies.
However, there is optimism that as life returns to normal, startups will start acquiring new customers and proptech investors will start investing again. And startups that make our new normal, working remote simpler and easier are likely to have their moment to shine. Tech solutions that can help maintain normalcy and productivity even in remote settings, for example reduced reliance on in person meetings; or digitizing workflows are likely to be resilient, and thus very attractive to investors.
Builders Patch and proptech
Builders Patch is a cloud-based platform for developers, HFAs, and banks. Our platform focuses specifically on underwriting and closing for multifamily and affordable housing projects.
Builders Patch is a proptech startup. We are also a real estate fintech startup. Our proprietary B2B technology platform simplifies and shortens the closing process. And we bring all parties together in one place, online.
We are the one of the only real estate fintech startups focused on housing tech. We know the multifamily underwriting and due diligence process is challenging. We want our clients to build and fund more faster.
Your underwriting and closing process can be more efficient with our powerful and popular remote-friendly features:
- Collaboration: team chat, data room, task management and more
- Due Diligence: collation of documents, complete checklists, etc.
- Proforma: complete online pro forma synced from your Excel file
- Underwriting Memo: created in a click, and shared with your bank