PropTech had a banner year in 2021, attracting a record amount of venture capital. What 2022 holds for PropTech remains to be seen, but a recent report written by the PropTech investment firm MetaProp in conjunction with PwC revealed that investor confidence in the space is at an all-time high. Seventy-one percent of investors expect to invest in more PropTech companies this year, according to the report.
“For investors, this can be attributed to the slight edge toward an ‘investor-friendly’ fundraising climate, following the multi-year ‘founder-friendly’ one, that emerged due to downward pressure on public company valuations,” a MetaProp representative said in an email.
Investors expect to invest in 8 startups in 2022, and they’re most interested in the single-family sector (by 26 percent). This would continue the trend in 2021 of investors focusing on residential PropTech versus commercial real estate. Global PropTech funding on residential tech received 49 percent of investments compared to just 7.6 percent for commercial owners and tenants.
The pandemic’s first year in 2020 put a dent in PropTech funding, but it bounced back last year and is expected to be strong again for the rest 2022, carrying any unforeseen circumstances. MetaProp’s report said this year will also likely see a wave of mergers and acquisitions, as founders believe traditional real estate companies will continue to step up as buyers.
One hundred and twenty five venture-backed real estate companies were acquired in 2021, the highest amount in the past five years, according to Crunchbase. Many analysts expect that type of consolidation will continue in 2022 and could perhaps be the most prominent PropTech market theme of the year.