#PropTech Venture Capital Trends from November
According to RE:tech, venture investors deployed over $3.2 billion into real estate tech startups in November. The majority of this capital went to just three companies. WeWork raised $3 billion, while Nested and PropertyFinder raised just over $120 million each. All other earlier stage real estate tech startups split the remaining $34 million of total funding in November.
What problems are these proptech startups solving?
Nested is a data-driven real estate agency and lender that gives users a cash advance of up to 95% of the market value of the property you are selling, enabling users to purchase their new home before selling. This is a major pain point for home owners, who often get stuck in limbo waiting for their home to sell and can miss out on purchasing their desired new property. Nested charges a 2-4% fee depending on how soon users want the initial advance. Northzone and Balderton Capital led the funding round of Nested, which totaled around $25 million USD. The other portion of the capital raise was debt finance from an institutional investor.
PropertyFinder is a listings service with over 6 million monthly visitors. The startup is operating in Dubai and soon will be expanding to markets like Saudi Arabia, Egypt, Turkey, the United Arab Emirates, Qatar, Bahrain, Lebanon and Morocco. They will be using the $120 million investment (led by General Atlantic) to add about 200 staff and to improve their product.
WeWork, which needs no introduction, is expanding rapidly in China. The coworking startup already has over 60 locations in Chinese megacities like Shanghai, Beijing, and Shenzhen. Many investors question the high valuation of the company (recently at over $35 billion), as well as WeWork’s business model (essentially taking risk on long-term leases and subletting office space at a premium, in addition to a smattering of other services like schools), but a recent NYT piece suggested that WeWork’s model might be more durable than people give it credit for:
That means when the next economic downturn comes — and it will — WeWork’s landlords will actually be less likely to evict the company if it doesn’t pay its rent. If they were to let WeWork fail, those landlords would risk depressing commercial real state prices to such a degree that it would create a serious sense of pain for the country’s largest real estate owners.
More likely, landlords would swallow hard and renegotiate the lease agreements on more favorable terms to keep WeWork from creating a full-on panic.
After WeWork, PropertyFinder, and Nested, all other startups (21 in total) raised approximately $34 million, in deals ranging from $6.7 million to funding rounds as small as $100k.
Charles LaCalle | @charleslacalle