MetaProp, a proptech-focused venture capital fund, just released its "Global PropTech Confidence Index" report. The report gives us a pulse on the health of the real estate tech market and also offers perspective from industry investors and startup founders from around the world.
For starters, proptech is the use of technology to drive efficiencies in real estate. The intended results include improved asset returns, reduced friction, and greater transparency across all asset types. Household names in the proptech industry include Zillow (NASDAQ: Z) (NASDAQ: ZG), a home sale listing site; Airbnb (NASDAQ: ABNB), a vacation rental listing site; and Opendoor (OTCMKTS: OPNDF), an iBuying platform.
MetaProp was founded in 2015 and has since invested in over 130 technology companies across the real estate value chain. Part of the firm’s value proposition is that its limited partners offer a "pilot- and test-ready sandbox" of 15+ billion square feet across every real estate asset type and global market. Not only does MetaProp provide capital, but it also gives companies square footage with which to work.
The key takeaways from the report
There were two key items to take away from the report, both of which touch on a Confidence Index, which has a range of zero to ten. The Confidence Index is based on responses to four sentiment questions about future market expectations.
Proptech investor confidence is high
During the second half of 2020, the Global PropTech Investor Confidence Index score reached 9.2 out of 10. This is up from a previous high of 8.8 in mid-2019. The pandemic actually turned out to be a boom for proptech, as technologies such as virtual showing tools were adopted and deployed faster than they have been in the past.
Additionally, 94% of investors think that the pandemic will further accelerate the adoption of proptech in the real estate industry, up 5% from the report done six months prior.
The report also noted that much of the confidence is likely due to how successful PropTech companies have done in the public markets. Jillian Williams, Principal at Athemis, explained:
2020 lit the match and highlighted the demand and now we will see the companies and growth within the space really play out. We have also seen more proptech and real estate-related companies go public in 2020 including OpenDoor, Rocket Companies, and Loan Depot, and Compass’ IPO filing. These moves towards the public market can grow the appetite for more PropTech companies to emerge. I think we will see a lot of companies emerge in the space and a lot of appetite from investors to back the next version of these PropTech startups.
Startup founders share a similar sentiment
The Startup Confidence Index is the highest it’s ever been, sitting at 7.7 out of 10. This uptick is likely a trickle-down effect from the positive vibes sent from investors in the form of increased investment activity. According to the report, 39% of startups say it will be easier to raise venture capital funding over the next year compared to the previous year, a steep increase from an all-time low of 12% during the middle of 2020.
The Millionacres bottom line
Co-founder and Managing Partner of MetaProp Aaron Block summed it up well:
"The second half of 2020 proved to be incredibly positive for the proptech ecosystem. As we predicted earlier last year, the proptech sector continued its rapid growth and maturation, with a flurry of record-setting activity and industry sentiment soaring to new heights. We are excited as we anticipate this trend will continue in 2021, with COVID-19 vaccines being rolled out faster than expected and a more stable political climate."
Expect more innovation coming for the real estate industry as both the founders building these companies and the investors backing them are excited for the future.