How Much Money Is Going Into Proptech, Anyway?

Trying to sort out what specialized investment markets are doing is often a challenge. Different sources have varying views and trying to piece them all together can leave someone bewildered.

Look at proptech. In commercial real estate, having at least a somewhat accurate view is important for multiple reasons. Investors might like to get exposure to growth and multiples — as well as the volatility that makes them possible. Those who own and operate properties should pay attention to see what tools might help their businesses, and that means knowing which vendors seem to have staying power or are up and coming. Funding is often a direct and indirect key.

But the range of estimates might leave you wondering how firms put together their views and what might be influencing them.

KPMG released a report on February 6 claiming that proptech investment had more than tripled between $4.1 billion in 2022 to $13.4 billion in 2023. Even though total global fintech investment dropped “from US$196.6 billion across 7,515 deals in 2022 to a six-year low of US$113.7 billion across 4,547 deals in 2023,” proptech “reached a record high of $13.4 billion in 2023.”

Compare that from the December 2023 report from Center for Real Estate Technology and Innovation (CRETI). “The proptech sector in 2023 observed a recalibration of venture capital flow, amounting to $11.38 billion, reflecting a cautious investor sentiment, one that was foreseen by CRETI in 2022,” they wrote. “This recalibration represents a 42.38% dip from the $19.75 billion invested in 2022 and a significant 64.44% decrease from 2021′s investment high of $32.0 billion.”

The 2022 amounts and changes in funding levels differ wildly. Here are aspects of reports to question to better understand which might be more realistic:

Regional differences — Typically, you want to be sure that different reports are covering the same areas. That might seem the case here because both studies are said to be “global.” However, do both equally cover all regions?

Quality of information — How do the studies get their information and are they equal in breadth and depth? There were many pullbacks in investments between 2022 and 2023, including some proptech companies that lost theirs. Do the growth or loss percentages seem to mirror other available information?

Definitions — This is one of the trickiest areas because firms use terms but don’t necessarily explicitly define them. Perhaps some companies are proptech to one and fintech to another. If a report discusses venture capital investment, it would be helpful to know what percentage of total investment that included.

For these reasons and others, trying to compare different reports on what seems a single subject is difficult. That alone is reason to pull together multiple ones and consider how they compare, in addition to asking each organization about definitions.