L et’s be upfront and honest, shall we? The real estate industry has been a comparative laggard in the realm of technology integration into its business model. It wasn’t that long ago when agents were still faxing contracts around. I know agents that still use flip phones. The real estate industry is, in many ways, what it has been for decades. However, that is changing, and it’s doing so at an accelerated rate. Investment in proptech has increased 100 fold since 2012, and it seems to be holding steady.
To understand where we are today, we need to take a step back. Let’s back up to the early and mid-2000s, before the market crash and the following real estate depression. Companies like Zillow and Trulia had come onto the scene and begun aggregating data to the buying public like never before. They weren’t getting data from the Multiple listing service, like your local brokerage. They were pulling tax records, census data, and municipal data to deliver a more complete picture of, not only the homes on the current market but all the homes in a given market. For the first time in the industry someone was using essentially big data to pull the curtain back on real estate information.
"Proptech as a sector continues to expand and mature and doesn’t show many signs of slowing down".
Even traditional companies like Cisco and IBM had started creating technology solutions expressly for the booming real estate industry. Those solutions were marketed to the commercial sector as predecessors to the current “smart building” products. Although I’ll admit that I found the “smart” toilet paper dispenser that sent notifications for refills seemed a little excessive.
As we all know, the bottom fell out of the sub-prime market and so went the rest of the real estate market, and the global economy. During this period, the real estate industry scaled down in many ways. Agents and brokerages shut down, and there wasn’t much in the way of investing occurring, at least not in the realm of proptech.
Let’s move forward to 2012. The global economy and the real estate industry had several years to recover and was moving in the right direction again. People had time to start rethinking the industry and how it did and should work. Those start-ups needed capitaland investors saw opportunity in an industry on the cusp of recovery with a business model that was ripe for change. That year VC funded was comparatively light at around $45 million.2012 would mark a shift in VC attention and investment in Proptech.