Real Estate Tech Venture Capital Report - Q1 2017

Investments in real estate businesses, including real estate tech, was off to a strong start in Q1 2017.  

Despite the strong start, venture capitalists are extra cautious and doubling down on established businesses, while returning back to rational dealmaking in real estate and real estate tech, regarding new investment data from Q1 2017.

Venture firms deployed nearly $3 billion in 70 companies, according to data by Crunchbase. However, 90% of venture capital was received by only 10 companies, including WeWork, PropTiger and Placester.  Additionally, non-tech/software based businesses, received nearly $2.65 billion in funding.

Real Estate (Non-Tech/Software) | Q1 2017

  1. WeWork | New York City | $1 Billion

  2. Global Switch | London | $526 Million

  3. The Lighstone Group | New York City | $305 Million

  4. e-Shang Redwood | Shanghai | $300 Million

  5. OfferPad | Gilbert, AZ | $230 Million

  6. ASRR Capital | Tel Aviv | $90 Million

  7. Ladder Capital Finance | New York City | $80 Million

  8. Opus Bank | Irvine, CA | $53 Million

  9. Phoenix Group India | Hyderabad, India | $47 Million 

  10. Knotel | New York City | $25 Million

Despite the disproportionate split between real estate tech and none tech investments, the global real estate tech sector received nearly $333 million from venture firms.  Venture firms deployed nearly $173 million in US based firms.  

Real Estate Tech (Software/Hardware) | Q1 2017

  1. PropTiger | Gurgaon, India | $55 Million

  2. Placester | Boston | $50 Million

  3. HouseCanary | San Francisco | $33 Million

  4. Knock | New York City | $32.5 Million

  5. Mindspace | Tel Aviv | $15 Million

  6. Credifi | New York City | $13 Million

  7. Square Yards | Gurgaon, India | $10 Million

  8. Nested | London | $9.9 Million

  9. Goodlord | London | $8.9 Million

  10. Trussel | London | $5.6 Million

$3.9 Billion Invested in Real Estate Tech

Real Estate Tech.  Venture capitalists invested $3.9 Billion in 26 Deals year to date, according to data by Crunchbase.  Carried by WeWork's $3 Billion investment by SoftBank, overall the global real estate tech sector has been off to a strong start.  Improving on investor confidence, mid-market investments, funding ranging from $1 million - $5 million, represented 46% of invested companies, pointing to a healthy overall growth in market activity.

Coworking.  Since the highly publicized success of WeWork, coworking has become big business.  WeWork, the leading coworking brand raised over $3 Billion in venture capital.  Knotel raised over $25 Million, financing the firm's rapid growth.  Collectively, the coworking sector raised over $3.25 billion in VC funding.


Demystifying Real Estate CRM Adoption Rates

Digital strategies have already delivered a major blow to businesses slow to respond. The very concept of work-strategies are being redefined as different generations enter and exit the workforce in the thick of a rapidly changing technological landscape fueled by startups.

An area of technological interest for the better part of ten years has been customer relations management platforms, or CRM. During that time, nearly half a billion dollars have been invested in some of today's leading CRM real estate tech startups globally.  However, as investors and real estate firms our capital to find the "Salesforce of real estate," a question remains,  do CRM's lead to sales?  

Based on a RE:Tech study, real estate organizations and brokerage professionals have access to a CRM system. In fact, 85% of real estate professionals said they have access to a CRM.  But, of more than 500 survey respondents, 45% said they use some sort of CRM to manage their business.  However, only 25% of respondents stated that having access to a CRM has lead to sales.


Has having access to a CRM lead to sales?



This trend in real estate seems to be backed by a larger macro trend in the CRM industry. Based on a CSO Insight study, 80% of the more than 1,000 companies surveyed have a CRM solution. But only a 1/3 have adoption rates of at least 90%.

The sentiment amongst real estate professionals has been, CRM's at best are considered a waste of time, at worst hinders production. "CRM's aren’t embraced by real estate professionals because, frankly, they don’t think it gives them a good return on their investment," according to a real estate broker in New York.

Additional research by Accenture reveals that:

  1. 59 percent of global sales executives say they have access to too many sales tools and are bombarded by too much-disaggregated customer data to be effective.
  2. 55 percent of sales representatives consider their sales tools to be more of an obstacle than a facilitator of sales performance.
  3. Sales productivity has decreased from 41 percent five years ago, to 36 percent today.
  4. 58 percent of sales executives are concerned about achieving this year’s sales targets.

It seems that many real estate professionals are struggling to drive value from their CRM tools. However, CRM is showing the highest growth of all the sub-segments of the cloud-computing industry, according to Gartner.

In the business of real estate, data is vital to sales and future sales. But statistics show that there’s a huge gap between gathering information and transforming it into meaningful and actionable to achieve sales objectives.

The Solution:  Customer Relationship Automation bridges the gap.  CRA transforms data into information that sales and business-development professionals can easily understand and take action on. Additionally, real estate professionals won’t be tied down mundane activities such as data entry. 

As a result:

  • Time:  CRA saves the average real estate professional an estimated 5 hours per week.
  • Accuracy: CRA's eliminate human error, such as data entry errors.
  • Efficiency: CRA's eliminates the time spent on activities such as downloading data or figuring out how to use it. 

Research: Customer Service is the New Sales

In today’s on demand world, sustainability and growth is dependent on customer service experiences that keep clients and potential clients engaged.

Customer acquisition is timely and costly, especially in the commercial real estate industry. Real estate companies with large, embedded client bases that improve customer retention may increase margins by hundreds of millions of dollars. How? By improving customer service.

While several real estate companies have begun to acknowledge the profit potential associated with churn reduction, also know as cancelation reduction, few have mastered the art of customer service. In the digital age, lease execution and commissions are no longer the singular point of victory. Customers are won long before the transaction. Retention is impacted by the experiences they have and the knowledge presented to the client while evaluating potential offices spaces, term negotiation, and other services.


A Game of Musical Chairs in Brokerage

Survey Question: Have you worked with multiple brokers? 4/5 tech startups seeking 5,000 sq.ft. switched brokers at least once in Q1-Q2 2016.

In the digital age, technology has helped with presenting better information with more robust data, but customer acquisition and retention has remained a white gloved service that requires the commodity of time.

Based on RE:Tech research, 80 percent of tech startups in New York seeking 5,000 sq.ft. (minimum) of office space switched brokers at least once due to poor service in 2016. The estimated value of what RE:Tech calls the “broker neglect” is $4.2 billion.

The service experiences most likely to frustrate clients:

  • Inaccurate claims
  • Under-delivered performance
  • Unresponsive to emails and phone calls
  • Impolite and/or unprofessional service

Survey: Real Estate Tech Competition Has Not Gotten More Fierce

In the age of technological innovation, buildings are getting smarter, people are more connected, and the workforce has become more mobile.  However, with change comes a increased pressure to compete and perform.  The Internet has made almost every company vulnerable to greater competition. Barriers to entry are withering, innovations are easily copied, and for many legacy businesses "disruption" is everywhere.  

As the real estate ecosystem continues to shift and consolidate, are real estate tech companies actually creating innovative solutions?  Are today's commercial real estate tech startups making real estate more efficient?  

According to a RE:Tech Survey, an overwhelmingly 95% of commercial real estate professionals believe real estate tech companies are not impacting their business or seizing the opportunity to innovate the industry.  "There are only a handful of real estate startups making a difference," say a Commercial Real Estate Broker in San Francisco

While Silicon Valley and Silicon Alley may be buzzing with startups, "many real estate tech companies are copying each other or picking the low hanging fruit," says a Senior Commercial Real Estate Broker in NYC.  


A Lack of CRE Disruption?

Q: Are today's commercial real estate startups impacting the Industry or your business?

A major challenge for many real estate tech companies has been customers acquisition.  Could part of the problem simply be inertia or is there truly a lack of ground breaking innovation?  While the answers could be a collective of both, the fact is "real estate tech has not gotten more fierce with competition," according to a Commercial Real Estate VP in Chicago.  

Recommendation:  The lack of competition and diversified product offerings impacts consumers, namely real estate professionals.  While there are tremendous opportunities for real estate entrepreneurs to make a longterm and positive impact on the industry, the lack of innovation and competition has kept the industry at a slight standstill.

To begin the next phase, real estate tech startups and entrepreneurs should evaluate process deficiencies within the real estate services value chain and implement a digital strategy that collaborates rather than alienate or imitate.  


Source: RE:Tech conducted a survey of 300 randomly selected commercial real estate brokers in New York, Chicago, Los Angeles, DC, Boston, Dallas, and San Francisco. 


The Decline of Real Estate Tech Startups

Entrepreneurship is vanishing in real estate tech.

Entrepreneurship in real estate tech seems to have gone the way of Greece’s economy — dramatic decline.

Real estate tech has felt the hit globally. A recent study conducted by Falkon shows that from 2012 to 2015, 282 real estate tech startups, on average, were launched each year. That number fell to a meek 69 in 2015-2016.

In just a few short years, the real estate tech industry took a hit of a 75.5 percent decrease.

The numbers are just as bleak when we look at the major real estate tech markets — NYC, San Francisco, Chicago, Toronto and London — collectively. 53 startups were launched in 2014-2015 followed by the launch of 16 during 2015-2016. The result was a 70 percent decrease in newborn real estate tech startups.

The location, location, location mantra doesn’t seem to apply here either.

Some of the largest tech hubs of the world can’t seem to shake this crippling trend either. In New York, the creation of just eight real estate tech startups in 2015-2016 has the city at a loss by almost 60 percent. London, even worse, took a 90 percent hit during the same period.

Now that the results are in, we must ask ourselves: why? Has real estate tech adoption slowed down or is it already over-saturated, showing signs of a maturing market? Is the changing funding environment to blame? And finally, what are the implications within the real estate industry?


New Real Estate Tech Startups (City)


It’s important to note that the real estate industry isn’t the only one to have been bitten by this abating bug. The Wall Street Journal reported that T. Rowe Price has devalued most of its investments in private technology companies like AirBnB, Uber and Dropbox Inc. Of the 17 tech companies T. Rowe has invested in, seven are now below purchase price.

Other firms, like Fidelity Investments and BlackRock Inc., that have invested billions into tech startups, confidently awaiting the big payoff, have also been marking down their stakes.

Regardless, the implications could be huge for the real estate industry.  Startups are disproportionately responsible for the innovation that drives productivity and overall growth in the real estate industry.  Considered as the real estate industry’s “R&D,” real estate tech startups account for new job creation as well as innovation.


New Real Estate Tech Startups (Global)


Overall, the underlying issue is job creation and churn. While entrepreneurship in the real estate industry is not for the faint of heart, in today’s dynamic economy, businesses are born, grow, and die.

If there is a disproportionate decrease in growth companies in the real estate industry, then labor and capital remain frozen in legacy real estate businesses. If the real estate ecosystem is not refreshed, innovation stalls, and growth slows

WeWork's Impact on Property Value

WeWork, the world's largest coworking space founded in New York in 2010, now has a valuation of over $16 billion dollars. Their recent valuation is comparable to the market values of Vornado and Boston Properties. 

With data from Falkon, RE:Tech recently ran a sample study on the benefits of coworking operators like WeWork and their impact property valuation.

  • Since lease commencement, WeWork has increased property value by 25.4%.
  • 1 Little West Street increased in value by 123% one year after WeWork began operations.
  • Average Property Valuation: $16.8M
  • Average Percentage Appreciation: 25.4%
  • WeWork Valuation: $16B
  • Total Equity Funding: $1.43B

Technology's Impact on Real Estate Sales and Brokerage

The Future of Real Estate Brokerage

Technology is completely reshaping the real estate industry, especially the sales and leasing experience.  It's also redefining real estate brokerage firms and organizations as they strive to increase sales and leasing activities by delivering a more engaged and personal experience, whenever and wherever the customers needs it, fulfilling the omni-channel promise of on-demand real estate, creating the next generation of real estate brokerage.

There is no shortage of technology platforms and tools made available to assist sales and leasing real estate professionals.  Today, a real estate professionals day - to - day performance and a large majority of activities are supported by tools across the entire sales process.  However, key metrics from RE:Tech Insight show that the performance of sales and leasing real estate professionals has not increased.  Despite broad investment into enterprise sales tools, technology, and automation, by real estate companies, all indications are that the return on investment from those tools is falling short.  While sales training is vital to a real estate professionals success, it has been disputed that digital and technological products may be underperforming.

This fundamental disconnect in objectives impacts many aspects of a real estate professionals operations, from goal setting and performance expectations, to day to day operations and use of technology tools. 

Are Tech Startups Overpaying for Office Space?


In recent years, the tech-startup sector has made a profound impact on revitalizing NYC's economy.  From creating thousands of new jobs to inspiring new neighborhoods and communities, the tech sectors economic impact has been targeted as the cause of dramatic upticks in both real estate prices and rents in NYC.

Fueled by venture capital growth and it's preference on calling Midtown South it's headquarters, some of New York's tech-startups may be on the verge of being priced out of a neighborhood they helped renovate.

According to a recent RE:Tech › Insight study, 65 percent of New York based startups believe they are over paying for office space.  The study focused on startups that are renting between 5,000 to 10,000 square feet and located in Midtown South, the epicenter of NYC's startup scene.  


Q: Is the Price of Office Space Expensive in NYC?


Additionally, nearly 70 percent of survey respondents that have office space between 5,000 to 10,000 square feet stated that they pay over $50 per square foot for office space, a minimum expense ranging from $3,000,000 to $6,000,000 per year.  

"For us, when our lease expires next year we're going to consider sharing space or taking space somewhere else to help manage our real estate expenses," according to a survey respondent in Union Square.   

As demand for Midtown South office space continues to remain healthy, asking rents seem to be remaining bullish.  "It's the price you pay in order to compete," according to a survey respondent in SoHo.  "Between the 6 month security deposit and high price tag for office space, real estate expenses are eating at our operating expenses." 


Q: How Much Do You Pay for Office Space?



According to the study, nearly 90 percent of survey respondents signed their current lease with employee growth in mind.  "The reality is that if you want to have the best and brightest minds working at our company, you're going to have to be here because employees want to be here," according to a survey respondent in Flatiron.

Failure opens opportunity for Real Estate Tech Startups

The failure culture of startups is killing innovation.  While the perceived risk of failure has been reduced with the accessibility of research and insight, the reality is that 8 out of 10 startups will fail.  However, when one company fails the door of opportunity opens for competitors, regardless of their innovation or competitiveness.   

In the competitive world of retail real estate, Storefront, a San Francisco based real estate tech startup, helped retailers 'beta test' a new retail concept before signing a long term lease.  However after receiving $8.9 million in venture capital funding in 2 rounds of funding from 17 investors, on March 18, 2016, Storefront shut down its pop-up retail platform

Founded in 2012, Storefront was amongst the second wave of real estate tech startups that ushered in a new era of real estate innovation.  However, with their sudden failure, Storefront has opened the door of opportunity for startups like MiLES and UK based startups We Are Pop Up and Appear Here to improve upon market share.  

While there still isn't a clear leader in the commercial real estate tech (cretech) - retail sector, the reality is that the herd is thinning.  And as real estate professionals begin to decide winners and losers, the luster of real estate tech is beginning to wear off as brokers, agents, and real estate investors focus their attention on profitability and "real" innovation rather than hype.

Bridging Commercial Real Estate's Gender Gap with Technology

The gender gap in commercial real estate has been a well documented fact in workplace equality and opportunity.  However, a new RE:Tech › Insight research is proving that digital fluency—the extent to which both men and women have embraced digital technologies to achieve a competitive advantage—is helping to close this gender gap and level the playing field for women in the workplace.

Emerging technology, such as apps, wearables, and innovative software has created new opportunities for women in commercial real estate. And the future looks promising as millennials mature and move into the ranks of leadership at work.

"In the past women were hesitant to help other women in the industry simply because opportunities were limited," according to a female commercial real estate broker in NYC.  However as technology continues to bridge the gender divide, "women have become more vocal about creating opportunities for everyone, especially for other women."  


Digital Fluency - Men vs Women

Women are 5X more like to use new technology than men

According to the RE:Tech › Insight study, women in commercial real estate were 5X more likely to use or experiment with early stage technology than men.  "Apps and mobile technology are creating opportunities and allowing leading female brokers to be more agile and gain new business," according to a female commercial real estate broker in NYC.  In terms of marketing and outreach, women were 10X more active on social media than men.  

Collectively,  the ratio of men to women working in commercial real estate brokerage in NYC was 7:3.  


Research: Qualitative Study - Sample of 200 NYC Agents/Brokers.

How Your Brands Relevance Wins Business in Real Estate

Branding is one of the most important aspects of any real estate business.  From leasing office space and retail to investment sales and residential, an effective brand strategy gives you a competitive edge in increasing market share and relevance amongst your target audience. But how can branding impact your real estate business?

Simply put, your brand is a reflection of your clients, customers and employees.  Branding has an impact on the decision making process. While your real estate brand represents you and your promise to your clients, customers and employees, it tells the outside world what they can expect from your services, and it differentiates you from your competitors'. 


In an independent RE:Tech › Survey Study* of 100 early stage tech startups, 90 percent of survey respondents, believed at first glance, a real estate brokerage firms brand impacts their decision making process of which firm they'll hire to lease office space. With a qualitative focus on brand "values" and "relevance", today's emerging companies seem to care more about who they work with rather than simply leasing space.  The remaining 10 percent of survey respondents stated that experience and referrals/word of mouth are important.

According to a survey respondent, "The best communications we've received from a real estate company came from companies knowing who they are."  



5 Things Your Real Estate Brand Should Be Saying About Your Business:

  1. I am a professional and I take my business seriously.
  2. I know who I am and what my brand represents.
  3. I understand my audience.
  4. I am current.
  5. I am unique.


The RE:Tech Brand Survey was conducted between November 2, 2015 and February 1, 2016. 

*RE:Tech Survey Respondents

  • Markets:  NYC, San Francisco, Chicago
  • Respondents: Founder(s), CEO, CMO, and/or CFO
  • Company Size: 5 - 30 employees
  • Year of Operation: 1 - 5 years
  • Financing: VC Backed and/or Profitable


The iPhone is the Most Popular Mobile Device by 63 Percent Amongst Real Estate Professionals

Approximately 63 percent of U.S. real estate professionals who work for real estate brokerages said they use their iPhone for work related purposes, according to a recent cobranded study by RE:Tech and The News Funnel. The study, which was conducted between November and December 2015, surveyed more than 1,000 U.S. real estate professionals about their technology usage and attitudes in order to gain a better understanding of how devices are used for work.

According to the snapshot market study, the iPhone was the preferred mobile device amongst real estate professionals. Overall, iOS devices, including iPhones, iPads, and MacBooks were the most popular mobile devices, representing 76 percent.

The most popular personally owned device used for work was the iPhone, followed by the iPad at 10 percent, MacBook at 3.3 percent and Samsung Galaxy at 2.3 percent. Other responses included a multitude of other devices including HTC One M7 and M8, Microsoft Surface, Motorola XT1097, and other devices representing 21 percent.

Emerging Trends: When asked how real estate professionals use their devices at work and play consumers provided some interesting answers, particularly for smartphones. Respondents listed impromptu prospecting as the number one way they used their smartphones, followed by social media and checking news.

Bring Your Own Device (BYOD): According to the study, devices that were once bought exclusively for personal use have become increasingly popular for work. The popularity of work and play devices has gained favor for many working professionals, making Bring Your Own Device (BYOD) a growing trend in the real estate industry, especially amongst millennials.

Work From Anywhere via Mobile Apps: Smartphone owners ages 25 to 40, 55 percent use apps to conduct work related activities. The ability to conduct work from anywhere was a common theme amongst millennial real estate professionals, a trend that has been echoed throughout other industries. 

Annual Report - Global Trends in Venture Capital Investments in Real Estate Tech

VC Funding in Real Estate Tech Startups › 2013 - 2015

Total equity investments into venture-backed real estate tech startups.

Venture capitalists invested $1.42 billion in 148 deals in 2015. Total venture dollars deployed to real estate tech startup companies for the year decreased 2.5 percent and total deal count was down 16.5 percent compared to 2014 when $1.45 billion was invested in 176 deals. The third quarter marked the second highest funding round since the third quarter of 2014 with $570 million of venture capital invested in a single quarter.

The $220 million and $279 million investment in the first and fourth quarter of 2015 were the second and third lowest funding rounds since the first quarter of 2014. The annual total average venture amount peaked at $7.1 million, a 7.8 percent decrease since 2014 with $7.7 million, and 91.9 percent increase since 2013 with $3.7 million.

The second half of 2015 out performed the midyear average venture amount by 27 percent, a delta of $1.8 million. Despite the fourth quarters dramatic venture funding decline, the third and fourth quarter average funding amount peaked at $7.97 million. 


In the full RE:Tech VC Investment Report, we analyze a full range of venture activity in real estate tech, including: 

VC Funding in Real Estate Tech

› Total Funding in Real Estate Tech

› Total Deals in Real Estate Tech

Real Estate Tech Deals: Sector

› Total Deals in Residential and CRE Tech

› Total Investments in Residential and CRE Tech

Real Estate Tech Mergers & Acquisitions

› Real Estate Tech M&A by Number of Deals

› Itemized list of Real Estate Tech M&A

Real Estate Tech Deals: Region

Future Outlook of VC Funding in Real Estate Tech

Consumer Confidence in Real Estate Tech Increased by 7.25 Percent

The RE:Tech Consumer Confidence Index (RETCI) is an indicator designed to measure consumer confidence, which is defined as the degree of optimism on the state of the real estate technology economy that real estate professionals (consumer) are expressing through their activities.

The Average RETCI increased by nearly 7.25 percent in 2015 on a seasonally adjusted basis and overall real estate consumer sentiment from real estate professionals. According to the Real Estate Average Power Trend Index (REAPTI), since May 2014, the index decreased by nearly 11.8 percent. The Average RETCI is expected to moderately decrease by nearly 7 percent to nearly 70 percent in Q1 2016 according to the RE:Tech Futures RETCI Index.

The indexes for residential real estate demonstrated erratic movement since May 2014, while commercial real estate remained more moderate. The commercial real estate index, which overall remained stable in 2015, overall decreased by nearly 13 percent since May 2014.

Residential real estate’s assessment of current conditions was less positive when compared to commercial real estate. residential real estate professionals saying real estate technology business conditions are “good” decreased by nearly 12.5 percent since May 2014. However, during the same time period, commercial real estate assessment decreased by nearly 11 percent, expressing lack of “actionable innovation.”


Consumers’ optimism about the future short-term outlook declined moderately. The percentage of residential real estate professionals expecting business conditions to improve over the next 3 months decreased by 7.14 percent to nearly 65 percent, according to the Residential Power Trend Index (RPTI). During the same time, commercial real estate professionals expecting business conditions to improve remains moderately balanced at nearly 80 percent, with no significant movement, according to the Commercial Power Trend Index (CPTI). 

Investments in Real Estate Tech Faced Turbulence in Q4 2015

Real Estate Tech VC Funding Falls in Q4 2015
Venture Capital Investments in Real Estate Tech Fell Dramatically by 53%

Investors Expect Real Estate Tech Slowdown. After several strong years of never before seen funding of VC backed real estate tech companies, investors see a narrowing of deals for real estate tech companies in 2016. Venture capitalists who have invested in real estate tech are looking ahead with moderate concerns after a slowdown from near record highs in Q3 2015.

Download Full Report ›
Global Trends in VC Investments in Real Estate Tech »

After reaching nearly $570 million in Q3 2015, real estate tech investment fell by a dramatic 53 percent to $27 million in Q4 2015. While the overall sentiment amongst real estate professionals remained stable, the negative sentiment amongst investors quickly manifested itself in Q4 at never before seen drop off levels.

“I think there will be a clearer divide between ‘haves and have nots’ with most funding going into the winners but the general market slowing down as investors wait for exits to materialize, according to Namek Zu’bi Founder & Managing Partner at Silicon Badia, investor in Compstak, Honest Buildings, and Storefront. “ I predict there will be some consolidation, particularly in commercial real estate tech, with synergistic players merging together to create more valuable plays.”


Real Estate Tech Startups Could Face Fresh Valuation Pressure in 2016. On the heels of higher interests, today's highly valued real estate technology startups could face tougher private fundraising conditions in 2016. The move could making it more difficult to raise capital than in 2015, especially in sectors like commercial real estate technology where the user adoption rate is already more challenged compared to residential real estate tech.

“There's a plethora of early stage technology startups that are spurring interest and investment from the VC community outside of the US.” said Ashkan Zandieh, Founder of RE:Tech. “The growth of the on-­demand economy, specifically in residential and multifamily, in the global market is an area we’re paying close attention to. Markets like Asia, UK, and India continue to be particularly robust and dynamic.”

Is Government Policy and Capital Markets Impacting Real Estate Tech Fundraising in Emerging Markets?

For the better part of 2015, real estate tech investments were trending upward.  Talks about a lower follow-on funds and down round in a bull market was unfathomable, especially when real estate and tech's global markets were outperforming estimates.  However in 2015, the real estate tech sector went through an interest rate hike, policy change, and lower total capital invested in the sector, begging the question, "are we in a real estate tech bubble?"

CommonFloor, a residential real estate tech startup in India, was the first startup in 2015 to receive capital from investors less than its previous round.  In 2014, the startup collectively raised a Series D and Series E, totaling $40.4 million (USD).  However, in Q1 2015, the startup raised a Series F, totaling $15 million, a dramatic 63% decrease since 2014.


While the valuation of the startup is unknown, the lower follow-on fund for the real estate tech startup may not come as a surprise to real estate investors in India and global markets.  Since 2014 and as recent as Q1 2015, lawmakers in India have been discussing revamping a version of a lapsed Benami Transaction Bill, which will impact concealing the identity of true buyers or sellers (developers), along with investing in real estate with untaxed income or unaccounted wealth, aka "Black Money," an illegal yet common demand from landlords and developers in India.

As the current market shifts, venture capital will dwindle and shrink valuations, especially in emerging and niche markets.  Some tech investors expect down rounds to become more common place in emerging real estate tech markets in 2016, just as they do when there is a macro market correction. 

A similar affect is also being felt in core real estate markets on the heels of U.S. interest rate increase.  Learn More › 


RE:Tech Futures 2016 - Emerging Trends in Real Estate Tech

Emerging Trends 2016.

Real estate has gone beyond the digital tipping point. The sector is gathering momentum towards rapid and wide scale transformation, driven by both real estate technology and a responding wave of innovation investment with both residential and commercial brokerage firms.

The challenge for real estate is to understand the technologies that are reshaping and will continue to reshape the future and how to strategically invest towards the future. The way residential and commercial brokerages think about management of the built environment is already changing dramatically.  Residential and commercial brokerage services are also empowering themselves with technology, allowing them to work more effectively and deviate from traditional working hours and practices.

To leverage future technologies effectively and competitively, real estate firms need to decide where they intend to differentiate. This differentiation strategy will create a paradigm to define investment. When this direction is in place, real estate firms will understand their own technology adoption landscape. Currently, real estate firms are pursuing competitive advantage through three paradigms:

  • Enhancing and extending enterprise efficiency through technological transformation
  • Improving customer propositions for greater revenue
  • Changing culture by providing resources to increase performance

Emerging Trends in Commercial Real Estate Marketing - Precision Marketing

Generating Leads through Precision Marketing

In today’s competitive and complex brokerage environment, how do you evaluate the myriad opportunities available to advance to a more precise marketing model? 

According to a recent RE:Tech Insight study, 15 percent of US commercial real estate brokers are delivering tailored digital marketing messages to deliver local outcomes. More than 65 percent of today’s commercial real estate brokers are focused on e-mail marketing and outreach as the primary form of advertising. As a result, an overwhelming majority of today’s commercial real estate brokers are not delivering targeted marketing messages to prospective clients. 

Commercial Real Estate's Data Driven Future

Emerging Trends ›
Commercial Real Estate's Date Driven Future

Imagine a world where data can be analyzed, processed, and "think" within seconds.  A world where data and systems are so interconnected it's thought of as one.  At the start of Q4 2015, RE:Tech conducted a study on technology's impact on real estate investing.  Survey respondents comprised of real estate investors, asset managers, and investment sales brokers.

In the real estate industry, data is the Holy Grail.  It's the source of our knowledge and nearly all decision making capabilities.  From investing to leasing, the data driven world of real estate enables businesses to compete and excel.  In today's infinite world of software, how can future real estate driven businesses leverage data to increase performance?

According to a RE:Tech › Insight Survey, 35 percent of commercial real estate professionals believe software enables better decision making.  Optimistically, several survey respondents believe smarter real estate software can evolve by "learning," similar to artificial intelligence or an "IBM Watson" like capability according to a real estate investor in Chicago. 

The future of real estate may be in discovering new connections, not just to inform, but to actually assist in key business decisions.  While enterprise software is becoming increasingly predictive by correlating data trends, the future may be to proactively articulate situations rather than reactive to market stimuli.  In essence, the future of real estate may be programmed to be fully aware of the real estate experience and ecosystem.

"The future of our business is heavily rooted in data", according to an asset manager in New York. The future of real estate software will enable investors to make decisions that empower businesses to run more efficiently.  According to a RE:Tech › Insight Survey, 51 percent of real estate professionals believe that qualified data is a primary decision making factor. 

To fully capture the potential of real estate intelligence, visionary real estate companies will find new ways to leverage software and apply it to as many practical scenarios as possible.  Additionally, 77 percent of real estate professionals believe that within the next five years, real estate companies will adopt a tech first methodology.  Only then will software be able to spur innovation and raise the operating-performance bar across organizations.