Shattering Ceilings: Venture Capital Investments in Black and Brown Founded Proptech Companies
Alex Lofton (Co-Founder & Managing Partner, Landed), Robert Reffkin (Co-Founder & CEO, Compass), Wemimo Abbey (Co-Founder & CEO, Esusu)
The proptech industry has seen a meaningful influx of venture capital investment, particularly in ventures founded by Black and Brown entrepreneurs. Since 2016, these firms have collectively raised $717 million in funding, highlighting an increasing recognition and support for diversity within the real estate technology sector.
Investment Trends
Investment dynamics have fluctuated, peaking in 2022 with $152 million and $115 million in 2021. Despite these shifts, the continuous investment underscores a steady interest in promoting diversity and innovation in proptech.
Median Funding Insight
Across all companies, the total median funding stands at $1.5 million, presenting a nuanced view of funding distribution. In 2023, the median funding was slightly higher at $1.8 million, following a peak of $2 million in 2022. The year 2021 matched the overall median at $1.5 million, while 2020 saw a notably lower median funding of $100 thousand. This metric sheds light on the evolving investment climate, reflecting both the challenges and opportunities faced by Black and Brown-founded companies in securing venture capital.
Top 6 Largest Investments
Notable investments include Compass with $370 million, Esusu with $130 million, Cover with $60 million, Landed with $31 million, Starcity with $30 million, and Nickson Living with $12 million. These entities span various proptech services, indicating the sector's diversity and potential.
Funding Stage Breakdown
Early-stage investments dominate, with Seed rounds comprising 47.06% of funding, followed by Pre-Seed rounds at 23.53%. This preference for early-stage backing highlights investors' readiness to support ventures from the outset. However, as ventures mature, the proportion of investment decreases, indicating a more selective approach to funding at later stages.
Top Investment Themes
Investment themes have concentrated on "Real Estate as a Service" and "SaaS," pointing to a shift toward digitalization and service-oriented solutions. Construction and financial services also emerge as focal points, showcasing a wide range of innovation opportunities within proptech.
Forward Outlook
The trajectory of investment in Black and Brown-founded proptech companies paints an optimistic picture of the sector's future. The diversity in investment themes and stages hints at a growing ecosystem ripe for innovation. The sustained investment promotes a more inclusive industry and propels forward-thinking solutions to address complex real estate challenges.
