Venture Capital Increasingly Attracted to Real Estate Startups
Posted on October 6, 2017
According to a recent TechCrunch article, “VC Doors are Wide Open for Real Estate Startups,” seed and early-stage investment in real estate technology have increased by $100 million over the past 12 months. Cultural and demographic shifts along with rising property and rental prices account for the rising interest in startups.
“Real estate and its adjacent industries are broadly behind in technology adoption, so many investors look at the space as low-hanging fruit,” says Constance Freedman, managing partner at real estate-focused venture capitalist (VC) firm Moderne Ventures.
The article identifies several companies that are experiencing early-stage funding:
- Knotel provides turnkey office space with flexible terms for companies who have outgrown co-working space.
- Zumper, HomeMe and Apartment List use information technology to add efficiencies to the apartment rental process.
- Multifamily owners and operators are creating time-saving amenities such as Hello Alfred, which provides housekeeping and errand-running services for tenants.
Brendan Wallace, co-founder of Fifth Wall, a real estate-focused VC firm, notes, “the real estate industry has historically spent less than 1 percent of revenues on IT, compared to about 3 percent for most other industries. That indicates there could be substantial room for growth if startups can prove their technologies boost the bottom line.”
Zillow and Redfin stand out as real estate industry success stories, but real estate VC believe technology adoption is still in the “very early innings.”