Posted on October 14, 2018 at 08:25 PM in Conferences, Insurtech Capital | Permalink
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At the end of August, online estate agent Yopa landed £20m from investors to fuel improvements to
its online platform and continuing growth in the UK. In total, investors have poured £75m into the
platform through several rounds of funding since the rm launched in January 2016.
The most recent investment in Yopa was led by dmg ventures, the venture capital arm of Daily Mail &
General Trust, which is one of a growing numbers of investors. They are among the few large, early
investors in proptech start-ups like Yopa. But while proptech is still in its infancy, it is growing – and
so too is interest from investors.
So what are these investors looking for and how much money are they putting into the sector?
Home ground: online estate agent Yopa received £20m from investors in August and has TV ads
featuring Mo Farah
Large cheques are expected to be written in the coming months for start-ups that investors bet will
be the next big thing.
The property industry has yet to see the level of innovation or disruption that companies such as Uber
or Apple have brought to taxis or the music industry, but some believe it might within the next ve
years. As one investor puts it, proptech has a “huge number of applications that haven’t been touched
A number of investors are now focused solely on proptech. Goldacre, formerly Goldacre Ventures, is
one such company. It still holds historic family investments that David Bloom, partner at Goldacre,
says “go as far back as 34 years”, but was relaunched early this year with a view to capitalising on the
opportunities offered by proptech.
Although Bloom would not say exactly how much money Goldacre has to play with, he tells people to
“look at our track record” and the tens of millions of pounds the rm has invested, and conrms that
the fund will take the same approach it has taken to property investment and apply it to proptech
over “the next three to ve years”.
“It’s about maturing the product into what the sector needs. Investment is not enough”
David Bloom, Goldacre
A batch of other investors have also emerged this year and revealed plans to invest tens of millions of
pounds into new proptech ventures. In May, a new €50m (£44m) fund called PropTech Capital, led by
French investment guru Christophe Reech, was established to focus on early-stage proptech
companies. Then in June, JLL Spark announced a $100m (£76m) global venture fund to ramp up the
number of proptech start-ups it invests in worldwide.
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Figures show that other investors are getting in on the action. In 2017, global investment in proptech
rms grew by 62% on the previous year with investments totalling £8.5bn, according to data from
Venture Scanner, which tracks investments in emerging technology sectors.
The growth of sector-specic venture capital funds is an encouraging development, according to Vik
Tara, founder of the start-up PropCo, which is behind Countrywide’s lettings management software
system. He argues that proptech investors’ success depends on a deep understanding of both the
property market and tech industries.
“If they don’t have domain expertise, how effective will they be?” he asks.
Lack of understanding Tara has invested in three proptech start-ups and founded two of his own. When seeking funding for
his start-ups, which include the property management tool Rentr, he says it was “very timeconsuming
when we went near traditional corporate nance” to raise cash. He attributes this to
investors’ lack of understanding about how technology could affect real estate, although he says this
is beginning to change.
“If you’re spending all your time building the technology then actually, the t with investors is about
how good they are at trying to understand what you’re doing,” he says.
Goldacre’s Bloom agrees that the sector is gaining momentum and that investors are striving to better
understand the companies that operate within it. In early September, he spent a day listening to
pitches from 16 proptech start-ups eager to get his fund’s investment and join its business accelerator
RElab. The start-ups had been whittled down from 150 applications and covered urban logistics,
digital retail in physical spaces, transactional platforms, legal, accounting, facilities management and
Home front: Yopa has received £75m in investment since it launched in January 2016
In October, RElab will be taking in six to eight start-ups. “It’s not always about whether those
companies are viable and successful; it’s also what we can contribute to them,” Bloom says. “We didn’t
take one company into the cohort because we didn’t believe we were necessary for their success.”
What the fund is looking for are start-ups that have a working product and have completed promising
initial trials. “You’re asking ‘can they capture enough market share to become de facto standard?’”
Bloom says. Of Goldacre’s approach, he adds: “It’s about maturing the product into what the sector
needs. Investment is not enough. There has to be alignment and synergy where you’re able to add
“There are a lot of interesting (proptech) products targeting different sectors of the
market” Mihir Shah, JLL Spark
Mihir Shah, an early angel investor in Uber and former vice-president at Groupon, is co-chief
executive at JLL Spark, which was created as a division of JLL in 2017. Its initial aim was to invest in
one proptech rm at a time. However, after a year spent looking at the sector, Shah says it became
clear proptech was growing so fast that the accelerator needed to invest in a number of start-ups
globally at the same time. The realisation led it to launch a $100m global venture fund in June.
“The world of proptech is moving fast,” says Shah. “There are a lot of interesting products targeting
different sectors of the market.”
The fund aims to back 10 to 20 start-ups this year. So far in 2018 it has nanced six companies, three
of which have been announced.
In July, it was one of several investors that put a total of $18m into Skyline AI, which aims to use
articial intelligence and machine learning to help investors make better commercial real estate
investment decisions and beat industry benchmarks.
In early September, Shah announced that JLL Spark had invested in transaction and deal management
software Dealpath. Later that month, the fund contributed to $2.8m in seed funding raised by start-up
Jones, which combines software and pay-as-you-go insurance products to handle liability insurance
for contractors working on building projects.
One thing these investments have in common, Shah says, is that they will contribute to JLL’s six core
businesses. “Is this product something that can help our businesses improve their services?” is a
question he says he nds himself asking each time he looks at a new pitch.
When asked where proptech could have the biggest, and as yet unrealised, impact, Shah points to
smart buildings. “A building is generating so much data and, with more IT developments, will
generate even more.” Using data collection and analytics “can you save energy and provide a better
experience for tenants?” he asks, noting that there is opportunity in apps that allow employees and
tenants to interact with the building.
“Another area is the ability to allow retail investors to own a piece of a commercial real estate asset,”
he says, by using blockchain technology – which creates a permanent digital public ledger of
transactions – to oat a percentage or share of a building to smaller investors.
PropTech Capital’s Reech – who says his fund is nalising a pipeline of three or four deals that he
hopes will be completed by the end of the year – also sees opportunity in start-ups bringing
blockchain’s public ledger to the property sector. “That is a direction we’ll be taking,” he says,
although he will not divulge details.
He adds there is only one area “where there’s a lot of interest from investors” but where they should
be wary: cryptocurrency or ‘digital dollars’. “We’ve seen a lot of start-ups trying to use
cryptocurrencies [but] we haven’t made an investment. In my view, cryptocurrency isn’t there yet.”
Latest news - Blockchain partnership sees Peakside launch rst tokenized
real estate fund
Tara agrees. He says that “we don’t have a reliable and stable cryptocurrency”, making it difcult to
make payments if the currency’s value is always uctuating. He has rst-hand experience. He did a
proof of concept of signing a tenancy agreement in blockchain and using a cryptocurrency to pay the
rent but it wouldn’t work because “the payment side isn’t stable”.
Using blockchain to track transactions or le documents only marks an incremental improvement
until cryptocurrencies become part of the equation, Tara says. For start-ups to be successful, he adds,
they need to make services “much better than what’s already out there”.
The trick for investors will be to sort the proptech wheat from the chaff and back the companies
whose software is better than what’s already out there – and will prove invaluable for property
companies seeking efciency.
Posted on October 08, 2018 at 09:53 AM in PropTech, PropTech Capital | Permalink
Posted on October 04, 2018 at 04:32 PM in PropTech, PropTech Capital | Permalink