Real Estate Technology Investors Investing More in Fewer Deals

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As we have previously shared, the Real Estate Technology (proptech) startup sector is seeing a lot of momentum. How have its funding trends evolved over time? On our Real Estate Technology research platform, we have analyzed the data through 2017 and can conclude that investments into the Real Estate Technology market have become fewer in frequency but larger in amount.

We have come to this conclusion from the following three takeaways:

  •      Total funding amounts are seeing strong growth
  •      Number of funding events is seeing a decline
  •      Average funding per deal is increasing

We will illustrate these takeaways through a series of graphics.

Real Estate Technology Funding Amounts Seeing Strong Growth

Let’s start off by examining the annual real estate tech funding amounts, stacked by quarters.

Real Estate Technology Funding Amount by Quarter

This graph illustrates that real estate tech funding saw robust growth at the annual level. Specifically, the funding in 2017 was 162% of that in 2016. In addition, the CAGR in funding amounts from 2012 to 2017 is an impressive 63%. 

We have seen that real estate tech funding is showing strong growth, but what about the number of deals?

Real Estate Technology Funding Events Declining

The following graph shows us the annual number of Real Estate Technology funding events, stacked by quarters. 

Real Estate Technology Funding Count by Quarter

The above graphic illustrates that the number of real estate tech funding events saw a healthy upward trend from 2011 to 2015 and declined thereafter. The CAGR in funding events from 2012 to 2017 is still positive at 16%, despite the number of funding events dropping by 76% in 2017 vs. 2016.

We have seen that real estate tech funding amounts are growing steadily but the number of funding events is seeing a decline. Let’s see if the trend in average deal size provides any further clues.

Average Real Estate Technology Funding Deal Size Increasing

The following graph shows the average funding per Real Estate Technology deal over different quarters from 2011 to 2017, as well as the trendline.

Real Estate Technology Average Funding Event Size

As we expected, this graphic indicates that the average Real Estate Technology funding per deal has experienced consistent growth over the past few years. The trendline shows that from Q3 2011 to Q4 2017, the average deal size has grown by approximately 350%. This stable upward trend in average deal size demonstrates that while the number of deals has dropped, the investments in Real Estate Technology have indeed become more substantial over time.

Conclusion: Real Estate Technology Investors Are Investing More in Fewer Deals

In summary, we have seen from the above graphics that real estate tech funding amounts experienced strong growth at the annual level, yet its deal count has seen a decline in recent years. Moreover, the average funding per deal has been increasing consistently over time. These takeaways lead us to conclude that the investors in Real Estate Technology are investing more money yet into fewer funding deals. It’ll be interesting to see if this trend continues in 2018. 

To learn more about our complete Real Estate Technology research platform, visit us at www.venturescanner.com or contact us at [email protected].

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