National CRE News In Your Inbox.
Sign up for Connect emails to stay informed with CRE stories that are 150 words or less.
Proptech Funding Reaches New Highs
Real estate technology has become a more crowded playing field over the past decade as the number of startups has tripled. With this year’s first half the most active on record for proptech funding, there remains plenty of opportunity for startups, JLL says in a new report.
“Our industry is right on the cusp of impactful change driven by widespread technology adoption,” said Raj Singh, managing partner of JLL Spark, the global venture fund of JLL Technologies. “The trends we’re seeing suggest there may be no better time to invest in real estate technology. The opportunity to shape the industry for the future by supporting innovation holds great potential for strategic change as well as return on investment.”
The nearly 8,000 proptech companies identified by JLL have collectively raised more than US$97 billion of equity funding in the past decade. Built environment technology startups can now be found in most countries around the world, although the U.S. continues to dominate the space.
“While real estate technology adoption was on the rise before the COVID-19 pandemic, it has become essential for today’s leading real estate players, buildings and spaces,” said Ben Breslau, chief research officer at JLL. “Technology is at the center of the most important trends shaping business and real estate. That includes hybrid work, health and safety, and sustainability initiatives, all of which are in high demand. That’s why we expect funding within this sector to break records this year.”
However, JLL also notes that this market is showing signs of maturation. Funding is shifting toward established players, and the sector has been seeing greater consolidation.
Citing data from Crunchbase, JLL says early-stage venture investment was down in 2020 by 11% year over year. JLL found that venture capital equity funding to proptech was notably impacted, slowing to US$13.4 billion in 2020. In the first half of 2021 alone, though, funding reached $9.7 billion.
As the sector matures, funding is also migrating toward more established companies, JLL says. The majority of capital invested is going to later-stage funding rounds and to products with strong adoption post-COVID.
This maturation, combined with a more challenging fundraising environment, is contributing to greater consolidation in the proptech sector. In 2020, M&A activity was at a record high of US$21.9 billion. With deals such as the combination of iOFFICE and SpaceIQ announced earlier this week, it’s already above US$18 billion so far in 2021.
- ◦Financing
