Inside the Q3 2017 Real Estate Tech Venture Capital Ecosystem

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One thing is clear in real estate tech, the market for startup equity is on firmer footing now than it was earlier in the year. With two successive quarters of growth in the amount of money invested, as well as a growing appetite on the part of the global real estate market innovation, there’s reason for cautious optimism going into the fourth quarter of 2017.

  • Bullish Finding: Dollar volume is up across almost all stages, and round sizes continue to grow. Across most measures, the global real estate tech VC market is on track to return to previous highs, if growth continues.
  • Bearish Finding: Despite growth in dollar volume, both deals volumes have slowed and measures of late-stage financings suggest a return to historic highs will be slower to come. 

An overview of the REAL ESTATE TECH + vC landscape

In the third quarter of 2017, the venture capital investment in real estate tech continued the trajectory set by the first quarter, one of recovery from a slump in the second half of 2016 due to looming uncertainty.

For better and worse, many sources of uncertainty, including the ballooning and seemingly unsustainable valuations of the U.S.’s largest private tech companies, have come to a head, and investors have seemingly adjusted to the new normal. Q3 2017 was all about managing and extending the gains made in the first half of the year.

Deals & Dollars

The total number of funding rounds in Q3 2017 decreased by roughly 34 percent compared to Q3 2016, amounting to approximately 37 deals. This change was primarily driven by a decrease in seed, angel and early-stage funding rounds.

The total dollar volume in Q3 2017 took a massive blow compared to Q3 2016, with a 56 percent decrease in total funding amount, amounting to approximately $372 million.

Year to date (Q1-Q3 2017), the total number of funding rounds at all stages declined by a projected 10 percent to roughly 228 deals, compared to the same period in 2016.

The total dollar volume from Q1-Q3 2017 grew by a projected 85 percent to $5.9 billion, compared to Q1-Q3 2016. 

Since Q1 2017, U.S. based real estate tech companies received the lion share of venture funding with approximately $2.3 billion in 144 deals.  In terms of deals, NYC based companies made up 22 percent of the U.S. market with 31 deals.  Additionally, $892 million went to NYC based companies, representing approximately 39 percent of the U.S. market.