The Future of Proptech Venture · Mark Accomando
The multi-trillion-dollar commercial real estate market is in the midst of exciting change. Innovation and technology have already given rise to a cohort of tech unicorns that sit amongst the world’s most influential real estate companies. If we follow the money, it’s clear that leading VCs are turning to real estate tech or proptech for new opportunities, returns, and disruption on a global scale.
In this Future of Proptech Venture series, we met with Mark Accomando, Partner at Heartland Ventures to discuss the future of proptech venture capital and emerging trends in the industry.
Heartland Ventures is an early-stage venture capital firm that invests in high-growth technology startups that are connected to LPs in the company’s network of large corporations as customers in the heartland. Learn more about Heartland Ventures at heartlandvc.com
What trends excite you the most in real estate tech?
Generally, I am excited by the continuing changes in regulation on enviornmental issues. The spped at which things are changing makes it very complex and complicated to keep up and I think this is one of the few areas that will impact every stage of real estate. Starting with site selection and envionrmental diligence, through the construction, renewable energy usage and ending with property maintenance. There are going to be some exciting times ahead for the industry and keeping ahead of the curve is a great opportunity for technology to step in and support at scale.
How has the entrepreneurial class in real estate tech changed in the past 5 years?
I think there are cycles here, much like anywhere else. We've seen real estate tech emerge as a separate category out of fintech and now real estate is branching off to include several other sub categories like insurance, construction, and evniornmental. The class of entrepreneurs has seen several folks moving aggressively into the sector who don't have experience in real estate but simply recognize it as the largest asset class with lots of potential. So, I spoke with loads of founders who were learning the industry and trying to uncover a problem to solve at the same time. More recently, I'm starting to see entrepreneurs with more industry experience rise to the top where they understand the genetle disruption path is a good one. You cannot make a complete legacy to digital transition over night. This takes time and for adoption sake, we need to meet the real estate professionals where they are today.
What areas of the real estate industry are not being addressed by tech?
There certainly is a lot of activity in the sector right now. I'm not sure that there really is an area that is being ignored by tech but I think there are certainly some shortfalls with existing solutions. With the amount of point solutions and niche products that exist and have a little bit of traction, bringing everything together appears to be the most pressing objective for many business leaders. It would be interesting to see how middleware or connected solutions across multiple business units and links of the value chain evolve.
What are some common characteristics you see in successful entrepreneurs?
I'll revert back to my previous point here about the best entrepreneurs understanding the industry, but more importantly, understanding the people and decision makers within the industry. There is no shortage of tech here but adoption challenges plague most startups. Too much too quickly and forcing that significant change leads to poor customer experience and often too much risk for the firms. So, I think long-term focus and meeting the customers where they are today with an eye towards scale is the right recipe.
What is your firm’s process when evaluating new investment opportunities?
Our firm focuses on product market fit as the primary diligence point. We look to incorporate experts from the industry in the evlaution process of any company we are seriously considering. This way, they can validate the severity of the problem and help us get conviction on willingness to pay to use a solution like this. Then, we know for certain that there is a market demand for this tool.
What are some of the common mistakes entrepreneurs should avoid when fundraising?
I recognize that managing your time as a founder is the most important thing you can do. In many cases, it's the only asset founders have. But, even when you're not fundraising, you should always be fundraising. Constantly exploring new partnerships and new investor relationships is the best way to align with the right people with shared values. It's easiest to raise money when you don't need it and in most cases it leads to the best partnerships as well. So, my advice would be to remain open to investor meetings. Have the conversation for 20 or 30 minutes. In that amount of time you should be able to get a good read on the investor. And, if it's a fit on both sides then you can worry about financing structures because at that point you would know for certain that this a a group or person that you want to partner with.
