An Original PropTech Investor Provides 2020 Vision
Zach Aarons, MetaProp’s co-founder and partner, advises investors to look for companies that solve problems in a variety of different ways with the end goal to ultimately make processes more efficient.
SAN FRANCISCO—In 2013, venture investors’ outlay in real estate tech startups was $491 million. Six years later, venture investors poured $12.9 billion into real-estate tech startups during the first half of 2019 alone, according to The Wall Street Journal. As more investors are attracted to PropTech, companies may ponder if the best approach is a myriad of real estate based-solutions or a focus on one.
One of the original investors in PropTech and MetaProp’s co-founder and partner, Zach Aarons, advises investors to look for companies that solve problems in a variety of different ways with the end goal to ultimately make processes more efficient.
“Despite the incredible advancements in construction automation, we are not even scratching the surface of what these machines can do,” he said in a Real Deal panel interview.
The potential PropTech offers the real estate industry is game-changing and will save millions of dollars. Soon it will not only be a reality, but an expectation, Aarons says.
Although PropTech is not a one-size-fits-all category, it offers more efficient solutions for every different type of project. This raises the question: are the best PropTech companies the ones that can morph into all categories or should each PropTech company have a specific focus?
“The technology an office building needs is different than what a multifamily building needs or a single-family home or warehouse,” Aaron explains. “One solution doesn’t always fit all problems. Therefore, we examine the ‘dirt to disposition’ of every single process and every single person that touches a choke point in that process to determine the biggest needs.”
As an example, Aarons explained how MetaProp views appraisals as a big choke point in the process. MetaProp determined there were two ways to fix appraisals, either by creating technology that enables appraisers to do their jobs faster, better cheaper or to replace human appraisers with some automated valuation model. Additionally, it was determined that appraisals should be specific for specific industries, i.e. commercial and residential. But in warehousing and logistics, PropTech can be more multifaceted because those industries work similarly and well together.
Whether it be surveying, construction, design or financing, anything in the real estate process that is inefficient must be examined by PropTech solutions to move forward, faster and better. PropTech addresses the biggest flaws in subsectors and specific solutions perfectly suited to solve a problem. When possible, technology can span asset types that are similar and, therefore, provide a profitable solution.
“A technology that can span these two asset types will be super successful as it will buttress true omnichannel retail and logistics,” says Aarons. “MetaProp looks at little subsectors and we go really deep into each subsector where there is really significant pain. We look for teams that are solving that pain in a variety of different ways with the end goal to ultimately make processes more efficient.”
As for what’s next for PropTech investments going into the next fiscal year, Aarons provides some interesting predictions.
“Google, Apple and Microsoft will buy PropTech companies in the near future,” he tells GlobeSt.com. “Somebody somewhere will make a distressed play on either WeWork’s bonds or real estate and make money. A dozen of the people WeWork laid off will go on to start businesses worth billionaires of dollars in the aggregate. In 2019, it will be the first year we may see a commercial real estate transaction without wet signatures. And, 2020 will be the first year we are able to produce an Alta survey without a single human being, i.e., all drones, robots, computer vision and AI.”