Weekly Proptech: Friday, September 2, 2022

Written By CRETI
 
 
 

This Week in Proptech

This Week in Proptech — $175 million was invested across 11 companies at a median funding amount of $8.3 million. Some of the largest funding rounds went to property management, residential, multifamily, construction, and other proptech companies.

Proptech in a Nut Shell: In August, $1.39 billion was invested in real estate tech businesses, at a median funding amount of $209 million, and an IQR of $269 million. Compared to August 2021, capital allocation decreased by 33.9%.

Why Does This Matter?

This week we took a look at the real estate tech and public equities market (stock market) to better understand capital performance and exit strategies for investors and proptech companies.

In an analysis of publicly traded real estate tech companies on the CRETI Proptech Public Equities Index, the majority of companies went public over the past three years. Following rapid appreciation over the past several years, the NASDAQ index is down 21 percent, and the CRETI Proptech Public Equities Index is down 33 percent.

What Does This Mean For PropTech?

In an analysis by Nima Wedlake, Principal at Thomvest Ventures, this rising interest rate environment has had a particularly strong impact on real estate technology companies — resulting in a powerful one-two punch of (1) multiple contractions across all growth technology stocks and (2) softening housing demand resulting from elevated mortgage rates (median rates have nearly doubled from less than 3% to about 5.5% over the last year). Many real estate companies generate revenue on a transactional basis, meaning a softening housing market has a direct impact on revenue growth expectations.

This has led to declining valuation multiples across every real estate segment. For example, the average EV (enterprise value) to NTM (next twelve months) revenue multiple in the Brokerages & iBuying segment has fallen from a peak of 5.5x to 0.5x as of August 2022. Similarly, valuation multiples within the Digital Insurance segment have declined precipitously, from 18.8x in August 2021 to just 2.1x in August 2022.

CRETI PROPTECH VENTURE INDEX

CRETI Proptech Index
The CRETI Proptech Index is a private market real estate technology index tracking the financial performance of the proptech industry. It is the most followed proptech venture capital indices, globally. Contact us to learn more.

EVENTS

The Great Automation of Industrial Real Estate
Industrial real estate is undergoing a massive transformation, with a raft of new technologies and innovations being implemented across the sector. These include robots in warehouses, integrations for drone delivery, and flexible space that allows for nimbler and more efficient use. Leaders from Prologis, now the largest industrial REIT in the world, and industrial flex-space provider Saltbox will talk about how new innovations are changing the landscape for industrial and where they may be headed in the future.

Notable Rounds of Funding

  • August 31, 2022 — Landa, an NYC and Tel Aviv-based single-family and multifamily investment platform, raised a $62 million Venture Debt round.

  • August 30, 2022 — CleanFiber, a New York-based carbon-negative building insulation company, raised a $8.5 million Venture round.

  • August 29, 2022 — RentSpree, an LA-based multifamily rent payment and tenant screening platform, raised a $17.3 Series B round led by Green Visor Capital with investments from 645 Ventures, Vesta Ventures, Venture MLS, Rally Ventures, KEC Ventures, Gaingels, ECG-Research, and the California Association of REALTORS.

 
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