A new report shows PropTech companies had a tough 2022 for global venture capital funding, but the news isn’t all bad. International VC funding for PropTech fell from $32 billion to $19.8 billion in 2022, a 38 percent decline, according to a report from the Center for Real Estate Technology & Innovation. The sharp decrease in funding was caused by the usual suspects, such as rising inflation, interest rates, and mortgage rates.
U.S. PropTech firms fared the best, as usual, receiving the biggest share of investments at 43.2 percent in 2022. The report said the theme for 2023 seems to be “cautious capitalism.” The industry is expecting a wave of mergers and acquisitions next year, and many businesses may shut their doors as they struggle financially.
News of the sharp drop in funding shouldn’t be surprising, considering the worsening economic conditions. But one bright spot for PropTech going into the New Year is the continued growth of climate-related real estate technology. VC firms like Fifth Wall are bullish on these types of investments, as they closed a $500 million inaugural “Climate Fund” over the summer. With a growing emphasis on decarbonization and energy management, the potential market for climate tech in real estate is enormous, which could buoy tech companys in the space moving forward.