Real Estate Venture Funding Sets Annual Record

Investments in the sector this year totaled $ 32 billion, according to the Center for Real Estate Technology & Innovation. (iStock)

When Proptech went mainstream in 2021, investors poured an unprecedented amount of money into the sector.

Venture capital investments in “real estate technology companies” reached $ 32 billion this year, according to a report by the Center for Real Estate Technology & Innovation, just barely beating the previous annual record of $ 31.6 billion set in 2019.

The report did not clarify its definition of real estate technology. According to CB Insights, the proptech sector had received $ 9.5 billion from investors and venture capital by mid-November, breaking the 2019 annual record of $ 9 billion.

Still, the CRETI number represents a 28 percent increase over the same report in 2020.

The report has broken down the amount of venture capital filtered into real estate by sector and phase. Residential real estate made up almost half (49.1 percent) of the risk capital. The multi-family sector, counted separately from commercial real estate, took second place with 20.8 percent, while construction and commercial real estate accounted for 18.9 percent and 7.6 percent of investments, respectively.

“After a year of uncertainty, the market for venture capital and real estate tech entrepreneurs is back in a meaningful way,” said Ashkán Zandieh, chairman of CRETI. “The sector’s continued growth has resulted in new investors entering the market in multiple phases, including private equity groups and institutional organizations.”

Unicorns galloped through the proptech world in this record year. Recently, Lessen, a property management platform that connects property owners with service providers, joined the party after nearly quadrupling their previous fundraising with a Series B of $ 170 million that the startup valued at more than $ 1 billion.

As one of the first venture capital firms to focus on proptech, MetaProp closed a $ 100 million fund – its largest to date – in June to support early stage companies.

“Proptech is a household name in both the public and private capital markets today,” MetaProp co-founder Zach Aarons said after CRETI’s report. “The cat is out of the bag.”

Venture capital isn’t the only area where Proptech is making big numbers. As of August, Proptech M&A deals totaled more than $ 18 billion – a pace to slightly outperform the $ 21.9 billion made last year.

“This record-breaking flow of capital into this category shows that the real estate industry is embracing and using technology and that proptech is no longer a niche investment,” said Brad Griewe, co-founder of Fifth Wall.

Contact Holden Walter Warner