Investors love a hot sector, and that's one good way to describe proptech based on the amount of cash being poured on by venture capital firms. The recent funding announcements are just a sample:

  • Property operations software company Facilio raked in $35 million in Series B financing from Dragoneer Investment Group, Brookfield Growth, and existing investors Accel India and Tiger Global Management.
  • Venture capital firm Camber Creek started with real estate tech in 2011 and just closed an oversubscribed fourth fund with $325 million in investment.
  • Investment management firm Tacora, which focuses on early- and mid-stage companies, closed $250 in its first fund that will focus on a number of sectors, including proptech.
  • European proptech VC and accelerator firm Pi Labs completed its third fund at $90 million, which it claims was oversubscribed by 40%.

And that's within a few weeks. Sums like this have become a regular feature in the market. Still, investors should be careful because there are distinct differences between investing in real property and in software firms, particularly through a venture capital fund.

VC firms are well established in real estate and have been seen as potentially having an edge in areas like opportunity zones. One advantage in a real estate investment fund is that if things go wrong, at least there's tangible property owned by the fund, so a chance to recoup some loss.

VC money in software is significantly different. The investment model is similar to the particularly non-high tech book publishing business in that both depend on big winners to deliver most of the profits. 

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