Managing the Growing Number of Proptech Applications

While intrigued by proptech, many commercial real estate executives lament that there are just too many options on the market from which to choose. And even if they find a product to invest in, they wonder how long it will be functional before it is obsolete.

Christopher Yip, the new partner and managing director of RET Ventures, hears these concerns. “There often are six or seven or eight players providing the same tech solution,” Yip says. “Recently, we were talking to one of our LPs [limited partners] to have them demo a startup we are looking at, and he said, ‘You know, it’s just too crowded. We don’t have the time right now to sort through it all. So, we will wait.’”

RET’s LPs include institutional multifamily and single-family owners in North America. The organization taps into these rental property owners and operators to help them identify potential real estate technology category leaders and speed their growth through deep engagement with the fund’s investor group.

“What we’re trying to do by getting so many industry participants together is to create scale and standards,” Yip says “Hopefully, over time, that helps set the market standard and helps reduce the risk that they [some proptech startups] won’t be in business.”

The number of proptech solutions is also increasing, which can also send property owners’ heads spinning. “Property owners might have four or five technology point solutions for things like packages, access control and payments,” Yip says. “But I think we are starting to see the rise of more one-stop or platform solutions. I think that’s certainly going to be a trend.”

Yip says some proptech firms are acknowledging and addressing tech concerns with overwhelmed property owners. “We are seeing some startups that are getting good traction saying, ‘Hey, is there a good enough solution that solves four or five pain points as opposed to having four or five [technologies] that you need to handpick,’” he says. “That’s just the natural part of evolution.”

Eventual consolidation in the proptech space will also simplify choices for property owners. “I think there will be acquisitions and different combinations [of providers], and I think things will sort themselves out,” Yip says. While the proptech space may still have some growing pains, Yip still sees tremendous potential. “It is a very exciting space that’s still early in its innovation cycle, and I think there is a lot of runway to go,” Yip says. “Part of why we’re seeing such innovation and capital coming to the space is because of changing consumer behaviors. Renters are expecting a certain level of technology, whether it is in how they interact with their building or the community around them.”