CRE Tech Investments Volume Up in April

Commercial global real estate tech investment volumes increased in April. According to research from CRETech, tech investment in the industry increased 13% last month over activity in March 2019 with 18 deals totaling more than $1 billion. Year-over-year, CRE tech investment increased 121%. US companies led this activity, accounting for 88% of all venture investments and 48% of deal volume.

“Globally, the residential real estate market received the most attention in April with 62% of all deals going to residential real estate tech companies, totaling $665.7 Million in venture funding. On average, two of seven real estate tech companies that received funding were residential transaction platforms, with the largest capital raise going to Perch,” Ash Zandieh, chief intelligence officer, tells GlobeSt.com. “In terms of vertical,  three of seven real estate tech companies, either in residential, commercial, hospitality, construction, or others were marketplace startups, including Lyric and Selina.”

Despite the increase in total deal volume, the report also shows total dollar volume decreased. Month-over-month tech investment dollar volume decreased 24%, and the median funding amount decreased 72% month-over-month to $6.5 million. However, April was the second consecutive month when tech investment surpassed $1 billion. “Overall venture investments in real estate tech companies remained strong in April, especially on the heels of a healthy economy and robust real estate market in urban core markets,” says Zandieh. “Deal and dollar volume will be a by-product of the cyclical nature of capital markets.”

The month was more good news than bad. In addition to the year-over-year increase in tech investment volume by 121%, median funding rounds increased by 53%. “The year-over-year growth was primarily led by late-stage funding, series B and greater,” says Zandieh. “What we’re seeing in the market is that late stage rounds have increased in both deal and dollar volume, while early-stage investments—angel to series A—have declined. A cause for the lack of funding in early-stage companies could be led by the lack of new companies coming to market. For real estate companies that have received funding, the funding rounds have grown outside of conventional seed and series A.”

Looking ahead, Zandieh expects tech investment activity to remain strong, although there may be month-to-month volatility. “Appreciations and declines aside, the market for startup fundraising remains amazing at the moment. 2019 is on track to be a record year for the global real estate tech industry,” he says. “That being said, it is very possible that we are seeing something of a turning point in the market. New unicorns and the largest unicorns, which have raised millions upon billions of dollars, will graduate to public markets within the next 12 to 24 months.”

For that reason, new entry into the market may have missed a big opportunity. “If you’re a new angel investor or an entrepreneur with a minimal viable product, you might be late into a historic funding cycle,” says Zandieh. “The clock is running, but there’s still time to play the game. Just don’t get caught empty-handed when the buzzer goes off.”