US proptech in flux but remaining resilient

US proptech in flux but remaining resilient

The first half of 2022 has delivered a turbulent property market in the US. The Federal Reserve has increased interest rates three times, with the latest hike in June (0.75%) the largest in decades. Borrowing money to buy a home has become progressively more difficult throughout the year and the mortgage market has taken a hit. Increasing numbers of potential homebuyers are instead looking to rent. These trends in the property industry have affected the proptech market, with rental and property management solutions gaining in popularity.

Since January, proptech valuations have also started to fall. Rising inflation and interest rates have had a negative impact on the private market, with the value of public proptechs decreasing by an average of 30%. Layoffs have hit the US proptech market, with Zumper, Redfin and Compass cutting their employee numbers in the first half of 2022.

Nevertheless, the year to date has seen a considerable amount of activity in the proptech market. Here’s our round-up of some of the key announcements, appointments, and acquisitions.

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Investment and funding announcements

  • Cove closed a Series A funding round worth $10 million led by Blackstone Innovations Investments and including funds from security firm Kastle Systems.

  • Climate proptech Turntide Technologies secured $80 million from OGCI Climate Investments; SDCL Energy Efficiency Income Trust; Meson Capital's Captain Planet LP fund and Fifth Wall. The company’s energy-efficient motors power buildings, cars and trains.

  • Peek, a virtual touring platform, got $2.5 million in seed funding. The company utilizes its countrywide freelance worker network to virtualize properties.

  • Quext, a smart building and property management platform, raised $63 million from a network of private investors. Among other initiatives, it will use the funds to further develop its platform, grow Internet of Things (IoT) inventory and further safeguard its intellectual property.

  • Foxen, a proptech specializing in products to promote financial wellness within the real estate industry, secured a $44 million investment to grow its product portfolio and secure key hires.

  • HomeLister, a digital brokerage and real estate platform offering vendors a “DIY” way to list and sell their properties, raised $10 million in series A funding.

  • Facilio raised $35 million in its latest funding round to double down on its marketing and sales efforts. The company uses an artificial intelligence (AI)-based predictive approach for real estate companies to digitize processes, optimize their property operations and increase operational effectiveness.

Senior appointments

  • Proptech investment company, RET Ventures, has appointed Jerry Davis as a senior advisor. Davis was formerly chief operating officer of UDR, one of the largest multi-family real estate investment trusts (REITs).

  • Xeal hired Chris Moreno as VP of Real Estate and Channel Partnerships. The company aims to seamlessly install smart EV charging stations at multifamily properties across the country.

  • CoreLogic officially announced Patrick Dodd as its president and CEO after Dodd became interim CEO in January 2022. CoreLogic is the leading global property information, big data and technology solutions provider for the real estate market.

Acquisitions

  • HomeLight raised $60 million in equity financing and $55 million in debit financing from Zeev Ventures and acquired Accept.inc. HomeLight’s mission is to streamline the homebuying process by enabling contingency-free, cash transactions. Accept.inc is an iLender that facilitates cash offers for mortgage-ready buyers, so this acquisition signals HomeLight’s intention to become the largest agent-focused cash offer program in the US.

  • SmartRent has acquired two companies - iQuue (a smart apartment company) at the start of the year for an undisclosed sum and then maintenance service platform SightPlan for $135 million in March. These major acquisitions build SmartRent’s market exposure and accelerate its journey towards offering a comprehensive property and resident management platform.

  • Property management company Poplar Homes announced its series B funding round worth $53 million, as well as nine acquisitions of property management companies in key high-growth markets.

Product updates

  • Baselane launched a new product named Landlord Banking, which claims to simplify the opening and management of bank accounts that specifically cater to the needs of landlords’ investment properties.

  • In June, View announced the launch of the industry’s first smart building cloud product. The Smart Building Cloud provides a platform to securely connect, manage, and optimize a portfolio of smart buildings.

Forecasts for the rest of 2022

  • Amid a slowing economy and investor hesitancy, VC funding is set to dry up and many successful proptechs are preparing themselves for acquisition.

  • With reports of many proptech startups facing difficulties raising funds and maintaining operations, the advice is to secure a runway of two years rather than the usually recommended 18 months.

  • The Covid-19 pandemic has accelerated certain proptech sub-sectors, for example, smart home and IoT technology. There's increasingly strong demand for virtual tour products in the rental market and remote property management solutions such as smart leak sensors.

  • With climate change moving to the top of almost every sector’s agenda, the property market should expect increased pressure from investors, customers and regulators to embrace low-carbon technologies. Many proptech providers can contribute to this agenda, for example through improved optimization of home energy use using solutions such as Nest Labs.

At the year’s midpoint, 2022 has been a tale of two halves. On the one hand, a turbulent economy, rising inflation and layoffs have dampened a once thriving industry in which VC firms were desperate to invest. However, the rental market is booming and sub-sectors such as virtual touring, property management and sustainability solutions are experiencing rapid growth. Proptech is an agile and resilient industry that should continue to play to its strengths.

Zai can help proptech firms make the most of the opportunities out there, helping them optimize their payment flows. To find out how, contact us here.

For more information on proptech trends, check out our guide below.


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