Private equity giant Blackstone didn’t reveal the size of its investment in Dealpath when the two companies announced the deal earlier this year, but it helped inject cash and cachet into a growing niche of real estate technology.
Founded in 2014, Dealpath is a pioneer in proptech, the nickname given to property deal and management solutions that now is gaining currency -- and new entrants -- much like fintech has for years in financial services technology.
Proptech’s time has arrived. "The real estate investment management industry has exhibited an urgent need for systems and purpose-built solutions that will allow them to scale as they deploy and manage billions of dollars," is how Mike Sroka, co-founder and CEO of San Francisco-based Dealpath, describes the opportunity his firm and new competitors are seizing.
Here, Sroka shares the history of proptech through the lens of his company, where it’s been, and where it’s going.
Do you consider yourself a proptech company, and where do you fit in that term’s history?
MS: Yes, proptech, CREtech, whatever people are calling real estate software services -- this is the industry that we’re committed to raising the bar in with data and collaboration through purpose-built software.
When we started Dealpath in 2014, real estate software services didn’t even seem like a cottage industry. There were a handful of long-standing incumbents and not much going on. Over the next couple of years, we observed a surge of investment and development and with it a new term, "CREtech," which then seemed to evolve into "proptech."
How many people work at Dealpath now, and what can you tell us publicly about your revenue and the size of your client base?
MS: Dealpath’s team has grown to more than 50 full-time employees, and we’re actively recruiting for a number of open roles. Our team is made up of experienced technologists and industry professionals that are passionate about solving real business challenges to create sustainable and compounding value.
Today we’re proud to be the leading deal-management solution supporting hundreds of top real estate investment firms globally. We surpassed $5 trillion of transactions on the platform and were recognized as the "Top Technology" at the Global PropTech Awards.
How do you describe your client base?
MS: Dealpath is purpose-built for real estate investment managers and is powering many of the largest, most sophisticated firms in the world.
We originated the category of "real estate deal management," which has grown rapidly. Today, our growing roster of hundreds of clients includes Blackstone, AEW, Bridge Investment Group, Oxford Properties, Manulife, and L+M Development Properties, to name a few examples.
How do you explain to real estate investors what Dealpath does?
MS: Dealpath is where teams manage pipeline through portfolio management. We understand the complex needs of wrangling disparate data and herding of cats. Dealpath serves as the command center, putting the information you need at your fingertips for your front office to focus on value-add work, identify and mitigate risks, and make smart investment decisions to deliver optimal risk-adjusted returns. This is smart deal management with a modern real estate tech stack.
What opportunity, and what challenges, did you see in forming your company, and how were they seized and met?
MS: Real estate investment teams have been long underserved by specialized software. As such, they’ve been forced to make do by cobbling together tools that weren’t designed for their work.
We identified the investment process, from pipeline through portfolio management, as a broken workflow that when solved with purpose-built software, unlocks tremendous value and is an ideal mechanism for creating a foundational data structure for the largest asset class in the world.
We focus on building the system of record for this need and enabling change management from a legacy way of work. Our mission is to empower real estate managers with data and collaboration through purpose-built software.
Who are your major competitors and how do you compare yourself to them?
MS: Dealpath created the category for real estate deal management and continues to be the leading solution. Over the past six years, we’ve been focused on enabling change management from legacy processes of cobbling together Excel reporting, Word document checklists, company shared drives, virtual data rooms, along with lots of emails and phone calls.
Recently, over the past 12 months or so, we’ve started to see new entrants in our space of real estate deal management -- these range from generic CRM systems that are creating targeted marketing for real estate use cases as well as new upstarts that look to build similar functionality and capabilities. It’s an exciting time as the industry adopts software and leverages technology in a condensed digital transformation.
How has the pandemic changed the commercial real estate business overall and what do you think it will look like going forward?
MS: Our current working environment shines a spotlight on the need for a few things: having centralized data that is globally accessible, standardized workflows to keep teams on track from wherever they might be working, and data security that you can depend on. Executive teams, investment committees, and portfolio managers must now be experts in leveraging collaborative software tools as a core part of the business.
How and why is the Blackstone investment important to Dealpath?
MS: Our partnership with Blackstone has really been a long time in the making and very important to Dealpath. They are fantastic partners as we build out solutions for their real estate business and the massive market opportunity. We really benefit from their feedback and perspectives -- we’re also incredibly proud and excited to support their work. Blackstone is really good at what they do, and we view the partnership and backing as strong validation of Dealpath’s value proposition and market opportunity.