MetaProp, the New York City-based Venture Capital firm focused on the PropTech industry, today published an enlightening white paper that gives industry stakeholders and startups alike a clear direction on how to come out of this crisis even stronger as well as outlines how the PropTech industry can act as a catalyst for innovation beyond its own boundaries.
MetaProp’s Point of View
It has always been our mission to improve the built environment and the quality of lives of all that utilize it. Now more than ever, we are committed to doing our part. We are determined to help the industry not only survive but thrive, through COVID and beyond.
Unlike some industries that are struggling under COVID’s pressures, the impact on PropTech has been limited to several categories and individual companies, but net the real estate industry’s need for technology is increasing and PropTech is perfectly positioned as a catalyst for industry-wide maturation.
Major Stakeholders Face Unprecedented Uncertainty
Real estate’s key stakeholders are asking urgent and unprecedented questions as they prepare themselves and their organizations to navigate COVID.
In general, PropTech companies either enable or benefit from an enhanced level of visibility, control, efficiency, flexibility, and/or customer experience compared to the status quo. A macro crisis can often crystalize and accelerate innovative activity. For example, much of the groundwork for the boom in FinTech, which is often held out as the closest parallel for PropTech, can be traced to the shakeup of the financial services industry in the wake of the global financial crisis. PropTech has a robust ecosystem of solution providers that can address the difficult situations presented by COVID.
MetaProp’s investor base represents 15+ billion square feet of owned and managed real estate. In addition, we run the industry’s largest global PropTech startup portfolio. Our world straddles broad cross-sections of both the global institutional real estate community and the PropTech startup ecosystem. This vantage point has offered a privileged perspective on current events, and their impacts on and implications for both the traditional real estate and PropTech communities.
Below is our frontline view of the three categories of PropTech transformation in the marketplace:
1. Already in motion, now accelerating - Rapid increase in the industry’s desire for a broad range of solutions that were already gaining traction in the marketplace to varying degrees over the past several years.
- These include asset-level technologies like space planning and occupancy monitoring solutions and touchless access and asset control, tenant-facing solutions that touch on themes like affordability for homeowners and renters, community and communications, wellness, and operations-oriented technologies like professional tools that enable real estate professionals to work remotely and/or more efficiently and effectively, data and business intelligence solutions to help real estate leaders make better, faster decisions in an uncertain environment, and or tooling that plays to the further institutionalization of real estate that is likely to occur as a result of COVID.
2. Previously in motion, now under pressure - Several categories within PropTech now face headwinds that range from moderate to severe.
- Companies whose business models center on lease arbitrage (e.g. co-working, co-living, alternative accommodations), who take high levels of principle risk (e.g. iBuyers) and those who are tethered in real-time to the shifting sentiments of the capital markets (e.g. many direct lenders) are being strained in the current economic conditions. While companies that are more “Prop” than tech but raised capital at software multiples are receiving stricter scrutiny in today’s market climate. And companies whose businesses rely directly or indirectly on activity in hard-hit end industry segments (e.g. hospitality and travel, retail) face headwinds as these sectors have effectively ground to a halt and face an unclear timeline towards recovery.
3. Limited prior activity, now activated - COVID has sparked interest in technology categories that had previously not been in widespread demand by the real estate community.
- These include solutions that address timely occupier safety concerns such as thermal scanning and workplace-specific contact tracing, which have moved from niche cases to the front of mind, and automated operations solutions, such as robotic cleaning and facilities management and virtual property tours, which have significantly enhanced ROI cases in the current environment.
Moving Forward & How To Succeed in Today’s Environment
As has become a constant refrain in recent weeks, some of the most successful companies are founded in recessionary environments. And, the urgency to bring creative new solutions to the market has only increased in the current climate. It is important to take a longer-term view and avoid the temptation to over-correct. Early adopters will not only sustain but increase their investment in innovation in this environment as they have already begun to realize real ROI from their commitment.
MetaProp is a New York-based venture capital firm focused on the real estate technology (“PropTech”) industry. Founded in 2015, MetaProp’s investment team has invested in 120+ technology companies across the real estate value chain. The firm manages multiple funds for both financial and strategic real estate investors that represent a pilot- and test-ready sandbox of 15+ billion square feet across every real estate asset type and global market. The firm’s investment activities are complemented by pioneering community leadership including the PropTech Place innovation hub, MetaProp Accelerator at Columbia University programs, global events NYC Real Estate Tech Week and MIPIM PropTech NYC, and publications Global PropTech Confidence Index and PropTech 101.
- Venture Capital