- Venture capital firms have invested £75.2b into built world tech since 2015
- Hiring the right talent and need for visible return on investment remain barriers to adoption
- AI and automation underpin a number of areas and have seen large investments
Global Leader in Audit, Tax and Advisory Services Joins Forces With Largest Event and Media Company in the Proptech Sector to Release Venture Capital Report
New York, NY (October 16, 2019) — EY and CREtech’s exclusive research reveals that since 2015, venture capital firms have invested US$75.2b into built-world tech, with around one third of all investment since 2015 coming in the first three quarters of 2019. The report also tags AI, automation and Visualization as “ones to watch” in the future.
The research shows that eight major market segments have emerged, with Real Estate & Finance receiving the bulk of the investment at US$27.88b, closely followed by Flexible Space with $22.76b. Digging into the numbers the two sectors are very different, with Real Estate and Finance being far more diverse, with seven times as many transactions but almost half (43%) of the money raised has gone to just five companies.
The report also revealed that there remain barriers to adoption and that while the marketplace has been driven by a large boost in capital, adoption has yet to catch up. The barriers outlined are:
- Available talent: Hiring and retaining the right tech talent is an industry-wide issue as it seeks to hire those with the right technological and digital skills to implement adoption.
- Lack of single-source solutions: A more joined-up approach providing umbrella solutions that solve a range of problems would allow firms to adopt knowing they had an adaptable and long-term investment.
- Return on investment: Currently there are few guaranteed returns on investment. This will change, but will take time as more tech is adopted and the needs of the market more clearly identified.
Mark Grinis, EY Global Real Estate, Hospitality & Construction Leader, presenting the key findings of the report at Cretech New York, said:
“In the report we’ve followed the money to help businesses cut through the hype and get a proper view of the market, because you can’t get to where you’re going if you don’t know where you are now.
“The astounding flow of capital into built-world tech show that this is the market on the cusp of breaking out. While there are hurdles to overcome, we are still in the early stages of built-world tech development.
“We’ve mapped out where we are now and our next joint report with CreTech in spring 2020 will allow us a clear look at where the sector is going next.”
“EY’s global leadership in the commercial real estate tech sector has had a profound impact on our young, growing industry and we are extremely proud of our growing partnership,” stated Michael Beckerman, CEO, CREtech. “This important research endeavor provides terrific insights into the overall state of the CRETech sector as well as in-depth funding analysis,” Beckerman added.
AI and automation underpin a number of market segments, and the deal data reflects that. AI and its subset machine learning, have gained significant investment, increasing in dollar volume by an average of 216.6%.
The report also highlights another area to watch in Visualization. To date just US$700 million has been invested, but valuations are high as VCs seek out future market leaders, with the bulk of investment going to just five firms.
CREtech (cretech.com), the leading media and consulting platform in commercial real estate technology and EY, a global leader in assurance, tax, transaction and advisory services, released their exclusive research report on venture funding trends live at the CREtech New York Conference yesterday (16 October).
The Report outlined eight segments (US$ investment 2015- Q3 2019):
- Real Estate and finance ($27.88b)
- Flexible space ($22.76b)
- Management ($9.15b)
- IoT/Smart buildings (£5.47b)
- Construction ($4.41b)
- Data and analytics ($4.26b)
- Visualization ($0.74b)
- Tenant experience (£0.53b)
Download the full report here.
EY is a strategic research partner and marquee Innovator Sponsor of the CREtech 2019/2020 Flagship Event Series. Together, CREtech and EY will conduct research about emerging trends in the real estate industry, as well as the impact of technology on this rapidly changing market. Research findings will be presented at the premier conference in commercial real estate tech, CREtech New York on October 16-17, 2019 and at future CREtech events in 2020.
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